CLP in A$475 m deal to buy two power stations

Through the agreement, the power supplier will have full ownership and control of the two coal-fired plants in New South Wales

PUBLISHED : Thursday, 25 July, 2013, 8:33am
UPDATED : Thursday, 29 August, 2013, 4:13am

Power supplier CLP said yesterday that it had agreed to buy two power stations in Australia from the New South Wales (NSW) state government for A$475 million (HK$3.4 billion), the latest in a string of purchases in the country that started 18 years ago.

The deal, which involves acquiring two coal-fired power plants with a combined capacity of 2,400 megawatts of electricity in central western NSW, would require the firm to pay A$160 million in cash through the existing financing facilities of its subsidiary in Australia.

The remaining A$315 million would be settled by a previous CLP deposit held by the state government following a separate deal, completed in 2011, in which it acquired the rights to sell the power generated by the two stations.

Shares in CLP dropped 1.2 per cent to HK$64.10 yesterday, while the benchmark Hang Seng Index finished down 0.3 per cent at 21,900.96 points.

In a statement on the Hong Kong stock exchange's website, CLP said: "The NSW state government has accepted a bid by EnergyAustralia [wholly owned by CLP] for the acquisitions of the Mount Piper Power Station and the Wallerawang Power Station."

The company previously bought the rights to the power generated by the two stations under what were known as the "Delta Western GenTrader agreements", which were designed to allow private firms to trade self-generated electricity exclusively into the wholesale market while maintaining asset ownership by the government.

In March 2011, as part of the energy reforms in NSW, the government and CLP's Australian unit completed a deal in which the private company acquired the energy retailing business along Australia's east coast under the EnergyAustralia brand and purchased long-term sales contracts to buy electricity and control the dispatch of power from the two stations.

CLP said the deal involved EnergyAustralia acquiring the two power stations and the associated infrastructure, "and by so doing, moving to full ownership and control of all aspects of the operation", which were formerly managed under the Delta Western GenTrader agreements.

It said one of the key benefits of direct ownership was that it freed EnergyAustralia from fixed contractual commitments.

The deal is expected to be completed by September 2 and the firm has issued a A$10 million letter of credit statement.

The two power stations, which are in close proximity, source coal from nearby mines through conveyors and trucks.

With the latest purchase, CLP has made 11 acquisitions in Australia since 1995, according to data provider Dealogic, with the biggest being the US$1.5 billion purchase of the retail businesses of EnergyAustralia.

Apart from electricity businesses, it also bought oil and gas assets in the Gunnedah Basin in NSW for US$302 million in July 2011.

CLP, which also owns a portfolio of power plants and energy assets in China, Vietnam, India and Taiwan, raised US$982 million from issuing new shares in December and said the fresh money would be used to invest in the electricity business.