Mitsubishi submits 'courtesy' bid as parent is not keen; SembCorp is not interested, citing excess capacity

THE tender to build and operate Singapore’s first private-sector incineration plant failed to fire the interest of investors, closing yesterday with just one formal bid.

Keppel Fels Energy and Infrastructure, a unit of government-linked conglomerate Keppel Corp, emerged as the only contender for the plant, which will be the fifth in Singapore.

Japanese giant Mitsubishi Corp submitted a bid, but said this was only as a matter of "courtesy" after being put on a pre-qualifying shortlist.

To the surprise of market watchers, another on the qualifying shortlist, Keppel Fels’ rival in the waste management business, SembCorp Industries, failed to throw its hat into the ring at all.

The president of its unit SembCorp Waste Management, Miss Loh Wai Kiew, said: "With four existing incineration plants, Singapore already has excess incineration capacity.

"This capacity will further increase when the waste management industry is completely privatised in the next few years, due to greater efficiency."

Additionally, the Government’s green initiatives mean less money to he made by those in the waste disposal business.

"Government programmes to decrease waste and aggressively support recycling programmes will only mean declining growth rates for the waste disposal industry," said Miss Loh.

The lack of interest in the tender for Singapore’s first private design-build-own-and-operate incinerator may cast a pall over the future of building more plants here, although about 90 per cent of Singapore’s waste is disposed of by incineration.

Indeed, rather than bidding for the new plant, which could cost between $600 million and $800 million to build, SembCorp revealed it will bid instead to buy an existing incinerator, when the Ministry of the Environment (ENV) proceeds with privatising its incinerators by 2005.

SembCorp president Wong Kok Siew said in an interview with Dow Jones Newswires: "Why would we want to take the risk of building a new plant for the future, when we know that the waste figures are coming down? A plant that is already up and running will fit our goals better. But even with existing plants, we will pick only the ones we feel are the best we can engineer."

ENV owns and runs four incineration plants: Senoko, Ulu Pandan, Tuas and Tuas South.

On the completion of this fifth plant, which will be able to burn 3,000 tonnes of rubbish a day, the ENV is slated to close its Ulu Pandan plant, privatise Tuas and Tuas South, and corporatise Senoko. It will run the latter in-house until the process of privatising the waste disposal industiy is on an even keel.

When contacted by The Straits Times yesterday, Mitsubishi spokesman Ronnie Quek said: "I’m surprised that only Keppel Fels made a bid, and others didn’t even bother to reply."

On why his company submitted a no-dollar-quote hid, he said: "Our headquarters in Tokyo decided not to get involved in the project. Although we were not required to make a final bid, we felt that given our many ongoing projects with ENV, it would only be polite to send in a formal reply."

The ENV is now evaluating Keppel Fels’ offer and will make a decision in 90 days. But it is gearing up just in case. It said it has raised a US$250 million (S$453 million) five-year unsecured transferable loan facility, of which USS 130 million could go into funding the plant.

-By Soh Wen Lin

Source : The Straits Times, Jun 8, 2001

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