31 Aug 2009

Keppel acquires Senoko Incineration Plant

Keppel Integrated Engineering Limited (KIE) has completed the acquisition of Senoko Incineration Plant (SIP) from the Singapore Government today. SIP is owned by Senoko Trust, which is indirectly wholly-owned by KIE1 .

With this acquisition, which is funded internally, KIE will be the only private operator of incineration plants treating general waste in Singapore. SIP’s capacity to treat 2,400 tonnes of waste per day, will enable KIE to treat more than a third or 35.8% of Singapore’s total volume of waste sent for incineration2.

Mr Michael Chia, Deputy Chairman of KIE, said, “Our agreement with the Singapore Government for incineration services will create steady recurring income and generate strong cash flow for Keppel, which is particularly attractive in the current times of economic uncertainty.”

KIE will provide incineration services for 15 years commencing 1 September 2009 to the National Environment Agency3. KIE will also maintain and repair SIP, and upgrade the flue gas treatment system of the plant4.

In accordance with the tender terms, the Singapore Government divested SIP through a trade sale instead of a public listing of a business trust due to market conditions. The purchase price of SIP was mutually agreed within the indicative price of S$462 million between KIE and the Singapore Government on a willing-buyer, willing-seller basis.

The above-mentioned contract is not expected to have material impact on the net tangible assets or earnings per share of Keppel Corporation Limited for the current financial year.

1. Senoko Trust is wholly-owned by K-Green Trust, which is in turn wholly-owned by KIE.
2. According to the Ministry of Environment and Water Resources, 2.45 million tonnes of waste were sent for incineration in 2008.
3. Through Senoko Waste-to-Energy Pte. Ltd., a wholly-owned subsidiary of KIE, in its capacity as trustee of Senoko Trust (Senoko Trustee), which had entered into an Incineration Services Agreement to provide incineration services for a 15-year term commencing 1 September 2009 to the National Environment Agency.
4. Through KIE’s wholly-owned subsidiary, Keppel Seghers Engineering Singapore Pte. Ltd., which is engaged by Senoko Trustee to provide the abovementioned services.

About Keppel Integrated Engineering (KIE)

KIE is a wholly-owned subsidiary of Keppel Corporation Limited.

The Keppel Seghers group of companies (Keppel Seghers Group), which are owned by KIE, are leading providers of comprehensive environmental solutions ranging from consultancy, design and engineering, technology and construction to operations and maintenance of facilities.

Its advanced technology solutions address a wide spectrum of environmental issues such as solid waste, wastewater, drinking & process water, biosolids & sludge. In addition, Keppel Seghers Group offers a full range of environmental-friendly industry applications for the removal of organic substances from metal parts and tools.

Keppel Seghers Group has an established track record of involvement in waste-to-energy (WTE) projects in Europe, the Americas and the Asia Pacific for more than 40 years. It is the market leader for imported WTE solutions in China where it has 60% of the market share.

In April this year, Keppel Seghers also secured an Engineering, Procurement and Construction (EPC) contract worth approximately S$518 million to build an Energy-from-Waste Combined Heat and Power Plant (EFW CHP plant), featuring Keppel Seghers’ technology, to serve the Greater Manchester region in the United Kingdom.

Notably, in the Middle East, Keppel Seghers Group is implementing two contracts worth approximately S$1.7 billion by the Ministry of Municipality and Urban Planning of Qatar for the EPC and Operation and Maintenance of an integrated solid waste management facility which can treat 2,300 tonnes of waste per day.

Currently, Keppel Seghers Group is building the Keppel Seghers Tuas Waste-to-Energy Plant in Singapore which will treat up to 800 tonnes of waste per day. Upon completion, Keppel Seghers will operate and maintain this plant under a 25-year contract with the National Environmental Agency, an agency of the Singapore Government.