Wednesday, October 17, 2007

How will the sale of Singapore's Power Plants benefit Temasek?

How will the sale of Singapore's Power Plants benefit Temasek?

Who is the sale of Singapore’s Power Plants actually benefiting? CLP Holdings, the larger of Hong Kong's two power producers, is considering bidding for Singapore's three biggest utilities being sold by Temasek Holdings said Group Director Stefan Robertsson.

“Electricity is a growth industry in Asia, the industry dynamics are one of consolidation and privatization,” Robertsson said in an interview today in Singapore. “Given that we are interested in Asia-Pacific, it is an important opportunity for us.”

OneEnergy, a joint venture between CLP and Mitsubishi, is expanding in Asia to take advantage of rising demand for electricity. Last month, CLP said it plans to buy two coal-fired electricity projects in India.

Temasek, the Singapore government's investment company, announced in June it's reviving the plan to sell the island's three biggest generators after a six-year delay. The three utilities account for 90 percent of the island's electricity capacity. So far this year, $53.5 billion of acquisitions involving energy companies have been announced in Asia.

Singapore's economy grew for a 14th consecutive quarter in the three months ended June 30, the longest expansion since 1991, the trade ministry announced Oct. 10. Demand for electricity during peak periods will rise 53 percent to 8,390 megawatts in 2015, according to the Singapore Energy Market Authority.

CLP, the 106-year-old company controlled by the family of Chairman Michael Kadoorie, has expanded in countries including Australia and India to counter slowing growth in Hong Kong. CLP reported first half profit rose 23 percent to HK$6.13 billion ($791 million) after selling its stake in a Taiwan power plant.

Marubeni , Keppel and Sembcorp Industries plan to bid for the utilities that may be worth S$2.5 billion ($1.7 billion), three bankers with knowledge of the deal said July 23. Temasek aims to complete the sale of Tuas Power, Power Seraya and Power Senoko by early 2009.

General Electric , Tokyo Electric Power , Babcock & Brown , International Power Plc are also among likely bidders for Singapore's power generators.

By selling it’s Power Plants, how will Temasek benefit?