Cablegate: Singapore to Divest Power Companies by Early 2009

VZCZCXRO1815
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHGP #1583 2400917
ZNR UUUUU ZZH
R 280917Z AUG 07
FM AMEMBASSY SINGAPORE
TO RUEHC/SECSTATE WASHDC 3869
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMCSUU/DEPT OF ENERGY WASHINGTON DC

UNCLAS SINGAPORE 001583

SIPDIS

STATE PASS USTR FOR AUSTR WEISEL AND DAUSTR BELL
COMMERCE FOR JBAKER

SIPDIS

E.O. 12958: N/A
TAGS: ENRG EPET EINV ETRD EFIN ECON SN
SUBJECT: SINGAPORE TO DIVEST POWER COMPANIES BY EARLY 2009

REF: SINGAPORE 1167

1. (U) The Government of Singapore recently announced plans to sell

all three of its wholly owned power generation companies (gencos) by

2009. Temasek Holdings, the government's investment arm, cited a
favorable market as the driving force behind the move. Temasek has

been planning to divest the gencos - Tuas Power, Senoko Power, and
PowerSeraya - for nearly a decade. However, sub-optimal local
conditions as well as the 2001 Enron debacle delayed its plan.

2. (U) The three gencos together supply approximately 80 percent of

Singapore's energy. Two other government-linked companies (GLC),
SembCorp Cogen and Keppel Merlimau Cogen, supply the remainder. The

five firms currently provide capacity that far exceeds Singapore's
current demand. However, construction of new petrochemical
refineries
and multi-billion dollar casinos, coupled with predictions of steady

economic growth in Singapore, are fueling interest in the power
generation business. A U.S. genco, Intergen, is also trying to
enter
the market by building a new gas-fired power plant (reftel). That
project has been delayed for several years due to a dispute with two

other GLCs, Power Gas and Gas Supply, over gas pipeline access.

3. (U) According to press reports, a number of foreign companies
from
Japan, China, Malaysia, and the United States have expressed
interest
in the gencos, each of which is worth about S$2 billion (US$1.3
billion). Local players, including the two other gencos, are also
likely to join the bidding. The sale of the state-owned gencos
represents another step forward for Singapore's energy
liberalization
process, which has included lifting caps on foreign ownership
(2000),
breaking up the country's former monopoly, Singapore Power, to form

the three gencos now up for sale (2001), and passing the Amended Gas

Act (2007).

HERBOLD

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