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Contact sells mothballed New Plymouth power station for $24M

Contact sells mothballed New Plymouth power station for $24 mln

Dec. 5 (BusinessDesk) - Contact Energy has sold its mothballed New Plymouth power station for $24 million to Port of Taranaki and Methanex New Zealand.

The deal will see the council-owned port buy the majority of the site for $15.5 million, and Methanex a smaller chunk for $8.5 million, the Wellington-based energy company said in a statement. The agreement with the port gives Contact rights to repurchase part of the site if the power company wants to develop it for future power generation or gas infrastructure, and stops rivals from doing the same.

The Methanex deal includes the area underneath methanol tanks the methanol producer currently owns.

"The two separate agreements represent a good commercial outcome for Contact both in terms of price and the option to repurchase part of the site should we need it," chief executive Dennis Barnes said. "We received a number of bids, of which the two separate offers from Port of Taranaki and Methanex New Zealand were the most compelling."

The New Plymouth site was mothballed in December 2007 when the power company discovered asbestos in areas that hadn't previously been registered. At the time of the discovery, former CEO David Baldwin said Contact's options were to either remedy the problem at a cost of millions of dollars, or shut the plant down and possibly demolish it.

Contact has primarily used the site for storage after removing the asbestos-ridden materials in 2008 and 2009. The plant was briefly recommissioned in 2008 in response to a national power shortage.

The sale follows Contact’s agreement in October to sell its gas metering business for $63 million to Vector.

The power company's shares fell 0.4 percent to $5.37 in trading yesterday, and have gained 2.3 percent this year.


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