China Huaneng Group, the nation's biggest power producer, was selected to buy Tuas Power Ltd for 4.3 billion Singapore dollars ($3.1 billion) from Temasek Holdings Pte, two people with direct knowledge of the matter said.

The Beijing-based company plans to sign an agreement with Temasek today, the people said, asking not to be identified before a public announcement.

Temasek in June last year revived a plan to sell Singapore's three biggest utilities after a six-year delay, to tap rising demand for power assets. The Singapore government has been gradually introducing competition in parts of the economy, such as banking, power and telecommunications.

Tuas Power, the first of three utilities the Singapore government-owned investment company plans to sell, was set up in 1995 and has 2,670 megawatts of capacity built at a cost of 2 billion Singapore dollars. For the year ended March 2007, the company had revenue of 2.28 billion Singapore dollars and profit of 177 million Singapore dollars, Temasek said in October.

Credit Suisse Group and Morgan Stanley are advising Temasek on the sale. Lehman Brothers is advising China Huaneng.

A Temasek spokesman declined to comment, as did spokespeople for all the three investment banks. Li Zhaokui, a Beijing-based spokesman for China Huaneng, also declined comment.

The Wall Street Journal reported earlier that China Huaneng will buy Tuas Power.

Deregulation of the electricity industry started in 1995, and the gas industry in 2000, with the separation of producers from the transmission and distribution networks. The three generators account for 90 percent of the island's power capacity and will attract investors in the Asia-Pacific region.

Following the sale of Tuas Power, Power Senoko Ltd and Power Seraya Ltd will be next, Temasek said last year.

Tuas Power has been owned by Temasek since 1995. Power Senoko and Power Seraya were transferred in 2001 to Temasek from Singapore Power Ltd, the main electricity supplier, after the government separated ownership of generators from transmission and distribution.