Sembcorp signs JV agreement for Chinese power project

Sembcorp Industries has formed a joint venture with Chongqing Energy Investment Group’s subsidiary to invest in a mine-mouth 1,620-megawatt 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. Owned by the Chongqing Municipal Government, Chongqing Energy Investment Group is the largest energy production and supply group in Chongqing.

Approvals from the relevant Chinese authorities were obtained for the formation of the joint venture. Sembcorp has injected equity, amounting to around RMB925 million (US$140 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-megawatt coal-fired power plant and is currently building an adjacent 1,320-megawatt 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 first quarter 2017. The total investment value of the two power plants will be approximately RMB 6 billion (approximately S$912 million), which is financed by a combination of equity and on-shore long-term financing.