Page 23 - Sphere No.6 (Jun 2002)

Ap Lei Chau,” says Paul Cheng, Chief System Control
Engineer. “The engineers comfortably anticipate most cus-
tomer emergency calls. It is very rare for an emergency call to
catch our team unawares.”
So, while the logistical complexity of achieving 99.999%
supply reliability might be enough to short-circuit the human
brain, the System Control Centre ensures this figure is met,
and often surpassed, every minute of the day.
GROWING THE BUSINESS
In the past few years, HEH has embarked on a strategy of
extending its operations.
Robust returns from Hongkong Electric, boosted by a
“sovereign” credit rating from Standard & Poor’s have enabled
Hongkong Electric to secure competitive financing for busi-
ness expansion.
“We had a wonderful year in Australia last year,” Mr Tso
recalls, “it was very hot.”
But if glorious days on a beach “Down Under” spring to
mind, think again. Mr Tso is referring to the company’s
Australian utilities investments inVictoria and South Australia.
In January 2000, Hongkong Electric International (HEI), a
wholly owned subsidiary of HEH, together with Cheung
Kong Infrastructure (CKI), acquired under a 200-year lease the
Electricity Trust of South Australia (ETSA), the major elec-
tricity distribution company serving the state of South
Australia. In August 2000, HEI/CKI also acquired Powercor
Australia Limited (Powercor), the largest of the five distribu-
tion/retail companies in the state of Victoria.
With these two deals, which had a combined worth of
A$5.565 billion (about US$3.1 billion), HEI/CKI became the
largest electricity distributor in Australia, serving over 1.4 mil-
lion customers.
Both companies have provided solid returns, and last year
the sale of Powercor Australia’s retail division resulted in a one-
off gain of HK$344 million (US$44 million) for HEI.
“The company’s philosophy is to invest in companies with
predictable returns and relatively low risks,” Mr Tso says.“This
is the thinking behind our Australian acquisitions; it is a regu-
lated business with returns that are fixed by a formula.”
He notes that HEI has timed its acquisitions well. “Share
prices of utility companies reached historic highs in the mid-
90s, but came down to more realistic levels following global
market turmoil in 1997. Prior to this, we viewed power util-
ities as overpriced. Now we are looking to consolidate our
Australian successes and add to our portfolio.”
An aerial view of the Lamma
Power Station. left, and the
coal storage area, above.
HONGKONG ELECTRIC (6)
S PHERE
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