Siemens bags major power deals in China

SHANGHAI, China — Siemens AG of Germany is undertaking a major power plant construction project in the Waigaoqiao Free Trade Zone in the Pu Dong district of this bustling city as China gears up to boost its power generating capacity to keep pace with rapid economic growth.

Senior officials of Siemens Ltd. China’s Power Generation Group briefed a group of visiting Filipino journalists last week about the company’s various power-related projects in China. Siemens has completed 16 power plant projects in China with a total output of 13,000 megawatts.

It was learned, however, that China’s annual growth rate of eight to 10 percent over the past decade has created a big demand for power which the country cannot meet with its existing capacity.

They said while the power sector is expanding at an annual four to six percent, a respectable growth rate, this is not enough to cope with industry’s rising demand. Even this city’s power generating plants have to be supplemented by other sources in nearby provinces to meet its electricity requirements.

Siemens is now actively involved in the second phase of the two by 900 megawatt super-critical steam turbine generation units in the Waigaoqiao economic zone. The Shanghai Waigaoqiao No. 2 power plant will significantly increase the power supply here. The two plants are the largest coal-fired power generation units in China and the turbines are being supplied by Siemens, with two other foreign companies providing the other major components of the project.

According to its officials here, Siemens is now the largest importing supplier for electric power customers in China –both in terms of constructing new power plants and modernizing new ones. Besides constructing the plant and supplying the steam turbines for the Shanghai Waigaoqiao power plant, Siemens has five joint ventures with China producing high-voltage switchgear and circuit breakers, medium voltage switchgear, circuit breakers, vacuum interrupters and power transformers.

The company has also been tapped to provide the generators, transformers and transmission lines for the gigantic hydroelectric project, "The Three Gorges Dam" in Central China, the world’s biggest hydroelectric project in terms of installed power generation capacity. Three Gorges Dam is expected to add 18,000 megawatts to the grid upon completion.

It was also learned that over half of this country’s power plants are still coal-fired since China is rich in coal resources, but there is now a determined effort to develop more gas and combined cycle power plants and to tap other sources of energy like natural gas.

Just recently, China awarded a $8.5-billion liquefied natural gas (LNG) purchase contract to Indonesia to supply a planned terminal in Fujian province for 25 years. Under the agreement, Indonesia will supply up to 2.6 million tons of LNG a year to Fujian from the Tangguh gas field in its eastern province of Papua.

Indeed, Siemens officials expressed optimism as the company sees greater opportunities ahead with China growing by leaps and bounds. Already this country is Siemens’ biggest investment site in the world after Germany and the United States. Company officials say that China and the Asia-Pacific region will continue to contribute significantly to the growth of their business in the coming years.

Siemens has come a long way in China since it opened its first representative office in this city in 1904, which at that time was the largest overseas subsidiary outside of Germany. Officials say that today Shanghai is again the largest Siemens location outside of Germany with over 12,000 employees.

The company reported that as of the end of September last year, its total long-term investment in China had already exceeded Euro 500 million. Sales in fiscal year 2001 reached Euro 3.5 billion on a consolidated basis in China. Today, Siemens has more than 40 companies, 26 regional offices and over 21,000 employees in China.