THE sub-prime crisis will not stymie the sale of the two remaining Singapore generating companies because
there is a flight to quality assets, Senoko Power president and CEO Roy Adair said this week.
This is obvious from the strong investment interest that culminated in last month's sale of Tuas Power,
he told BT on the sidelines of the Asia Power and Energy Congress here.
The $4.2 billion sale of Tuas Power to China's biggest power producer, China Huaneng Group, is an encouraging
first step as investment company Temasek Holdings moves to divest generating assets, Mr Adair said.
The Tuas Power sale was launched in October last year and took just five months to complete.
But industry sources have said that amid the global credit crunch, Temasek is likely to take a breather
before selling the island's other two generating units - Senoko Power and PowerSeraya.
Given its stated timeline of mid-2009 to divest generating assets, it can still complete all three
sales - barring macro shocks.
The keen interest in Singapore generating companies was underscored by Mark Takahashi, managing director
of One Energy - a joint venture between Hong Kong's CLP Holdings and Japan's Mitsubishi Corp - which reportedly bid for Tuas
Power, Singapore's smallest generating company with capacity of 2,670 megawatts (MW).
'We are always on the look out for good assets,' he told BT, when asked if One Energy will now try
for Senoko Power (3,300 MW) or PowerSeraya (3,100 MW).
Mr Adair and Mr Takahashi took part in a panel discussion on Wednesday on the challenges that face
the power industry.
Mr Adair said Tuas Power has always been a competitive player and China Huaneng's purchase will make
it even more so.
Tuas Power recently told BT it is considering lower-cost coal-firing to repower its steam plants. It
can tap the expertise of new owner Huaneng, which has huge experience with clean coal technology.
Mr Adair said the liberalisation of Singapore's generating market brings the right pressure to bear.
'There's a more commercial culture and costs and electricity prices are driven down as power players
are always looking for a competitive edge,' he said.
This has helped cushion Singapore consumers from oil prices that have quadrupled in the past four years.
Energy Market Company (EMC) figures show that despite an 18.7 per cent fuel price rise last year, average
electricity prices here dipped 6 per cent in 2007 after climbing for two consecutive years.
EMC chairman Tan Soo Kiang attributed this to efficiency gains and greater competition.
One Energy's Mr Takahashi said a short-term challenge is to build generating capacity to meet strong
electricity demand amid high fuel prices and construction costs and longer lead times.
Senoko Power's Mr Adair said that in the long term, environment issues will come into play and 'a lot
of decisions we are taking now already have to take into account carbon emissions'.
