Origin Energy has a 51.36% stake in Contact and would receive $51 million if Contact received the $100 million it expects for its share of the station.

Contact Energy chief executive Steve Barrett said yesterday afternoon that IPA and Mitsui’s decision to divest their combined 60% in Valley Power had created an opportunity for Contact to maximise value from the sale of its 40% holding.

Contact acquired its stake in Valley Power in late 2001, as part of its long-term strategic intention at that time to grow its Australian business, according to Barrett.

“Since then, Contact has refocused on its opportunities in the New Zealand market and, consistent with the sale last year of our start-up Victorian retailer Red Energy [last November], we are taking this opportunity to test market interest in our Valley Power investment,” he said.

Valley Power is a 300 megawatt fast-start power station located in the Latrobe Valley, which services peak demand in the state of Victoria. The station comprises six 50MW gas turbines, running primarily on natural gas.

Once Valley Power has been sold, contact would have only one Australian asset, a 25% stake in a 200MW, open-cycle, gas-fired peak plant in Oki, Queensland. Presumably this will also soon be up for sale.

Origin Energy would have no trouble finding uses for its the $51m it expects to make from the sale of Valley Power.

Origin has applied for permission to build an 800MW, gas-fired plant in western Victoria, which could cost up to $1 billion, and is aiming to build a similar plant in Queensland.

It is also a possible contender in the bidding for renewable energy company Southern Hydro, which has an estimated price tag of $1.5 billion.