SINGAPORE - Sembcorp Industries has formed a joint venture with a state-owned Chinese company to invest RMB925 million (S$202 million) in a power plant project in Chongqing.
Sembcorp's wholly-owned subsidiary, Sembcorp (China) Holding Co, holds 49 per cent in the joint venture, ChongQing SongZao Sembcorp Electric Power. The remaining stake is held by Chongqing Songzao Coal and Power, a subsidiary of Chongqing Energy Investment Group, which is owned by the city's municipal government.
Sembcorp said the joint venture strengthens its energy business in China. The company now has 2,757 megawatts of thermal and renewable power capacity in operation and under development.
Sembcorp's energy portfolio in China also includes a gas-fired power plant in Shanghai and wind power plants in Inner Mongolia and Hebei.
Sembcorp's investment in the joint venture was financed by internal funds, it added in a filing to the Singapore Exchange on Wednesday (Dec 30).
The joint venture company operates an existing 300-megawatt coal-fired power plant in the city and is currently building an adjacent 1,320-megawatt coal-fired power plant, with construction over 50 per cent completed. It is expected to commence commercial operation by the first quarter of 2017.
Sembcorp said the total investment value of the two power plants will be approximately RMB6 billion (S$1.3 billion), which will be financed by a combination of equity and on-shore long-term financing.
This transaction is not expected to have a material impact on the earnings per share and net asset value per share of Sembcorp for the current financial year.