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Huaneng Power gets local bank funding for buy

By Wan Zhihong (China Daily)
Updated: 2009-09-22 08:28

Huaneng Power International Inc, China's largest listed power producer, yesterday got a S$3.2 billion ($2.3 billion) bank loan to fund its acquisition of Tuas Power in Singapore.

Under an agreement signed yesterday, Huaneng will get S$2.8 billion ($2 billion) loan from Bank of China and S$400 million ($300 million) loan from China Construction Bank. The company will mainly use the money to pay for the loan it had borrowed from overseas banks for the deal last year.

Huaneng paid S$4.24 billion ($3 billion) to buy Singapore's Tuas Power Ltd in March 2008. It was Huaneng's first 100 percent stake purchase in an overseas company.

Huaneng bought the company from Singapore's Temasek. It made the deal from its wholly owned subsidiary in Singapore.

"Acquiring Tuas is an important step in Huaneng's overseas strategy," said Cao Peixi, chairman of the company, adding that with the help of domestic banks the company could better achieve its overseas development targets.

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Tuas Power is one of the three main power producers in Singapore. At present, the company's operating capacity is 2,670 mW, accounting for 26 percent of Singapore's total power capacity.

Tuas power produced 9.84 billion kWh of electricity last year, accounting for 24.27 percent of Singapore's total power output.

The sale of Tuas Power was the first step by Singapore to privatize its utilities sector. Temasek, Singapore's state-owned investment firm, also plans to sell the city-state's other two major power generators - PowerSeraya Ltd and Senoko Power Ltd.

In recent years, Huaneng has been paying increasing attention on overseas development, said Cao. By the end of last year, company's overseas business revenue accounted for over 6 percent of its total revenue.

In 2003, the company bought a 50 percent stake in OzGen Australia, which was also the company's first overseas deal.

Huaneng last month signed a memorandum of understanding with Duke Energy Corp, the third-largest US electricity utility to explore a variety of renewable and other clean-energy technologies.

Duke Chief Executive Jim Rogers said last Friday that the company had signed agreements with several Chinese companies to develop energy technology, including solar energy. Details of at least one of the agreements will be announced at the Clinton Global Initiative annual meeting in New York, Reuters reported.

Power output of Huaneng fell 5.84 percent in the first half of 2009 from a year earlier, on the back of weakening power demand amid the global economic downturn.

Huaneng Power produced 86.107 billion kWh of electricity in the first half, it said in its interim report.