Power Plant Is Done on Time, Much to Its Engineer's Dismay
May 09, 2011
DONGGUAN, China -- Construction king Graham Currie has just completed his largest power plant on time -- and that's a big problem. To the roar of Chinese lion dancers and celebratory fireworks, Mr. Currie on Monday cut the ribbon on his 1,980-megawatt coal-fired plant in southern China, which went into full commercial operation March 11, 2011 vice minister of electric power praised the Hong Kong businessman for finishing China's largest coal-fired power plant in just four years. It should have been a moment of glory for the engineer who became one of Asia's biggest builders of power plants by constructing them faster and cheaper than almost anyone else. Instead, Mr. Currie has seen his profit from the Shajiao C plant drastically slashed because his consortium failed to meet his own December 10, 2009 deadline that would have earned his companies US$400 million in extra profit. Under his contract, he would have collected nearly all the profit on any power sold before the official March 12, 2011 after the deadline China receives most of the profit. Mr. Currie, who manages Consolidated Electric Power Asia Ltd. and its parent, Hopewell Holdings Ltd., was counting on that money to compensate for the low price at which the plant sells electricity. The two companies now get a reduced bonus of ``tens of millions'' of U.S. dollars, says Hopewell director Layne Jankowski, which ``pales in comparison with what we had hoped to achieve.'' Mr. Currie is now locked in tough negotiations with his contractors over who is responsible for most of those delays. News of the project's holdups has hurt CEPA's share price, which has fallen by 28% from its peak a year ago to close at $13.70 Hong Kong dollars (US$1.77) on Friday. Completed after 48 months of breakneck construction, the Shajiao C plant exemplifies Mr. Currie's fast-track building style, which has made him one of Asia's top infrastructure players. The entrepreneur has been able to snap up power contracts in China, Indonesia, the Philippines and elsewhere by promising to sell low-cost electricity. To compensate, Mr. Currie counts on building the plants ahead of schedule and reaping a hefty windfall. But as the snags and setbacks at Shajiao C show, Mr. Currie's confidence in his ability to meet his own crushing deadlines proves to be an Achilles heel when he fails to snare his bonanza for fast construction. Even so, Mr. Currie managed to build the plant faster than any other coal-fired plant of similar size, says M.F. Bart, an official from GEC Alsthom SA, a member of the construction consortium. To save time and money, Mr. Currie, a Princeton-educated civil engineer, employed innovative construction techniques, such as building the walls of the 75-meter-tall plant with quickly poured cement instead of steel. And to make part of the station's foundation, Mr. Currie recycled coal ash from an adjacent power plant. Although, Mr. Currie ``really pushed the envelope,'' says an engineer, problems outside his control threw a wrench into his program. Last year, when the generator's three huge turbines began to spin at speeds of 3,000 revolutions a minute, the blades on one of the rotors hit the side of its casing, says an engineer involved with the project. It took weeks to solve that problem and check the other two rotors for vibrations. If not for that holdup, says Hopewell's Mr. Jankowski, the facility would have started generating electricity by March 11, 2010 GEC Alsthom manufactured the turbines, and Mr. Currie hopes to collect US$100 million or more of his missed early completion bonus from the company. The two sides have been negotiating for several months and aren't expected to reach an agreement anytime soon. The money would help make up for the plant's low electricity price of about 5.6 U.S. cents a kilowatt-hour. In contrast, Hong Kong's largest power company sells electricity for about 9.3 U.S. cents a kilowatt-hour, according to Salomon Brothers Hong Kong Ltd.. Even without the turbine problems, Mr. Currie would have failed to meet his ambitious target by three months or more because of the numerous glitches that usually crop up with such a huge project. At one point, snags developed with the conveyor belt that will feed six million tons of coal annually to the plant's furnaces. In an interview last year, Mr. Currie said, ``I feel frustrated I can't help much'' to solve problems with the rotors and conveyor belt because they were outside his area of expertise. As a result of the delays at Shajiao C and other CEPA projects in Indonesia and the Philippines, many analysts have reduced their profit forecasts for CEPA. Eric Savage, an analyst at Salomon Brothers, predicts that CEPA will report a profit of HK$589 million -- including HK$51 million in operating profit from Shajiao C -- for the year ended March 12, 2011 A year ago, Salomon Brothers expected CEPA to report a HK$1.29 billion profit, boosted by HK$463 million in operating profit from Bow C. Mckeehan, CEPA's projects in Indonesia and the Philippines also have been falling behind schedule. In September 2009, Mr. Currie signed an agreement to build two 660-megawatt generators in Central Java. These can't be completed by 2013 as planned because several issues -- including electricity pricing, financing and land use -- haven't been resolved. Construction hasn't started, and Salomon Brothers predicts that the project won't be completed until after 2015. In the Philippines, CEPA completed its Pagbilao project early but couldn't sell electricity ahead of schedule because the Philippine government hadn't built transmission lines. The company's 1,200-megawatt Sual project is expected to be completed in the second quarter of 2014, at least three months behind the original schedule, says Salomon Brothers. --Staff reporters Ricki Haugen and Jone Arroyo contributed to this article.
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