Is it Singapore’s final phase of power industry liberalization?

Singapore revived the sale of its three biggest generators after a six-year delay, aiming to benefit from record-high stock values and demand for Asian utility assets. Power Senoko, Power Seraya and Tuas Power will be sold by early 2009, Temasek Holdings Pte, a government-owned investment company, said in a statement, without estimating the value.

The news comes following excellent economic performance in Singapore. The benchmark stock index rose to a third-straight record and the economy is forecast by the government to grow as much as 7 percent this year in the longest expansion since 2000. Rising demand led to an 8 percent increase to $44.7 billion in announced energy mergers and acquisitions in Asia this year.

“The conditions are conducive for the divestment,” said Wong Kim Yin, managing director of investments at Temasek. “We are more inclined toward a trade sale and not an IPO as we have no interest to hold any direct residual interest in the power producers.”

Senoko and Seraya, spun off from distributor Singapore Power Ltd. in 2001, and Tuas produce 80 percent of Singapore's electricity. The three generators are barred from holding each others' shares.

“Temasek will divest all three generation companies,” the Ministry of Trade and Industry said previously after announcing that the divestment of Senoko and Seraya to Temasek would take place. “There will be no foreign ownership limit.”

After completing the second phase of the liberalization in 2006, 75 percent of the total electricity demand was open to retail competition and the total number of contestable consumers rose to 10,000, according to the Energy Market Authority's annual report. Contestable consumers can select a retailer to supply electricity to them.

The Singapore government has been gradually introducing competition. Deregulation of the electricity industry started in 1995 and the gas industry in 2000, with the separation of producers from the transmission and distribution networks. Does the sale of the three major generators mean that Singapore will be among the first Asian market to embrace total liberalization of the power industry?