Utility believes the deal should lead to additional downstream power projects
CLP Holdings has sealed the purchase of energy assets in Australia in an A$2.12 billion ($13.17 billion) deal that paves the way for further moves into the country's downstream electricity market.
CLP signed an agreement on Monday to buy the power retailing and generation assets from Singapore Power. The acquisition, CLP's biggest overseas, complements its only other asset in Australia, the wholly owned power plant in Yallourn, Victoria.
'In merging our Yallourn generation business and the retail business, we can have a naturally hedged business,' a CLP spokeswoman said. 'Now [our] focus will be on further expansion of the retail business, in Victoria and South Australia as well as other states.'
The deal prompted Standard & Poor's and Moody's Investors Service to say they were likely to downgrade CLP given its decision to plug into Australia's risky non-regulated merchant energy and retail market and its weakened financial profile.
Although analysts widely perceived the purchase as being 'slightly expensive', they said the deal made strategic sense, blending well with the Yallourn power plant.
The acquisition highlights CLP's efforts to reduce its reliance on the Hong Kong market where returns are facing a possible cut when the scheme of control regulatory regime expires in 2008.
