Reliance Energy, GMR only Indian cos on Singapore’s Tuas shortlist
The Anil Ambani-controlled Reliance Energy and the infrastructure major GMR Infrastructure are the only Indian firms shortlisted for buying the $2 billion Tuas Power, owned by Singapore’s state investor Temasek Holdings.
By TNN |
MUMBAI: The Anil Ambani-controlled Reliance Energy and the infrastructure major GMR Infrastructure are the only Indian firms shortlisted for buying the $2 billion Tuas Power, owned by Singapore’s state investor Temasek Holdings.
Three local companies, including Tata Power, had submitted non-binding bids in December 2007. Temasek plans to complete the bid by June 2009.
Japan’s Marubeni, Mitsubishi Corporation, Hong Kong Electric, Reliance Energy, a joint venture (JV) of Macquarie Bank and GMR, Malaysia’s Tanjong, Huaneng Power International, Hong Kong’s CLP Holdings, and a JV of Bahrain-based investment bank Arcapita and Spain’s Union Fenosa are believed to be shortlisted for the final bid, the Singapore media reported on Monday.
Cash-rich Indian power companies have joined their colleagues in manufacturing and services in bidding for overseas assets. Tuas has 2,700 mega watt generation capacity, 1,500 mw from a gas-fired combined cycle project and 1,200 mw from oil fired steam turbine project. It also has an electricity distribution arm under its fold. It reported net profit of $125 million during FY07 on sales of $1.6 billion.
In recent years, Singapore has reformed its power generation by breaking up the former monopoly of state-run companies into several companies active in power generation, transmission and distribution.
ADVERTISEMENT
Despite the reforms, analysts said that Singapore might not be as lucrative for power firms as fast-growing China, which is growing 15% annually. But China is a harder power market for foreign firms to enter, which makes Temasek’s assets an attractive way for an Asian utility to expand into new geographies. Singapore is a mature market with electricity demand growth of about 5-6%. The country offers stable returns, thanks to the transparent regulatory environment, said industry sources. REL, which nurtures overseas ambitions, is bidding for an international project after its unsuccessful bid for British power firm Globeleq.
Now, the company through its subsidiary Reliance Power plans to build 1,200 mw green-field power generation plant in Bahrain. It is also eyeing projects in Africa and Saudi Arabia. GMR, which had unsuccessfully bid for Globeleq’s Asian and Egyptian assets, is now bidding for four international power projects with a combined capacity of 952 mega watt in Nepal.
GMR Infrastructure had teamed up with Australia’s Macquarie Group and Kuwait’s sovereign wealth fund to bid for the power company. As many as 30 companies and funds had expressed interest in buying Tuas. Singapore’s state-run conglomerates, Keppel Corporation and Sembcorp Industries, were expected to bid, but both did not take part in the bidding.
ADVERTISEMENT
The sale of Tuas will be the first of three power-generating companies owned by Temasek. The other two power firms that Temasek hopes to divest are PowerSeraya and Senoko. They have capacities of 3,100 mw and 3,300 mw, respectively, but their plants are older and believed to be less efficient, a committee appointed by the Singapore government said last year. Temasek has said the sales of the two older plants will follow the disposal of Tuas, wrapping up a privatisation that has been repeatedly delayed for about six years. Analysts say the three plants are likely to go to different bidders since they account for almost all of Singapore’s power.
Start a SIP with as low as ₹500 with ET Money App!
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
