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Infrastructure & PPPs in Singapore, Laos and Cambodia - Q2-2021 Update

Updated: Sep 6

We wrap up our insight series for Q2-2021 to highlight key developments in Infrastructure and PPPs in Singapore, Laos and Cambodia. The three ASEAN nations are setting the pace for innovative infrastructure financing solutions given their unique characteristics compared to larger ASEAN counter-parts.

Singapore

SHELL PLANS SOLAR PROJECT WITH JTC IN SINGAPORE LANDFILL

Singapore's JTC Corporation (JTC) and energy giant Shell are planning to jointly explore the development of a solar power project on a landfill site, south of the Singapore mainland. The solar power project, to be located at the Semakau Landfill of Singapore, is set to have a generation capacity of 72 MW.

To be spread across an area of 60ha, the project is set to provide power to up to 17,500 households in the island-nation for a year. It will also be the first large-scale solar project in Singapore where a sanitary landfill is used for clean energy generation.

This project is in line with Shell's 10-year plan to re-purpose its core business, cut emissions in Singapore and help its customers in their decarbonization efforts. Semakau is Singapore’s only operational landfill, and the country is looking to preserve its capacity for as long as possible by reducing waste.

Singapore targets to increase its solar deployment to at least 2 GW by the year 2030 from around 400 MW currently. Given the limited land space, the island-nation considers solar power is its most promising renewable energy source and is a key switch for decarbonization.


SEMBCORP GREEN BOND ISSUANCE

Singaporean energy company Sembcorp Industries has priced its debut SGD 400Mn (USD 302Mn) green bonds, which are set to finance the firm's low-carbon and climate-friendly projects.

The 10-year bonds were priced at 2.45% per annum and more than 90% of the issuance was subscribed by institutional investors mainly from the Asia-Pacific and some from Europe, the bonds, which are part of Sembcorp's SGD 3Bn multicurrency debt issuance programme, will be listed on the SGX-ST. The company will use the proceeds to finance and refinance new and existing green projects.

Sembcorp is looking to invest SGD 5.5Bn in sustainable businesses such as renewable power and integrated urban solutions over the next five years. Half of that amount - SGD 2.75Bn - will be invested through debt including green and sustainability-linked bonds. DBS Bank and United Overseas Bank acted as the joint lead managers and OCBC Bank acted as financial advisor for the bond issuance.


BAYFRONT PRICES USD 401MN INFRASTRUCTURE ASSET-BACKED SECURITIES

Singapore-headquartered Bayfront Infrastructure Management priced USD 401Mn infrastructure asset-backed securities.

Of the total, investment-grade notes aggregating to USD 361.1Mn were listed on the Singapore Stock Exchange and subscribed by banks, multilateral financial institutions, insurance and pension funds and asset managers. The remaining is retained as equity by Bayfront Infrastructure Management as sponsor and retention holder.

The transaction offers investors exposure to a portfolio of 27 infrastructure loans across 13 countries and eight industry sub-sectors. Of the total number of projects, 83.8% are operational while 16.2% will turn operational within the next 12 months.

Bayfront, which is owned by Temasek-backed Clifford Capital Holdings and the Asian Infrastructure Investment Bank (AIIB), aims to buy about USD 400Mn to USD 600Mn of infrastructure bank debt every 12 to 15 months.


ENGIE WINS SINGAPORE DISTRICT COOLING PROJECT

French energy company ENGIE has been appointed to design, build, and operate a district cooling system in a new "smart" business district in Singapore. ENGIE's Southeast Asia unit will develop the underground district cooling system for the Punggol Digital District, which includes a business park, the campus of the Singapore Institute of Technology and residential areas.

The project will have a cooling capacity of close to 30,000 refrigeration tons and is expected to be completed in 2024. Engie will operate the facility for 30 years. The 50ha smart city project will also include the development of a smart energy grid, a district-wide vacuum-pipe network to collect waste across the area, and a digital platform gathering data from the buildings in the district. A raft of district cooling projects has been launched in Southeast Asia in recent years, as some of the largest cities aim to introduce energy-efficient solutions through smart city projects.


SINGAPORE'S MAIORA RENEWABLE PLANS 1 GW TAIWAN SOLAR PORTFOLIO

Singapore's Maiora Renewable Energy is looking to develop 1 GW of solar power projects in Taiwan over the coming three years. It is working with US fund manager Farallon Capital on co-investments in solar power plants and has already set up 15 project companies for existing assets as well as for those in the pipeline. A total investment of TWD 65Bn (USD 2.28 Bn) to TWD 70Bn will be needed to achieve the 1 GW target by 2024.

TWD 2.5 Bn syndicated loan for its 50 MW Yongyao Solar Power Plant that will be built in three phases. The first will have a capacity of 15 MW with grid connection targeted for 2021 while the second and third phases will be operational in the third quarter of 2022.

The project is located in the Yongyao district of Changhua County. The group of banks backing the project is led by Bank SinoPac, KGI Bank, EnTie Bank, Fubon Bank, while Cathay United Bank also participated. The project reached financial close within three months and is also the first of Maiora’s Taiwanese projects to have secured a syndicated loan locally. Apart from the power plant, the developer will also build a 161kV ultra-high voltage transmission line.


SUNSEAP AGREES TO SELL SOLAR POWER TO FACEBOOK

Singapore's Sunseap Group has signed a multi-year renewables offtake with social media group Facebook. Facebook will indirectly buy the output of a 5 MWp floating offshore solar farm in the Straits of Johor. The company has previously agreed to buy the solar output of 1,200 rooftops from Sunseap. Sunseap will sell the output from the floating solar project to the grid under the so-called Virtual Power Purchase Agreement (VPPA) and will then transfer renewable energy credits to Facebook.

The VPPA will be used to support all of Facebook's operations in the city state, including the company's first data centre in Asia. The Singaporean company has been growing strongly and seeking Series E funding to fuel that growth. Dubai-based conglomerate Dutco was its most recent investor.

The company operates three businesses: Sunseap Leasing, which sells rooftop solar; Sunseap Energy, which sells clean power to commercial customers including Apple and Microsoft in Singapore; and Sunseap International, which operates in Cambodia, Thailand, the Philippines, India, Malaysia, and Australia.

Laos

MITSUBISHI TO INVEST IN LAOS 600 MW WIND DEVELOPER

Japanese conglomerate Mitsubishi Corporation will acquire a stake in the developer of the planned 600 MW Monsoon Wind Farm in Laos. Mitsubishi’s wholly owned unit Diamond Generating Asia (DGA) and Earth Power Investment (EPI), a member of Thailand-based renewables firm Impact Electrons Siam, will jointly invest in Hong Kong-headquartered Impact Energy Asia Development (IEAD) through an intermediate holding company.

While the holding company will own a 55% stake in IEAD, the remainder will be held by Thailand’s BCPG Public Company. IEAD plans to export the electricity generated by the onshore wind farm, the first in Laos and the biggest in Southeast Asia, to state-run utility Vietnam Electricity under a 25-year power purchase agreement. Construction of the onshore wind project is slated to launch later in 2021and will begin commercial operation in 2024.


JAPAN AND LAOS TO COMPILE SMART CITY PLAN

The Japanese government has signed an accord with authorities in Laos’ Luang Prabang city to jointly map out a master plan to develop a smart city there. The tie-up is the first project to materialize after Tokyo in December 2020 unveiled its Smart City Supported by Japan Asean Mutual Partnership initiative, or Smart JAMP.

Japan has pledged a JPY 250bn (USD 2.4bn) package to help the private sector invest in smart city projects in Southeast Asia. In addition, the government will spend JPY 1bn for research. Amid shrinking domestic demand and an increasingly aging society, Japan has been stepping up efforts to export high quality infrastructure projects under its pro-growth policy. These include the Shinkansen bullet train technology, as well as smart city infrastructure

Cambodia

CAMBODIA TO USE PPPS FOR AFFORDABLE HOUSING PROJECTS

Cambodia aims to use public-private partnerships (PPP) to solve the lack of affordable housing. The country's real estate market is focused on luxury housing, making it difficult for the middle-income and lower middle-income population to access housing.

In order to promote affordable housing projects, the government will offer tax incentives to investors. The country will ensure that projects are serviced by the necessary infrastructure, including grid connection, water and wastewater services, and roads. It will also provide assistance to developers with building and other permits to develop projects. The country will need to develop approximately one million houses between 2015 and 2030.

CAMBODIA APPROVES 10,000HA MIXED-USE PROJECT

Singapore-listed real estate developer Hong Lai Huat Group has received government approval to develop a 10,000ha mixed-use project in Cambodia. The project will involve the development of an agricultural hub in Aoral district, in southern Kampong Speu province. It will include warehousing facilities, farms, food processing factories, water treatment facilities, renewable energy plants, and commercial and residential areas.

Three companies have expressed interest in partnering with Hong Lai Huat to commit a total of USD 225m to the project. The first phase of the project is set to start in the fourth quarter of 2021, with initial work to focus on infrastructure upgrades inside the are

List of Key Transactions


Source: YOG INFRA analysis, Public Information



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