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The Global Energy Markets
Around the world, the energy sector is being transformed by M&A activity. Mergers, take-overs and joint ventures are on the increase, frequently catalysed by factors such as:
- Liberalisation of markets;
- The impact of stiffening competition on the critical threshold customer base;
- Globalisation and the erosion of traditional geographical boundaries of incumbent power producers; and
- Enterprises' multi-utility and vertical integration strategies.
Meanwhile, the expansion of e-business into retail markets and the bundling of products/services by new entrants is increasing switching and churn throughout the world as consumer awareness of competitor offerings grows.
Leading Advisors to the Energy Sector
In the context of this rapidly changing environment, PricewaterhouseCoopers has established a dedicated Energy, Utilities & Mining Group to assist clients to identify solutions to the complex industry specific business problems which they face.
Globally, PricewaterhouseCoopers are the leading accountancy firm in the energy sector (1) .
In Hong Kong, our team comprises professionals with a wide range of experience of the Energy, Utilities & Mining industry, both in the Asia Pacific region (including Mainland China) and the rapidly-changing European markets, and from a diverse portfolio of service lines.
(1) Based upon the 2002 Energy Finance polls which undertook research from 500 of the largest international energy companies.
Energy, Utilities & Mining in Greater China
Oil and Gas
Within the PRC, the advent of WTO membership and the need for capital among the state-owned oil companies seem finally to have allowed the multi-nationals some access to what has previously been a highly regulated and closed sector of the economy. These developments herald the introduction of global industry practices into the PRC including a greater focus on the return on assets, the consequential retirement of underperforming and surplus to capacity refining plants and new investment in modern refining and chemical equipment.
At the same time, grand plans are afoot to focus on better utilisation of natural gas within the economy; plans have been revived to build pipelines from the remote resource-rich west and north-west regions to the power hungry southern and eastern parts of the mainland.
Electricity
In the China power industry, the government has announced its intention to introduce competition among power producers. This reform is expected to result in the break-up of the Chinese power behemoth, State Power Corporation. Whilst it is, at present, unclear how these reforms will ultimately be implemented, the process will undoubtedly offer tremendous opportunities to those investors with both flight of foot and a keen eye for managing risk in this rapidly-evolving market.
Other Utilities & Infrastructure
As the economy in China continues to grow, the need for investment in infrastructure remains strong. At the same time the Government is seeking to attract more foreign investment to the utilities sector and is beginning to reduce barriers to entry.
In Hong Kong, the HK S.A.R. Government remains committed to the development of a number of large projects, notwithstanding that it is facing a squeeze on its finances. Consequently, alternative financing structures, such as Public-Private Partnership arrangements, are being considered. Should this type of structure prove successful, as it has elsewhere in the world, there are likely to be significant opportunities for operators and investors in a range of services.
Opportunities
While many opportunities exist in Greater China, covering a variety of sectors including oil and gas, power, airports, roads and water, making a successful investment still requires a very careful approach. Our experienced Energy, Utilities & Mining team possesses the range of skills needed to assist companies in minimising the downside risk of implementing their investment strategy, providing services from financial and IT systems due diligence to structuring advice and post acquisition reviews.
Visit our global Energy, Utilities & Mining website. |
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