The deal is the first of perhaps several in the next month or so, as NGC sells its electricity generation assets, after earlier exiting from the electricity wholesaling and retail markets.
Industry commentators expected the NGC-Mighty River Power deal, as Mighty River Power (MRP) was already joint owner of the 118MW Southdown co-generation station in south Auckland and had pre-emptive rights. It also owns Rotokawa and had a sales agreement with NGC for the power output from the 24MW station, which NGC then on-sold under contract.
NGC chief executive Phil James said the cash proceeds from the transactions were expected to be about $NZ39.5 million, with approximately $NZ7 million relating to the Rotokawa power purchase agreement interest. The balance related to land and other assets associated with Southdown. The transaction would also release NGC from $48 million of joint venture non-recourse debt.
The agreement was expected to become unconditional by November 28, given NGC shareholder approval and MRP successfully funding its purchases.
James described the conditional agreements as a pleasing outcome for NGC, although it did not expect to realise a profit from the transactions, as proceeds above book value would be applied to the reduction of goodwill.
NGC provides gas to the station under a long-term agreement entered into before the plant was commissioned in 1996.
Mighty River Power chief executive Doug Heffernan said MRP was a natural buyer for the NGC share of Southdown interest, which had significant value. Full ownership would allow MRP to operate Southdown more efficiently, avoiding any unnecessary gas usage when its hydro lake levels were high, while at the same time being able to provide base-load demand when lake levels fell.
Most industry interest remains, though, on the bidders for NGC's 360MW Taranaki Combined Cycle station in Stratford. Interested parties include Meridian Energy, which sees the TCC plant as offering balance to its existing portfolio of hydro stations; Genesis Power, which is the dominant supplier in Taranaki-Wanganui-Manawatu; and Contact Energy and Tauranga-headquartered TrustPower.
It is understood an unknown French firm and Australian company Origin Energy, which is active in the New Zealand oil and gas industry and is big in the Aussie power station scene, probably lodged indicative bids earlier this month.
NGC is calling for final bids for the TCC and small (32 MW) Cobb hydro station near Nelson by late December.
