Deregulation of the Queensland energy market in 2007 will offer HK firms new ground for mergers and acquisitions
Hong Kong's power producers are likely to respond in sharply contrasting styles to the decision by the Queensland state government in Australia to open its electricity retailing market to foreign investors.
CLP Holdings and Hongkong Electric Holdings have been battling to amass power assets elsewhere in Australia in recent years - the former showing an appetite for distribution, or retail assets, while the latter has mainly targeted generation, or wholesale assets.
In the circumstances, CLP is likely to be a contender for merger and acquisitions opportunities arising from the power deregulation now due in Queensland in 2007, via its Australian unit TRUenergy - which manages a diverse energy portfolio encompassing A$2 billion ($11.6 billion) of assets in New South Wales and South Australia that includes electricity generation, energy contracts management and trading, gas storage and the provision of retail energy services.
But Hongkong Electric, which runs three electricity transmission joint-ventures in an alliance with immediate parent, Cheung Kong Infrastructure Holdings (CKI), will prefer to stick with its wholesale strategy, according to sources familiar with Cheung Kong group.
Welcoming the Queensland government's intention to introduce a fully contestable retail market from July 1, 2007, CLP said it was a sector that would be of interest to its Australian unit.
