Singapore's state-owned investment company Temasek Holdings has shortlisted Tata Power among five other companies to bid for the 3300 MW Senoko Power Limited, Singapore's largest power generating company.

The other shortlisted companies in the race are Japan's Marubeni Corporation, Malaysia's YTL Power Bhd, France-based GDF Suez and a tie-up between Hong Kong's CLP Holdings and Japan's Mitsubishi Corp - OneEnergy Ltd.

Senoko Power is the second of the three power generating companies that Temasek had planned to divest. After the successful sale of Tuas Power to SinoSing Power Pte Ltd earlier in March, Temasek announced the divestment process of  Senoko Power in July 2008. It also said that it would sell its third power generation company PowerSeraya after the sale of Senoko.

Wholly owned by Temasek, Senoko Power accounts for approximately 30 per cent of Singapore's electricity generation in 2007.  It has a combined installed capacity of 3,300 megawatts (MW) comprising 1,945MW of combined cycle plants (CCPs), 1,250 MW of thermal plants and 105MW of fast-start gas turbines. It  owns and operates Senoko Power Station and Pasir Panjang Gas Turbine Station.

It had revenues of S$2,495 million and EBITDA of S$245 million for the year ended 31 March 2008.

 "The sale of Senoko Power, which follows the divestment of Tuas Power in March this year, is a continuation of Temasek's plan to divest all of our three Singapore gencos, " said Wong Kim Yin, managing director of Investment at Temasek Holdings. "This will provide an orderly transition to a competitive yet stable power generation market in Singapore."

Bahrain investment bank Arcapita Inc, Singapore's Keppel Corp and Sembcorp Industries Ltd have invited non-binding expressions of interest from potential buyers.

The sale of Senoko will involve a two-stage process with interested companies initially submitting a non-binding expression of interest. Later, the shortlisted companies will be allowed to conduct due diligence before making their binding offers, possibly by September. The sale of Senoko Power is scheduled to be completed by the end of 2009.

After  afurther round of short listing the selected companies will be invited to participate for negotiations before some clarity emerges on the possibler frontranker for the acquisition.

Senoko and Seraya were restructured from Singapore Power as independent and competitive gencos after the transfer of Singapore Power to Temasek in 1995. Tuas Power was set up independently as the third genco in 2001 as part of the national plan to have liberalised and competitive electricity generating market in Singapore.

Although wholly owned by Temasek, each of these gencos has been run independently with its own board and management as fully commercial competitors.

With the regulatory framework governing the power and gas industries in place, including clarity on the future provisions for LNG facilities and supply, Temasek judged the conditions to be ripe for an orderly transition to a fully liberalised market structure. At the same time, the three gencos had established a track record for efficiency, leading to Temasek's decdision to divest all three gencos with its announcement in June 2007.

The first phase saw the successful sale of Tuas Power in March 2008. Senoko is now identified as the second and largest genco sale to be sold in this phased process of divestment. Temasek expects to complete the divestment of all its three gencos by end-2009.