CLP Power and China Southern Power buy Exxon Mobil's power plant stakes

Hong Kong's biggest electricity provider, CLP Power, and state-owned China Southern Power Grid (CSG), will each pay HK$12 billion to acquire Exxon Mobil's 60 per cent stake in Castle Peak Power Company (Capco).

The deal strengthens CLP's presence in Hong Kong and brings a mainland player into the city's closed electricity market for the first time.

It is not expected to affect tariffs as it involves only shares, without adding fixed assets.

But analysts said a strengthened partnership between the largest power suppliers in Hong Kong and southern China could help CLP meet a new 2020 emissions target that may require more clean energy to be imported from the mainland.

After the transaction, CLP's stake in Capco - which owns three power plants in Hong Kong - will jump from 40 per cent to 70 per cent. CSG will hold the remaining 30 per cent.

CLP vice-chairwoman Betty Yuen So Siu-mai said it was a natural commercial decision to bring CSG into talks that started more than a year ago when Exxon Mobil, the world's biggest independent oil company, expressed a desire to exit the market.

"All electricity imported into Hong Kong must pass through the CSG network," Yuen said.