S A ADVISORY Engineering Power Systems Group Inc
Power Barge Competition

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  1. Van Der Horst (Singapore) has built several smaller barge mounted plants.
  2. Enron has completed a 154 MW boot project in Hainan, China, that started generating power in January, 1996, as well as 116 MW and 110 MW plants in the Philippines, 110 MW in Guatemala and a Dominican Republic plant.
  3. Raytheon Engineers and Constructors (Lexington, Mass).
  4. Westinghouse Electric Corp. - Generation Systems Division through joint ventures.
  5. ABB (Asian Brown Boveri) of Switzerland.
  6. Smith Co. - Generation International (USA).
  7. Westmount (Malaysia).
  8. Nippon and Mitsubishi - pursuing Asia, but have not achieved a contract yet. ENGINEERING POWER SYSTEMS GROUP - only - "Pure Play" in North America involved in power barge development; that is, PUBLICLY TRADED.

The award of the Andhra Pradesh contract indicates the company is competitive with, if not superior to, these industry giants in terms of its design!

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"The energy demand of developing countries such as India, Pakistan and much of Latin America is astronomical," said Nauman Ahmad, Manager of Finance for Smith Cogeneration of Oklahoma City.

There is a growing market for electric power in most third World countries. But, investors are reluctant to risk money on brick-and-mortar projects, such as power plants, in developing countries. They tend to take comfort, however, in having their investment on a barge, which can be moved to another location in the event of default or other adverse circumstance.

"Access to financing is one of several factors which make barge-mounted power plants attractive, but there are others," said Mr. Ahmad. "We can make use of state-of-the-art technology, high-quality facilities and skilled workers in the U.S. to build the plant rather than having to depend on available resources on site. In the Third World, the need is yesterday ."

Mr. Johannes Kotjo, Chairman of Van der Horst, said: "Power barges not only offer flexibility and mobility, but they can be built in just six to nine months, and are used to meet temporary requirements for power supply in remote areas, as well as to provide backup support in case of power failure."

There are factors that can make a power barge an attractive option. One of the most obvious of these results from the fact that power barges can be moved. This has a number of consequences.

The first, and perhaps most obvious, is that the power plant can be moved away from a site should circumstances require this. Thus a power barge can provide a good leasing solution to a power need of a finite duration.

Mr. Kotjo said that he expected that Van der Horst would build between two and four power barges per year. He said: "Power barges have provided the company with a high profile entry into the power business. In the future, the focus of the company will be to broaden this capability."

As stated by CMS Managing Director David Weaver, "Up to now there has never been a large scale company with the ability and expertise of CMS and EGPSF combined which has concentrated its resources on a business dedicated to the supply of short lead time mobile power plants".

According to Mr. Mark Axford, Vice President of Stewart &Stevenson, Asia Pacific Operations, the two main driving forces for the development of power barges have been financing and siting. He said: "Most activity in this field is coming from the developing countries. Obtaining finance is relatively straightforward in developed markets. In developing countries, however, the situation is sometimes less clear.

According to Mr. Axford, power barges also reduce the problem of public acceptance of large developments. In particular, there is often local concern about the impact of plants located nearby. However, when plants are mobile, there is less concern, because decommissioning of the plant is no longer a local issue.

In addition, transportability of the plant means that a lower level of infrastructure is required. The need to transport large pieces of equipment over potentially inhospitable terrain is greatly reduced. This is clearly of benefit for remote locations.

Mr. Axford said that Stewart & Stevenson did not see power barges as being a gigantic market. It was difficult to forecast what the future market would be, but he believed that it would remain a niche market.

Mr. Sanjay Jalali, Sales and Marketing Director of International Operations for Westinghouse Electric Power Generation, described power barges as being ideally suited for leasing operations.

Another consequence resulting from the mobility of power barges is that it provides greater reassurance to lenders. Because these plants are mobile, if a problem arises with finance, the assets can be repossessed. This provides protection for conservative and risk-averse lenders.

Westinghouse claims that barge-mounted power plants can be built in less time than most conventional power plants. As a result, power can be brought on-line more quickly, reducing costs incurred through interest on financing costs.

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