China Huaneng Group will buy Singapore's Tuas Power Ltd for S$4.24 billion (US$3.1 billion) in China's second-biggest overseas acquisition this year.

The Beijing-based company has signed an agreement to buy Tuas Power from Temasek Holdings Pte, Huaneng, China's biggest power producer, said on its Website Friday.

The transaction is expected to be completed by March 24, Singapore's state investment company said in a separate statement.

The purchase "represents a major step for China Huaneng in its goal to diversify its assets across geographies and technologies," Vice President Huang Long said in the statement.

Tuas Power, the first of three utilities Temasek is selling, was set up in 1995 and has 2,670 megawatts of capacity built at a cost of S$2 billion.

Its power station at the western end of the city state comprises four blocks of natural-gas-fired combined cycle plants and two units of steam plants.

"The move is a natural extension of the Chinese power producer's core competencies," Donovan Huang, a Nomura Securities Ltd analyst, said by phone from Hong Kong. "Huaneng has sound management and has some gas-fired management experience."

For the year to March 2007, Tuas Power had revenue of S$2.27 billion, up 31 percent from a year earlier, its financial report showed.

Net income for the year to March 31 was S$177 million, 70 percent more than a year earlier. At December 31, Tuas Power's net debt stood at S$71 million.

Wong Kim Yin, Temasek's managing director for investments, said in the statement that China Huaneng's proposal, through its subsidiary SinoSing Power Ltd, was the "most attractive." It was the clear winner on price and commercial terms, according to the statement.

(Shanghai Daily March 17, 2008)