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Sunday, 17 February 2019

Sembcorp Industries

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The PFI Citation for outstanding private-sector developer is given to Sembcorp Industries of Singapore in recognition of the many successful biddings it has won and its successful development of infrastructure projects in the country, in the region, and elsewhere. By Minerva Lau.

To see the full digital edition of the PFI Asia Best Practice Report 2014, please click here.

To purchase printed copies or a PDF of this report, please email gloria.balbastro@thomsonreuters.com

Sembcorp Industries is a Singapore listed company that is 49.5% owned by Temasek Holdings , the country’s sovereign wealth fund. The remaining 50.5% is held by the public. It registered a turnover of S$10.8bn (about US$8.6bn) during fiscal year 2013, and net profit was a handsome S$820.4m (about US$653m). For the first quarter of this year, the company announced a 4.5% increase in earnings over the same period of last year and net profit was S$184.8m.

Sembcorp Industries holds a 60% stake in Sembcorp Marine, but is a 100% shareholder of Sembcorp Utilities and Sembcorp Development. The company is led by Group President and CEO Tang Kin Fei who has been with the group for more than 25 years. The company is a leading energy, water and marine group and has operations  across six continents. It boasts facilities of more than 7,200MW of gross power capacity as well as more than 8m cubic metres of water per day in operation and under development.

Sembcorp prides itself as being a trusted provider of essential energy and water solutions to both industrial and municipal customers. It is also a world leader in marine and offshore engineering, as well as an established brand name in urban development. “Meeting the world’s growing needs” is its tagline. And indeed, it does seem to do so.

Its entry into the power generation industry started in 2001 with the development of the 815MW Sembcorp Cogen merchant plant. This was recently expanded with another 400MW of capacity to a total 1,215MW. The additional capacity is expected to be ready for operation by the middle of this year.

Soon after, it got busy in Vietnam as it was one of the sponsors developing the 746MW combined cycle Phu My 3 power project, putting the financing in place. Phu My 3 was one of the IPPs in the first round of IPP development in the country. Then the company looked to the Middle East and joined in the bidding for a few infrastructure projects. 

Its latest win, together with ADWEA , is the F1 independent water and project project (IWPP) in Abu Dhabi. They have appointed SMBC as financial adviser, whose work involves working on consolidating the existing power and water purchase agreement (PWPA) for the new reverse osmosis (RO) expansion scheme into the existing PWPA for the IWPP and working on a refinancing plan for the entire project in 2015. The scheme was bought and financed in 2006 by Sembcorp using a US$1.275bn 22-year loan led by Barclays SG and Standard Chartered.

The Singapore conglomerate owns and operates the US$1bn Salalah Power & Water, a 445MW and 15 mgpd project that was financed in late 2009. Sembcorp and Oman Investment Corp were lead sponsors.

In the UK, the company partnered with Sita and Itochu to develop the Merseyside waste private finance initiative (PFI) style scheme. It involves sending Mersey waste across the country by train to Teesside to Sita’s existing energy from waste (EfW) sites, which already serve the South Tyne & Wear and Northumberland PFI waste contracts.

It has the Sembtol, Teesside Wilton industrial estate utility business. The power and steam from the plant, one of the largest biomass developments in the UK, will be supplied to Sembtol’s industrial customers at Wilton. On the renewable side of the deal the company has entered into a 12-year renewable obligation certificate (ROC) sale with E.ON, which is providing a floor price on the ROCs and is covering change of law risk.

Sembcorp is big in China. It operates in 24 locations in 10 provincial regions. Its operations there largely involve coal-fired power plants and renewables with a total capacity of 987MW for power. It also has 10 water plants there  – industrial water supply, industrial waste water treatment and reclaimed water plants – with a total capacity of 154,980 m3/day.

India is the latest market the company is looking at. It recently acquired from Nagarjuna Construction Co (NCC) a 45% stake in a 1,320MW coal-fired power plant in Krishnapatnam in Andhra Pradesh, for Rs8.48bn (US$135m). NCC Infrastructure is jointly owned by NCC and Gayatri Energy Ventures . Sembcorp is already a partner with Gayatri in Thermal Powertech Corporation India , which is developing a similar 1,320MW plant in Krishnapatnam.

Back in Singapore, Sembcorp won in 2008 the bid to design, build, own and operate Changi Newater for 25 years. This is Singapore’s fourth and largest Newater plant – it started with a 15mgpd capacity in 2009 and then ramped up to 50 mgpd capacity in 2010.  It is currently one of five bidders to develop a new bigger 227,100m3/d (60 mgd) Changi Newater II PPP project.  The country’s Public Utility Board is evaluating the proposals and a winner is expected to be announced in June.

And the rest of the pipeline looks good. In addition to the Sembcorp Cogen expansion, there are water treatment plants in a few locations in China, Fujairah 1 desalination expansion, Huanghua wind power expansion, NCC Power Projects, as well as an energy from waste facility in Singapore itself.

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