Shantou Chenghai Power Plant

concluded

Shantou Chenghai Plant is a 75-MW oil-fired power plant comprising four 2.5-MW and six 10.89-MW diesel generators. It is owned and operated by the Shantou Changhai Power Development Co. Ltd., a Sino-foreign cooperative joint venture. The joint venture was established in October 25, 1993 by Shantou Municipal Power Development Company, a PRC state-owned enterprise, and Cheung Kong Hutchison Changhai Power Ltd, a subsidiary of Cheung Kong Infrastructure Holding. Cheung Kong sold its share in the plant in 2002. The plant occupies a land area of 29,800 sq. meters, which is leased from the municipality for the joint venture term. The total project cost is approximately $41 million. CKH Changhai invested 60% of the equity in cash in US dollars, while Shantou Power Development Invested 40% of the equity as an asset contribution consisting of diesel generators, buildings and facilities. The joint venture was formed to construct and operate the power plant until December 31, 2010. The fixed assets of the plant, as well as US dollars in the reserve fund, will then belong to the Shantou Power Development. The current assets of the plant will be distributed to the joint venture parties in accordance with their initial actual investment ratio. If the CKH Changhai fails to recoup its investment, then the municipality company will make up for the short-fall. The joint venture has entered into a long term power purchase contract that is coterminuous with the joint-venture agreement. To secure the joint venture parties' recoupment of and return on their investment, Shantou Power company has agreed to purchase all electricity generated by the plant and guarantees to offtake a certain annual minimum quantities. The minimum offtake quantities for the years 1995 and 1996 were 306.9KWh and 277.7KWh, respectively. There is no operations and management contract and Shantou Power Development is responsible for fuel supply, maintaining all power generators and anciliary facilities of Chaghai Power Plant, and ensuring that the plant can generate sufficient electricity to satisfy the annual minimum quantitities stipulated under the purchase agreement. As of first quarter 2002, Cheung Kong was in the process of disposing of its stake in the plant. The BOT period ended in 2010, and all assets were transferred to the government.