India firm in driver's seat at Island Power

Its interest is shown in bids for Tuas and Senoko Power in '08
Ronnie Lim, Business Times 11 Feb 09;

INDIA'S GMR Infrastructure - the new 50 per cent shareholder of Intergen - is understood to be spearheading the international power group's push to restart its long-stalled $1 billion Island Power project on Jurong Island, sources said.

GMR's interest in having a Singapore presence was clearly reflected in its bids last year for Tuas Power and Senoko Power, two of the biggest generating companies here that were eventually sold by Temasek Holdings to China Huaneng Group and Lion Power, a Japanese/French consortium, respectively.

'Island Power is still actively reviewing various options for taking the development opportunity forward. We still believe the Island Power project has merit and is important to Singapore's energy future,' a spokesman for US-headquartered Intergen told BT yesterday when asked about the latest project status.

His statement clearly reiterates that Intergen - now backed by GMR - is still keen to try to move forward its 785-megawatt cogeneration project here, stalled since 2002.

BT understands that Island is still trying to negotiate a new gas supply deal, while awaiting a response to its appeal made last October to Singapore's Trade and Industry Ministry.

This was regarding the decision - which unfortunately came too late for Island - by electricity and gas regulator Energy Market Authority that it cannot have access to the gas pipeline network here unless it has a natural gas deal in hand.

It was a Catch-22, as Island saw its earlier agreement to buy 110 million standard cubic feet of gas daily from a Sumatran gasfield being cancelled by BPMigas, Indonesia's oil and gas regulator, following its inability to gain Singapore pipeline access due to legal wrangles involving the incumbent parties here.

Sources said that GMR is now 'taking the lead' in the Island project, after completing late last year its US$1.1 billion acquisition of a 50 per cent stake in Intergen from AIG Highstar Capital II.

The deal marked the largest-ever acquisition of a global energy utility by an Indian company.

Ontario Teachers Pension Plan owns the remaining half of Intergen, which has ownership interest in 12 power plants with a total net capacity of 12,766 megawatts.

GMR's leadership of the Island Power project also follows the resignation of Michael Reading, Island's former managing director, who has been involved with the project from the outset.

Island has since appointed a new project manager in Mark Iamonaco, a spokesman said.

The Island project has seen as many changes in its ownership as the numerous hurdles it has run into.

Malaysia's Sime Darby which had acquired a 50 per cent stake in Island Power itself in late-2003, withdrew from the delayed Island project in 2005.

When the Island project was first mooted, parent Intergen was originally owned by Shell and the Bechtel Group.

But they eventually sold out to the partnership of Ontario Teachers Pension Fund and US private equity fund AIG, with the latter recently selling its stake to GMR.