Page 9 - Sphere No.30 (Dec 2011)

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Sphere 30
The company resumes
operations at the North
Point Power Plant after
over three years of
Japanese occupation.
Hongkong Electric Holdings Limited
is established as the holding
company of Hongkong Electric and
other subsidiaries and listed in
Hong Kong.
1976
Hutchison acquires a
substantial interest in the
company from Hongkong
Land for HKD2.9 billion.
1985
The company installs a 20 MW
unit at North Point – its largest
generator.
1955 1945
The company’s first 250 MW
unit is commissioned at the new
Lamma Power Station within
40 months – a world record –
increasing the transmission
network voltage to 275kV.
1982
Publication of a colourful history of
the company, A Mountain of Light,
The Story of The Hongkong Electric
Company, written by celebrated Hong
Kong-based author Austin Coates.
1977
1945
For most of its long existence, the company now
known as Power Assets was a local utility through and through.
The city’s hectic pace of development across different eras meant
that the home town of the Hongkong Electric Holdings Limited,
as it was known until mid February this year, offered plenty of
room to grow.
All that began to change about 30 years ago, when
manufacturing started moving out of Hong Kong into southern
China’s Pearl River Delta. At the same time, land shortages
constrained prospects for the city’s further physical expansion
and population growth on Hong Kong Island, the power
company’s heartland.
“There used to be a 10-12 per cent annual increase in
electricity demand during the 1970s,” recalled Power Assets
Group Managing Director Tso Kai Sum. “But this has now
declined to around 1-2 per cent in recent years especially
with energy conservation initiatives in various sectors of the
community.” Faced with a mature, low-growth local market, the
company decided to shift course. “Power Assets had to go global
for its shareholders,” said Mr Tso.
Now, the company has interests in 6,790 megawatts (MW)
of power generation assets and over 400,000 kilometers of
power and gas networks outside Hong Kong serving a total of
12 million customers.
The new focus has brought the company face-to-face with
a host of challenges in the global power market, such as the
need for investors to have very deep pockets and lengthy
investment horizons. This high entry barrier explains the
cautious, considered approach behind Power Assets’
investment strategy, namely that it is long-term, focused
on areas with clear regulatory regimes and looks for stable,
reasonable returns.
As pinpointed by Mr Tso, Power Assets’ ability
to team up with heavyweight partners HWL and
Cheung Kong Infrastructure Holdings Limited (CKI) has
delivered significant financial muscle, on top of an enviable
business reputation. This has boosted the company’s standing
as a serious player in the international energy market, a view
reflected by senior executives of overseas power businesses in
which Power Assets has already invested.
Since embarking on an international strategy 10 years ago, Power Assets Holdings
Limited has successfully established itself as a force in the global energy market.
Earnings from its activities outside Hong Kong now exceed those from Power Assets’
Hong Kong operations and, as Sphere reports, are set to contribute even more.