Russia’s HydroOGK eyes hydro joint ventures

Russian hydropower utility HydroOGK is talking to a dozen foreign and Russian firms about joint plans to build mid-sized hydropower stations. Deputy Chief Executive Vasily Zubakin said HydroOGK hopes to sign its first joint venture deal this year. Zubakin told an April 5 industry conference his firm would control at least 51 percent of joint ventures. In 2006, Austrian utility Verbund and HydroOGK agreed to evaluate possible projects in a joint working group. HydroOGK also said it hired Merrill Lynch and two Russian banks, IFK Metropol and KIT Finance, to advise it on consolidation. HydroOGK is being spun off from power monopoly Unified Energy Systems (UES). As HydroOGK will group together numerous stations and assets belonging to UES and its affiliates, the new giant firm will need to go through a complicated consolidation process. HydroOGK will become the world’s second largest hydropower generation company, after Canada’s Hydro-Québec, with more than 50 hydro stations totaling 23,300 mw.

Brazil finances first hydro in growth program

Brazil’s development bank completed 570.2 million reais (US$277 million) in financing for the 243.2-mw Sao Salvador project, the first hydroelectric project to be financed under Brazil’s new Growth Acceleration Program (PAC). President Demian Fiocca of Banco Nacional de Desenvolvimento Economico e Social (BNDES) and Chairman Mauricio Bahr of Suez Energy Brazil, the project owner, signed the financing agreement in March. “This is one of the projects that will strengthen the energy supply in Brazil and the first one ever approved under the new interest rate conditions, which have been reduced for the second time within two years,” Fiocca said. BNDES said it expects PAC to include 41 other hydroelectric projects totaling 24,600 mw in the next two years. Sao Salvador already is under construction, on the Tocantins River in Tocantins State, and could be completed by 2010.

China sees early completion of Three Gorges

China’s 18,200-mw Three Gorges Dam is expected to be completed by the end of 2008, a year ahead of schedule, state media reported. Three to four generators are due to start operation this year, the state-owned Xinhua news service reported March 23. The initial project has a total capacity of 18,200 mw. Additionally, the developer plans to boost capacity to 22,400 mw by adding another six, underground, generators. China Three Gorges Project Corp., operator of the project, invested 131.3 billion renminbi (US$17 billion) by the end of 2006 and would keep the total cost within 180 billion (US$23 billion), Xinhua said, lower than the earlier reported US$25 billion.

Nile Basin states form water use commission

African countries in the Nile Basin agreed to set up a commission governing the river’s use, although a few sticking points remain. The 6,695-kilometer river has been a source of conflict for decades between the impoverished nations in its catchment area and Egypt, for which it is a lifeline. “We will be establishing a commission which will be able to regulate the use of the waters of the Nile,” Kenyan Water Minister Mutua Katuku said. “If you are doing a major project within the Nile, you must inform the partners and if anyone has any problem with the project you want to initiate, they can raise it with the commission, then the issue will be resolved.” The commission is to replace the Nile Basin Initiative formed in 1999 by Burundi, Democratic Republic of Congo, Egypt, Ethiopia, Kenya, Rwanda, Sudan, Tanzania, Uganda, and Eritrea.

Europe, World banks launch Europe carbon fund

The European Investment Bank and the World Bank jointly initiated a carbon fund to help European countries meet commitments under the Kyoto Protocol to cut greenhouse gas emissions. The Carbon Fund for Europe (CFE) will be worth 50 million euros (US$66.42 million) with contributions from Ireland, Luxembourg, Portugal, Belgium’s Flemish region, and a single private company participant, Norway’s Statkraft Carbon Invest AS. The fund will buy carbon credits from projects, including some hydropower, that reduce greenhouse gas emissions under Kyoto’s Clean Development Mechanism, for carbon-displacing projects in developing countries, and Joint Implementation program, for projects in developed nations.

New EIS seen for Chile’s 600-mw Rio Cuervo

Energia Austral, a Chilean unit of Swiss miner Xstrata, says it will resubmit an environmental impact study (EIS) to Chilean authorities who rejected the initial EIS for the 600-mw Rio Cuervo hydroelectric project. Energia Austral’s first EIS for the US$600 million project, submitted in January, was rejected by Chile’s Region XI environmental regulator, Corema, as “lacking relevant and essential information.” The company said April 17 it plans to resubmit the revised study as soon as possible. “Energia Austral once again reaffirms its commitment to the Rio Cuervo project as it is convinced it can become a relevant part of the solution Chile needs in terms of its long-term energy requirements,” it said. Xstrata inherited the Rio Cuervo project when it bought Canadian miner Falconbridge in 2006. It hopes to bring it on line in 2012 on the Cuervo River. Corema President Viviana Betancourt said regional agencies found that essential information for evaluating the EIS was not included in the filing. Environmental groups have filed objections to Rio Cuervo with Chile’s national environment commission, Conama.

Pakistan advances Basha, Akhori

Pakistan’s water and power minister directed the Water and Power Development Authority (WAPDA) to take steps to advance development of the 4,500-mw Basha and 600-mw Akhori hydroelectric projects. In a high-level meeting of water and energy officials in March, Minister Liaquat Ali Jatoi directed WAPDA to complete engineering design and a comparative detailed activity cost estimate of the Basha Dam project for submission to the ministry for review. The officials decided to establish an independent environmental assessment and resettlement unit for Basha, on the Indus River. Project executives said the project is on schedule. Officials also said area provinces made observations and recommendations about 600-MW Akhori, on the Nandna Kas River, based on Akhori’s final feasibility report. Jatoi directed WAPDA to convene meetings to sort out suggestions, issues, and reservations raised by the provinces so detailed engineering design can begin.

South Africa’s Braamhoek becomes Ingula

South Africa utility Eskom Holdings Ltd. renamed four power projects March 20, including the 1,333-mw Braamhoek pumped-storage project, indicating the plants have progressed sufficiently and received required authorizations. Braamhoek, which has been in the process of development tendering, was referred to formally by Eskom under the “code name” Project Hotel. Eskom declared its new name to be the Ingula power station. “The name Ingula alludes to the creamy contents at the top of the milk calabash” or gourd, an Eskom statement said. Project Hotel and three thermal projects were changed from code names to names that reflect the cultural heritage of the project areas. Ingula is under construction in the Little Drakensberg Mountains northeast of Van Reenen.

India’s NHPC plans initial public offering

India’s state-run National Hydroelectric Power Corp. (NHPC) plans to sell 13.6 percent of the company in an initial public offering (IPO) to raise up to 25 billion rupees (US$580 million), a banker to the deal said April 5. Once completed, the IPO would value NHPC at about US$4.25 billion, making it the second most valuable utility behind another state-run power developer, NTPC Ltd. Enam Financial Consultants, Kotak Mahindra Capital Co., and SBI Capital Markets are the managers to the offer. NHPC has 11 completed hydro projects of 3,755 mw, 13 under construction of 5,712 mw, 12 in development or investigation totaling 16,400 mw, as well as other joint venture and turnkey projects. The offer is aimed at raising between 22 billion and 25 billion rupees (US$510 million and US$580 million), the banker said. The offer document said the funds would finance six planned hydro projects totaling 3,080 mw.

Brazil approves studies of 6,880-mw Madeira

Brazil’s energy regulator approved feasibility studies for two major hydroelectric projects totaling 6,880 mw on Brazil’s Madeira River. Agencia Nacional de Energia Eletrica (ANEEL) published approvals in Brazil’s official gazette for the 3,580-mw Santo Antonio and 3,300-mw Jirau projects. The studies by utility Furnas Centrais Eletricas and builder Norberto Odebrecht help establish the value of the projects and the form of their integration into the transmission system. Brazil Mines and Energy Minister Silas Rondeau said a build-operate concession auction for Santo Antonio was expected in July. Santo Antonio’s sister project, 3,300-mw Jirau, could be offered at the end of 2007 or in early 2008. However, the auctions could be hindered by an environmental lawsuit filed in March against licensing the projects.

Enel, E.ON to carve up Spain’s Endesa

German utility E.ON conceded in April that its bid for a majority stake in Spanish utility Endesa was likely to fail and agreed instead to split up Endesa’s global holdings with two big Endesa shareholders, Italian utility Enel and Spanish construction company Acciona. E.ON agreed to abandon its 42.3 billion euro (US$56.5 billion) bid for Endesa, instead striking deals to buy 10 billion euros (US$13.35 billion) of power plants and other assets. The deal is to give Enel a strong grip over Endesa’s business in Spain and Latin America while most of Endesa’s other European assets will be sold to E.ON. Enel Chief Executive Fulvio Conti said the companies could wrap up the deal by July. Italian Prime Minister Romano Prodi said he was satisfied with the deal, while Spanish Industry Minister Joan Clos said the compromise was acceptable as it did not break up Spanish assets.

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