Monday, January 24, 2011

Q1 '11 date set for building Island Power's new station

Q1 '11 date set for building Island Power's new station
 

CONSTRUCTION of the long-delayed $1.2 billion Island Power project here will start in the first quarter of next year, India's GMR Infrastructure announced yesterday, following its signing of an EPC (engineering, procurement and construction) deal with a Siemens/Samsung consortium.

This makes it the third generating company, after Keppel Corp and Sembcorp, to announce new investments on Jurong Island in as many weeks.

Island's 800-megawatt station, when up and running in 2013, will mark the entry of the first new power player in years. It also gives India's GMR Group a long-awaited foothold in the Singapore market, after its earlier unsuccessful bids to buy one of the big gencos here now owned by other foreign players like China Huaneng and Malaysia's YTL Corporation.

The rash of power/utilities expansion here comes ahead of a scheduled Sept 15 deadline when all the gencos here will finalise their liquefied natural gas (LNG) purchases with appointed aggregator BG Group.

That is also when they are supposed to commit to their new 'planting' with regulator Energy Market Authority (EMA), to qualify for 'vesting contracts' which essentially guarantee them a share of the electricity market here. This was a 'carrot' dangled by EMA - which took over the $1.5 billion LNG terminal project here - to get the gencos to commit to LNG feedstock supplies.

Island Power did not specify the value of its EPC contract with Siemens/Samsung, but previous indications put it at around $850 million. With the EPC finalised, Island Power will now proceed with securing financing for the plant.

Ng Quek Peng, GMR Infrastructure's Asean head, said: 'We have initiated discussions with both local and international banks, and there is strong interest in the project. We expect to secure our financing by December.'

Construction will then start by the end of Q1 next year, with the 800MW station ready by 2013, when the first LNG shipments come in.

The Island project - delayed for eight years by earlier gas pipeline transportation issues - will sign up with BG Group for its entire feedstock requirements, which is about 100 million BTU of regasified LNG daily, Mr Ng told BT.

'We have over three years to sort out custom for the plant,' he added, when asked if it had signed up any direct customers yet. Island will supply just electricity, and not other utilities like steam and cooling water.

Still, with so much planned new planting - the 800MW Island Power (at Seraya sector), Sembcorp (with an announced 400MW expansion at Tembusu) and KepCorp (with plans for another 900MW at Tembusu) - market competition is going to get intense.

This doesn't include expansion also by the three biggest gencos here.

'Repowering' of older oil-firing plants into new, more efficient, gas-firing cogeneration units has been completed at PowerSeraya (giving it 1,500MW of cogen capacity to also supply steam) while Senoko Energy is currently building 860MW of new combined- cycle plants.

Tuas Power has also started building its $2 billion clean coal/biomass plant to supply multi-utilities at Tembusu sector - with Germany's Lanxess butyl rubber plant being its first customer.

With the electricity market here growing just about 4 per cent annually, some industry observers are questioning if there is too much supply chasing demand, and whether all the planned projects will eventually get off the ground. On Jurong Island itself, there are apparently also technical constraints regarding the amount of new capacity that can be supported by the present power grid's 'fault levels'.

Still, for the smaller gencos here like Sembcorp, for instance, the expansion is critical if they are to compete with the big boys. Sembcorp CEO Tang Kin Fei, however, earlier stressed that it would only do so if it had secured custom - hence its announcement last week to build an $800 million power/ steam utilities expansion, after it clinched a 20-year utilities supply deal from Jurong Aromatics Corporation.

No comments:

Post a Comment