Malaysian conglomerate Sime Darby said Friday it has acquired a 50 percent stake in Island Power Holdings Pte. Ltd. (IPH) of Singapore as part of its expansion in Southeast Asia.

In a statement to the stock exchange, Sime Darby said it would pay a nominal sum of S$50 (US$28.74) for the stake but it would also have to provide IPH with a US$4.56 million loan for the construction of a power plant in the republic.

IPH is developing a 715 megawatt combined cycle gas turbine power plant on Singapore's Jurong island, and the plant is scheduled to commence operations by September 2006. The overall project cost is estimated to be S$898 million.

IPH is Sime Darby's third power generation investment, following Port Dickson Power Bhd. in Malaysia and Laem Chabang Power Co. Ltd. in Thailand.

Generation licence

The statement said IPH has a generation licence to produce up to 800 megawatt of electricity and it would be the first entirely-independent power producer to participate in Singapore's deregulated power pool market.

"We have been actively seeking to expand our power business portfolio," said Sime Darby's chief executive Nik Mohamed Yaacob.

"Acquisition of IPH offers us the opportunity to enhance our expertise in power plant operations and to establish our power business as an important power player in three key Southeast Asian markets, namely Malaysia, Singapore and Thailand."

Sime Darby is Malaysia's oldest plantation group but has diversified its portfolio. It said the loan it offered to IPH under the deal amounted to half of the total development and construction cost incurred on the project up to August 31 this year.

It said the rest of the costs would be funded by project debt financing and additional shareholders' loans in equal proportions from Sime Power and IG Island Power B.V. which owns the remaining 50 percent stake in IPH.

IG Island Power is a subsidiary of global power generation firm InterGen N V - itself a joint venture between Shell Generating (Holding) B V and Bechtel Enterprises Energy B V.

InterGen operates or is building a total 20 power stations in various countries, including the Netherlands, Britain and United States, the statement said. - AFP