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Cablegate: Island Power's Continuing Pipeline Access Woes

VZCZCXRO0728
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHGP #1669 2500905
ZNR UUUUU ZZH
R 070905Z SEP 07
FM AMEMBASSY SINGAPORE
TO RUEHC/SECSTATE WASHDC 3955
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SINGAPORE 001669

SIPDIS

SENSITIVE
SIPDIS

STATE PASS TO USTR FOR AUSTR WEISEL AND DAUSTR BELL

E.O. 12958: N/A
TAGS: ENRG EPET EINV ETRD ECON SN
SUBJECT: ISLAND POWER'S CONTINUING PIPELINE ACCESS WOES

REF: A. SINGAPORE 1583

B. SINGAPORE 1167
C. SINGAPORE 996

1. (SBU) Summary: Island Power, the local subsidiary of U.S.
company Intergen, is increasingly pessimistic that it will
gain full access to Singapore's electricity market. Although
Singapore's amended Gas Act to liberalize the energy sector
took effect in June, Island Power finds itself squeezed
between bureaucratic foot dragging in Singapore and a
beleaguered gas supply contract in Indonesia (ref B). End
summary.

2. (SBU) Singapore's Energy Market Authority (EMA) is still
reviewing Island Power's recently submitted application for
pipeline access, but the process is a "pedantic nightmare
with no end in sight," according to a company representative.
He told us that EMA is "doing all the right things" under
the amended Gas Act, but at a "glacial pace." He attributes
the problem to EMA's lack of experience with this process and
its perceived need to proceed with utmost caution.

Indonesian Gas Contract Not Dead -- Yet
---------------------------------------

3. (SBU) Despite recent press reports to the contrary,
Island Power's gas supply contract with Indonesia is still
valid, according to the representative. However, the
situation is "extremely serious" and the GOI is becoming more
aggressive in its insistence that Island Power complete the
pipeline access agreement soon. If Indonesia formally
cancels the contract, Island Power's application with EMA
will be void. The likely result is that the company will
lose all of the US$70 million it has invested in the power
station project so far, he stated.

Other Access Barriers
---------------------

4. (SBU) The managing director of a Singapore
government-linked power company recently told us that Island
Power stood a slim chance of gaining access to the pipeline,
regardless of EMA's decision. Even if the application is
approved, other industry players involved will "utilize every
option at their disposals to foil Island Power's plans," he
claimed.

Visit Embassy Singapore's Classified website:
http://www.state.sgov.gov/p/eap/singapore/ind ex.cfm
HERBOLD

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