Elektrim bid for G-8 group is weakened

The bid by the Elektrim-led consortium for a 25 per cent stake, worth $501m, in the Polish G-8 group, is under threat as one company has pulled out and another is on the verge of quitting.

Polskie Gornictwo Naftowe i Gazownictwo (PGNiG) withdrew from the consortium comprising Elektrim-Volt, PGNiG, Kulczyk Holding and PKN Orlen after the group raised its bid for the G-8 group of distribution companies. A further blow is PKN Orlen’s consideration to opt out.

The first bid offered from the initial five-strong consortium was $460m, but as the bidding war intensified a further $41m was added to brush aside rival bids. The consortium was awarded exclusive negotiating rights until November 19, which was recently extended to November 30.

Elektrim is considering bringing in foreign partners to help ease the cash flow problems. E.ON, Electrabel, Endesa and Electricité de France are said to be interested in G-8, and might see Elektrim’s problems as an ideal way of participating in the bidding.

The G-8 sale has not been without its problems. Earlier this year Iberdrola pulled out of negotiations for G-8 due to a dispute over workers’ rights. Unions wanted to see workforce levels at the distribution companies sustained after privatization.

The eight distribution companies account for 16 per cent of the nation’s combined distribution market.

Turkey pushes foward liberalization plan

Turkey is moving ever closer in its quest for liberalization by appointing members of a key board set up to carry out implementation plans that were outlined earlier this year.

Yusuf Gunray, senior minister, will head the board and Ali Turkoglu will deputise. The remaining five members include energy experts and academics from foreign trade and planning organizations.

The main flux of their roles will be to issue licences to private entities for new plants, transfer of operational rights, oversee the operation of licence holders, and set tariffs for wholesale electricity and gas prices.

The Turkish government is looking to raise $1.5bn through liberalization to fund its debt-laden treasury which recently said that it would provide ten-year guarantees for build-own-operate-transfer (BOOT) power projects to be completed by late next year.

Kemal Dervis, economy minister, notes that of the 29 BOOT projects which have an operational life of 20 years, he was only able to offer guarantees on half the plants’ life span. After ten years, the service will be offered on a ‘pay and use’ service by a state electricity trade company.

However, it is believed that only nine bidders have come forward for the 29 available projects. As an added sweetener, the state is offering bidders loans for at least four years to help finance the projects.

Bulgaria gears for privatization

Bulgaria is working towards the first steps of partial deregulation by implementing plans to privatize seven power distributing companies, 20 heating utilities and seven thermoelectric power plants by next year.

The council of ministers approved the plans last month. Nikolay Vasilev, deputy prime minister, says that part of the capital raised from the planned sell-offs will be used to lower the country’s national debt.

The sales are expected to generate a total of BGN748.5m ($338m). One asset which is not included in the privatization is Kozloduy, a nuclear power plant. The state has set aside its best assets and has made a list of companies which are still to play a part under the government’s control.

Assets likely to be sold are the thermoelectric plants Maritsa East three, Maritsa East two, Varna Bobovdol and Maritsa three.

AES invests in South Africa

AES has continued its strong-hold on the South African power market by acquiring Kelvin Power Station, a $23m, 600 MW coal-fired plant located just outside Johannesburg.

The Arlington, USA-based company has entered into a 20-year power purchase agreement for power offtake with City Power Johannesburg, a local distribution company.

AES has committed to invest $15m in repairs to modernize the plant with a new bag filtration system to make it one of the cleanest plants in South Africa. AES also plans to spend $11m on worker transition costs.

VA Tech awarded E330m contract

VA Tech has been awarded a €330m ($290m) contract to supply and construct a 770 MW combined cycle gas turbine plant 40 km from Turkey’s capital Ankara.

The plant is scheduled for completion by the end of 2003 and will be connected to Turkey’s main 380 kV transmission system linking power to the east, west, south west, and north west.

The financing of the project is to be split with VA Tech Hydro, which will supply the equipment, and Elin Elmak, a Turkish subsidiary of VA Tech, which will undertake construction of the power plant.

News digest

Eastern Europe: The European Bank for Reconstruction and Development will invest 6100m ($87.6m) to raise energy efficiency in central and eastern Europe through an investment with Dalkia, the energy service arm of Vivendi Environment. Dalkia will reduce energy consumption in buildings and facilities in the region.

Hungary: Fortum Engineering Ltd. and Budapest Power Plant Ltd. will build a gas fired combined cycle power plant in the Kispest area of Budapest. The plant will produce 120 MW of district heat for the southern part of the city and 110 MW of electricity to the grid.

Russia: The Russian Atomic Ministry has provided Iran with a feasibility study for the construction of a new VVER-1000 type nuclear power producing unit. Russian deputy atomic energy minister Yevgeny Reshetnikov said that work on the first power producing unit at Bushehr Nuclear Power plant was being completed.

Russia: A proposal to establish a new Federal Grid Company (FedGridCo) in Russia by January 2002 has received the full backing of the Supervisory Board of Unified Energy Systems (UES). The new company will be run as a 100 per cent owned subsidiary of UES.

Serbia: The Serbian utility Elektroprivreda Serbije will receive a $87.7m loan from the European Bank for Reconstruction and Development (EBRD) to improve the reliability and efficiency of electricity generation and distribution in the region.

Slovakia: A 43 per cent stake in three of Slovakia’s monopoly electricity distributors will be sold off as the government’s first major step in privatizing the state-owned energy sector. The companies will be sold by mid-2002 and industry sources have estimated that their total worth will be in the region of $300m.

Slovakia: The European Bank for Reconstruction and Development (EBRD) and the Slovakian government have approved a framework agreement for the decommissioning of the V-1 blocks at the Jaslovske Bohunice nuclear plant. The decommissioning of the plant will cost in the region of SKK15bn ($304.7m), of which EBRD will provide SKK6.56bn.

Tanzania: AES, CDC Capital Partners, The World Bank and the European Investment Bank are supplying funds to Songas Ltd. to build, own and operate a gas fired power plant in the Songo Songo Field which will supply Tanzania with a cost effective energy alternative.

UAE: A fully integrated electricity network is expected to be on-line in the UAE by 2003, preventing the power cuts that have recently plagued the area.

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