Introduction
This dual case study (in this chapter and the previous one) is a comparison of Laibin B and
Meizhow Wan, the first two wholly foreign-owned power projects in China. Please refer to
the ‘Introduction’ in Chapter 1 for a brief overview of the projects.
Project summary^1
Meizhou Wan is a 724 MW (net) pulverised-coal-fired power plant in Fujian Province.
InterGen, owned by Bechtel Enterprises Energy BV and Shell Generating (Holding) BV,
owns 70 per cent of the plant; Lippo China Resources owns 25 per cent; and the ADB owns
5 per cent.
The project was built by Bechtel Power and its affiliates. Turbines were supplied by GEC
Alsthom and boilers by Foster Wheeler, a major supplier of power plant equipment to China.
Fujian province, located on the Taiwan Straits, has been building up its infrastructure to
capitalise on growing communications and trade between the PRC and Taiwan. The Meizhou
Wan plant is part of a proposed mixed-use commercial, industrial and leisure development
called Tati City in Putian, originally proposed by the Lippo Group in the early 1990s. The
Lippo Group is a US$12 billion financial and real estate conglomerate based in Indonesia.
Background
Putian was the home town of Dr Mochtiar Riady, the successful overseas Chinese business-
man who founded the Lippo Group. Because of the bond between Dr Riady and his home-
town, and local desire for infrastructure investment, the project received strong government
support from the beginning.
The PRC’s State Planning Commission (now the State Planning Development
Commission) originally approved the project in 1993. However, during the five years
between then and the project’s financial closing there were changes in the project ownership,
the Fujian Provincial Electric Power Bureau, and Chinese laws and regulations related to
power projects.
The project consortium originally had four members, including Bechtel Enterprises,
with the Lippo Group in the lead role. In 1996, however, after many project delays and
changes, two of the four consortium members withdrew and InterGen increased its invest-
ment in the project.
When the project first was conceived, early in the 1990s, the Power Bureau was a gov-
ernment utility in dire need of new generating capacity. By 1997 it had relieved some of
those supply pressures by building new plants and refurbishing old ones. Also, in line with
other Chinese entities moving towards the private-sector model, the Power Bureau had
become incorporated and had started to assume a more aggressive stance in the negotiation
of project agreements.
The new laws and regulations enacted during the constantly evolving project negotia-
tions included the Security Law, passed in October 1995, the Electric Power Law, passed in
April 1996, and the Administration of Standardised Power Purchase Contract Tentative
Measures, announced in September 1996. As each new law came into effect the project spon-
sors had to review how it applied to the project and to the required approvals. The provincial
and local government authorities had no relevant experience with the approvals and permits
POWER PLANT