Temasek sells PowerSeraya to YTL Power for S$3.8b
SINGAPORE: Temasek Holdings has sold the Singapore generation company PowerSeraya to Malaysia’s YTL Power for S$3.8 billion.
PowerSeraya is the third and last genco that Temasek had put up for sale. It had earlier sold Senoko Power and Tuas Power.
The timing of the transaction was a surprise.
Just a week ago, Temasek had said that it was suspending the tender process for PowerSeraya due to poor market conditions.
In a statement, Temasek said it had found YTL Power’s proposal to be attractive.
Temasek said with the sale of PowerSeraya, it would have fulfilled its commitment to help develop a competitive power generation market in Singapore.
YTL will pay S$3.6 billion for the purchase and take on a debt of $201 million.
Yes, it’s Malaysian Company. Is Singapore really that desperate to liberlized the electricity market that they sold our power generation company to Malaysia?
Looks like Power Seraya is having huge amount of debt no doubt due to the falling oil prices and their previous hedging of oil contracts.
Malaysia really took a gamble and it may eventually pays off for Malaysia, the probability of oil prices to hit the lowest price of $30 per barrel is remote but it has it’s chances.
If oil prices reaches $30 a barrel, all hell will break loose as oil producers no longer makes profit , loses all margins in the oil business and may disrupt oil supply indifinitely until the oil prices return to normal.
This either means oil price may spike or there will be a huge oil shortages that make life miserable for cities like Singapore.
Just be prepared mentally that electricity prices may eventually becomes too expensive to enjoy excessive use.
