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New joint venture formed to invest in Chongqing power project

Published by
World Coal,

Sembcorp Industries has formed a joint venture with Chongqing Energy Investment Group’s subsidiary to invest in a 1620 MW mine mouth coal-fired power project in Chongqing municipality, China.

Sembcorp’s wholly-owned subsidiary, Sembcorp (China) Holding Co., now holds 49% stake in the joint venture, ChongQing SongZao Sembcorp Electric Power. Chongqing Songzao Coal and Power LLC, a subsidiary of Chongqing Energy Investment Group, holds the remaining stake.

Approvals from the relevant Chinese authorities were obtained for the formation of the joint venture. Sembcorp has injected equity, amounting to around RMB 925 million for its stake in ChongQing SongZao Sembcorp Electric Power, and this amount is financed by internal funds.

ChongQing SongZao Sembcorp Electric Power operates an existing 300 MW coal-fired power plant and is currently building an adjacent 1320 MW coal-fired power plant in Qijiang District, Anwen Town. Construction of the plant, which will utilise supercritical technology and be one of the most efficient power plants in Chongqing, is over 50% completed. It is expected to commence commercial operation by 1Q17. The total investment value of the two power plants will be approximately RMB 6 billion, which is financed by a combination of equity and on-shore long-term financing.

The plants are the only mine-mouth coal-fired power plants in Chongqing.

According to Sembcorp, this strategic location of the plants in Chongqing is likely to entail significant savings in total cost for the delivered coal, enabling the joint venture to be a low cost power producer. It also enables the power plants to have a competitive edge especially with the impending reform of Chongqing’s power market, allowing power generation suppliers to retail electricity directly to qualified power consumers.

The joint venture is reported to strengthen Sembcorp’s energy business in China. The company now has 2757 MW of thermal and renewable power capacity in operation and under development.

Edited from press release by Harleigh Hobbs

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