Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Meridian mulls quitting stake in Australian wind farm

Meridian mulls quitting passive stake in Australian wind farm

By Pattrick Smellie

Jan 8 (BusinessDesk) - Meridian Energy is considering the sale of its 50 percent stake in the A$1 billion Macarthur wind farm in the Australian state of Victoria to book gains made available by the global drop in interest rates.

The state-owned enterprise's chief executive, Mark Binns, told BusinessDesk the company stood to earn a "bond-like" return over the 25 year life of its joint venture arrangements for the massive 420 megawatt wind farm, which it is building with Australian energy generator and retailer AGL.

The project is expected to be producing full power early this year and will be the largest in the southern hemisphere.

Meridian won an international award for the way the finance arrangements were structured in a ground-breaking deal announced in September 2011 under previous CEO Tim Lusk, whom Binns replaced almost a year ago.

"The way Macarthur is structured, we don't participate in the ups and downs of the electricity market," said Binns, who confirmed Meridian was "considering exiting" its stake in talks that include AGL. "It's an AGL risk. It doesn't totally fit with our strategy."

By comparison, its 70MW Mt Millar wind farm in South Australia is wholly-owned and operated by Meridian.

A timeframe for decisions was uncertain, but "not imminent," he said.

"We can stay in the 25 year deal, or we can look at selling. While interest rates are low, there's a profit to be made."

He would not be drawn on whether an exit from Macarthur could see a capital return to the government ahead of the proposed partial privatisation of Meridian, the most valuable of the three SOE power companies, independently valued at $6.5 billion in 2011 in work undertaken for the Treasury's Crown Ownership Monitoring Unit.

Assuming legal challenges are overcome, the sale of up to 49 percent of MightyRiverPower is planned in the second quarter of this year, with a second partial float of either Meridian or Genesis Energy possible by the end of the year.

Treasury papers released over the Christmas break warned the government that capital markets would struggle to absorb three partial SOE floats in one year.

There was "no link" between thinking on Macarthur and the asset sales programme, said Binns, and capital returns from the partially debt-funded investment could be used for balance sheet strengthening.

He declined to comment on the extent of debt and equity components in the Macarthur funding arrangements, although statements at the time of the deal cited "term facilities totaling A$386 million to complete Meridian’s funding commitment to the project."

"The addition of the Macarthur investment to Meridian Energy Australia’s portfolio of operating and development assets represents a further step in developing Meridian Energy Australia as an integrated energy participant in the Australian market," the company said at the time.

As well as Mt Millar, Meridian is due to start construction of a wholly-owned 131MW wind farm at Mt Mercer, in Victoria. The company's website says construction was due to start last month, with first power forecast in 2014.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Postnatal Depression: 'The Thief That Steals Motherhood' - Alison McCulloch

Post-natal depression is a sly and cruel illness, described by one expert as ‘the thief that steals motherhood’, it creeps up on its victims, hiding behind the stress and exhaustion of being a new parent, catching many women unaware and unprepared. More>>


DIY: Kiwi Ingenuity And Masking Tape Saves Chick

Kiwi ingenuity and masking tape has saved a Kiwi chick after its egg was badly damaged endangering the chick's life. The egg was delivered to Kiwi Encounter at Rainbow Springs in Rotorua 14 days ago by a DOC worker with a large hole in its shell and against all odds has just successfully hatched. More>>


Trade: Key To Lead Mission To India; ASEAN FTA Review Announced

Prime Minister John Key will lead a trade delegation to India next week, saying the pursuit of a free trade agreement with the protectionist giant is "the primary reason we're going" but playing down the likelihood of early progress. More>>



MYOB: Digital Signatures Go Live

From today, Inland Revenue will begin accepting “digital signatures”, saving businesses and their accountants a huge amount of administration time and further reducing the need for pen and paper in the workplace. More>>

Oil Searches: Norway's Statoil Quits Reinga Basin

Statoil, the Norwegian state-owned oil company, has given up oil and gas exploration in Northland's Reinga Basin, saying the probably of a find was 'too low'. More>>


Modern Living: Auckland Development Blowouts Reminiscent Of Run Up To GFC

The collapse of property developments in Auckland is "almost groundhog day" to the run-up of the global financial crisis in 2007/2008 as banks refuse to fund projects due to blowouts in construction and labour costs, says John Kensington, the author of KPMG's Financial Institutions Performance Survey. More>>


Health: New Zealand's First ‘No Sugary Drinks’ Logo Unveiled

New Zealand’s first “no sugary drinks logo” has been unveiled at an event in Wellington... It will empower communities around New Zealand to lift their health and wellbeing and send a clear message about the damage caused by too much sugar in our diets. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news