Energy officials in talks with gencos' new owners

Ronnie Lim, Business Times 10 Mar 09;

WITH the divestment of Singapore's three power generating companies (gencos) having been officially wrapped up by Temasek Holdings, senior energy officials led by a minister have begun visiting the new foreign owners of the power plants.

Familiarisation visits kicked off last week, when a team led by Senior Minister of State for Trade and Industry S Iswaran and new Energy Market Authority (EMA) chief executive Lawrence Wong met China Huaneng, which bought Tuas Power for $4.23 billion in March last year.

Tuas Power - the smallest of the island's three gencos but with the newest plant - was the first to be divested.

Next up for the visit, apparently, is Senoko Power - the biggest genco but with the oldest plant - which was sold to Japanese/ French Lion Power consortium for $4 billion in September last year. Senoko is in the midst of spending $750 million to convert three oil-fired plants into two more efficient gas-fired units.

The third and final genco divested is PowerSeraya, sold for $3.8 billion to Malaysia's YTL Group in a deal officially completed last Friday.

Upcoming issues in Singapore's electricity and gas markets include a proposed interim measure to help smaller consumers benefit from competition ahead of full opening up of the electricity market; and the import of liquefied natural gas (LNG) to boost energy security by supplementing current piped gas supplies from Malaysia and Indonesia.

Sources said these issues are expected to figure in talks with the new genco owners.

Currently, bigger industrial and commercial customers - who account for three quarters of the electricity market here - can choose which retailer they want to buy from and at what price. Other users, including some 1.2 million small consumers, have so far been unable to do so.

Full retail contestability - pilot trials are now going on - is expected to take another three years to implement. So EMA is proposing as an interim measure that gencos bid for part of the domestic electricity load on a competitive basis.

This is understood to have cropped up in talks with Tuas Power, given that EMA expects to complete a detailed study of the proposal by year-end and to implement the idea next year.

On LNG, BT has previously reported that construction of Singapore's $1 billion terminal is expected to start by mid-year, with the project expected to come on stream around mid to late-2012. Meanwhile, the LNG aggregator, BG Group, has been trying to firm up LNG purchases by gencos here.

The LNG plan is especially attractive to Senoko's owner Lion Power, as many of its consortium partners are involved in LNG either as buyers or traders, with France's GDF Suez also having a 30 per cent stake in the Singapore LNG terminal.

Apart from being a major user of the LNG terminal, Lion Power also plans to go into LNG trading here once BG's local monopoly on LNG imports expires.