Chinese power project
Copyright in picture owned by ALSTOM
Summary
The
Laibin B project is a 2 x 360MW coal fired power station located adjacent
to the existing Laibin A coal fired 2 x 125MW power plant, close to the Hongshui
Nigel Hawke was closely involved in the development of the financial model, the term sheet for the finance facilities, the negotiation of the financing documentation and underlying contracts. This included the negotiations with the Chinese authorities, including drafting certain sections in the project documentation, since adopted as standard models in China. Nigel led the successful syndication presentations for ALSTOM in Hong Kong.
Detail
In 1995 the Chinese government wished to achieve the following objectives:
Under
China's Ninth
Five-Year Plan (1996-2000), the government aimed to boost the country's power
generation capacity at the rate of 15,000 MW to 20,000 MW annually by the year
2000. Since
China's public
external debt balance already exceeded $80 billion, the government decided to
allow foreigners a greater role than before.
The new BOT (Build Operate Transfer) Law was being developed to allow
foreigners to take a 100% ownership in PRC power projects.
Previously a Chinese joint venture partner was always required. Guangxi
Zhuang autonomous region was chosen as the test province for the first project
developed under the WFOE (Wholly Foreign Owned Enterprise) regulations. At
that time Guangxi had an installed capacity of 5,023MW, hydro 61%, fossil fuel
39%, with a power shortage of 450MW during the dry season and 320MW during the
rainy season. The
9th Development Plan of Guangxi Government forecast 13.2% annual growth in
electricity demand to year 2000 with power shortage by year 2000 forecast to be
at least 1,400MW. In
1994 total power consumption was 18,830 GWh consumed 75.8% by industry,
agriculture 4.3%, service sector 4.7% and residential 15.2%. In
1995, Guangxi Province had a population of 45 million (3.8% of the PRC total)
and a GDP of Rmb 160.6 billion (USD 18.6 billion) and ranked 15 out of 30
provinces with GDP growing at 16.7% p.a. over the previous five years.
It has 101 different mineral deposits, mainly metallurgical, with heavy
industry accounting for 55% of the USD 3.21 billion trade surplus (1995) and
light textiles 35%. In
year 2000, there were 2000 foreign enterprises in Guangxi province. The
Laibin B project was to be a 2 x 360MW coal fired power station located in
Laibin County of Guangxi Province, adjacent
to the existing Laibin A coal fired 2 x 125MW power plant, and close to the Hongshui
River.
Guangxi Power Bureau main grid then had 834km of 500kv line and 2,559km
of 220kv line with plans to connect Laibin B to the 220kv grid. The
BOT scheme entailed the granting of a concession by Guangxi Government (the
concession granter) to a company (the concession holder) to design, construct
and finance the project built at the concession holder's expense and to operate
it for a period of 15 years under the terms of a Concession Agreement, selling
electrical power generated to Guangxi Power Bureau under the terms of a Power
Purchase Agreement. Guangxi
authorities also undertook to provide coal, by rail from two separate mines,
under the terms of a Fuel Supply Agreement. After the operation period of 15
years the plant reverts to Guangxi Government ownership for nil consideration
and debt free. In
this way Guangxi Government raised the finance for the power station without
using government borrowing. It pays for the electrical power produced
during the operation period at a pre-agreed tariff, the terms of which were
proposed by bidders and formed one of the principal competitive elements of the
bid. In
September 1995 Guangxi Government invited pre-qualifications and received over
30 proposals. In December the Call
for Tenders was launched and six bids were submitted in May 1996. Nigel
Hawke led the financing aspects of the bid submission for GEC ALSTHOM. A
very efficient evaluation process by the Chinese authorities resulted in the
choice of the EDF/GEC ALSTHOM consortium as preferred bidder, confirmed in July
1996. Following negotiation of the
Concession Agreement in Beijing and
Nanning,
Guangxi Province
capital
city, which required also the close involvement of the lead arranging banks, Bid
Award was made in November 1996. The investment company, FIGLEC (French Investment Guangxi Laibin Electric Power Company), was created to finance the project. Finance was obtained from a mix of Export Credit facilities backed by COFACE and commercial loans supporting equity injected by the sponsors. Financial close was achieved once the full contractual nexus for the project could be developed with detailed risk allocation negotiated and agreed by September 1997 with lead arrangers HSBC, Barclays and Credit Agricole Indosuez. Full
syndication to international banks was launched in January 1988.
Nigel Hawke led the syndication presentations for GEC ALSTHOM and was
closely involved in syndication close. Construction
started in September 1997 with full commissioning completed at the end of year
2000. Project Company French
Investment Guangxi Laibin Electric Power Co (FIGLEC) Owned 100% by EDF group since January 2004. Turnover in 2003 was US$ 185m with 14 employees. In March 2005 Thompson Deals reported that EDF had arranged a local refinancing of the project debt of US$ 616m described above in the sum of US$ 350m for a 10 year tenor. Lenders are said to be Bank of China and ICBC. Financial close was targeted for August 2005. © Copyright Talanworth Limited 2003 - 2011 |
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