Sembcorp Industries: Investing in Bangladesh to meet growing power demand

Sembcorp Industries: Investing in Bangladesh to meet growing power demand

SINGAPORE — Sembcorp Industries, Singapore’s state-linked infrastructure firm, is increasing its foothold as a major power generation player in emerging Asia. The company announced on Sept. 28 that it has clinched a deal to develop and operate a power plant in Bangladesh, following its recent forays into India and Myanmar.

     The latest deal is to develop a 426-megawatt plant powered by natural gas in Bangladesh’s Sirajganj district, 110km northwest of Dhaka. It is to be an energy efficient “combined cycle” power plant, which uses a gas and a steam turbine together. Sembcorp already runs such plants in Singapore and Vietnam.

     Slated to be operational in 2018, the project is Bangladesh’s first public-private partnership. Sembcorp will hold 71% of the joint venture company and will build, own and operate the plant, while the Bangladesh government’s power generation arm will hold the remaining shares. The total development cost is about $390 million, of which Sembcorp is to invest $68 million in equity from internal funds and borrowings.

     Power demand in Bangladesh is increasing along with economic growth. As the government plans to add 10 gigawatts of power generation capacity over the coming decade, Sembcorp sees “immense opportunities” in the market.

     The Bangladesh deal is part of Semcorp’s wider expansion of its power business in emerging markets. In mid-September, the company’s first power plant in India began full commercial operations. The coal-fired plant in the southern state of Andhra Pradesh has total capacity of 1320 MW. Construction of another coal-fired plant of the same capacity is underway, to be completed in 2016.

     In April, Sembcorp was awarded a deal by Myanmar’s government-owned power company to develop and operate the country’s largest gas-fired independent power plant, with 225 MW capacity.

     Sembcorp’s utility business, made up of power generation, water treatment and waste management, is its biggest profit generator, representing 49% of the company’s net profit of 801 million Singapore dollars ($560 million) in the 2014 fiscal year. The other core businesses are offshore rig construction and industrial park development.

     Emerging markets, with their growing demand for energy, are prime targets for Sembcorp’s expansion. The company, in which Singapore sovereign wealth fund Temasek Holdings owns a 49.5% stake, already operates power plants in China, Oman and the United Arab Emirates.

     Meanwhile, Aboitiz Power of Philippines has joined two renewable energy projects in Indonesia. It has teamed up with Norway’s SN Power and Indonesia’s Energi Infranusantara on a planned 127 MW hydropower project along the Lariang River in Central Sulawesi, Aboitiz Power announced on Tuesday. A week earlier, its Singaporean unit, Aboitiz Power International, said it had partnered with Medco Power Indonesia to look into building a 110 MW geothermal plant in East Java.

     Aboitiz Power’s investment in Indonesia follows Indonesian President Joko Widodo’s bid to add total power capacity of 35,000 MW by 2019 in the country. Erramon Aboitiz, chief executive of Aboitiz Power, said Indonesia’s prospects were similar to those of the Philippines, where a growing population has boosted demand for electricity.

Sembcorp Industries: Investing in Bangladesh to meet growing power demand