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New South Wales Government sells state owned coal-fired power plants

Oilfield Technology,

EnergyAustralia has announced it has entered into a sale and purchase agreement with the state of New South Wales and Delta Electricity for the acquisition of the Mt Piper and Wallerwang coal-fired power plans, for a price of AU$ 160 million.

The two coal-fired power plants are currently owned by state-run company, Delta Electricity.

The announcement follows the sale of Eraring Energy to Origin Energy for AU$ 50 million. Eraring Energy was the first of the state-owned power generators to be put on the auction block by the New South Wales Government, led by Barry O’Farrel.

In a recently announced budget, the New South Wales Government also indicated that the Port of Newcastle could be privatised, as those in office look to balance the books at a time when the Australian coal industry faces difficult market conditions. The Australian coal industry suffering from low prices for its coal, as well as rising costs of domestic production. State royalties received from the coal industry were AU$ 1.305 billion, down from a forecasted AU$ 1.878 billion.

The sale of the Mt Piper and Wallerwang coal-fired power plants mark a continued push toward privatisation of the Australian coal industry.

The Mt Piper power plant has a capacity of 1400 MW, while the Wallerwang plant has a capacity of 1000 MW.

Managing director of EnergyAustralia, Richard McIndoe, said the purchase of the power plants were part of the company’s move toward attaining the position of one of Australia’s largest integrated energy businesses.

McIndoe said the purchase of the two coal-fired power plants would enable the company to operate the plants with more flexibility to meet customer needs.

EnergyAustralia previously entered into GenTrader Agreements (GTAs) with the Delta Electricity in 2011. The GTAs gave EnergyAustralia the right to trade output from the Mt Piper and Wallerwang power plants.

McIndoe said that moving from a GTA to direct ownership would result in a number of financial advantages for EnergyAustralia. “We will gain unrestricted access to the full 2400 MW capacity of the plants,” McIndoe said, adding that this would give the company more freedom in how the power plants were managed.

Mt Piper is one of the newest and most efficient black-coal fired power stations in NSW, while Wallerawang has comparatively lower levels of efficiency and higher fixed costs.

Delta West employees transferring to EnergyAustralia will do so on current terms and conditions and with a number of important guarantees and benefits, consistent with other State asset sales. 

“I look forward to welcoming Delta Western employees to our business,” Mr McIndoe said. “We also understand that we are purchasing two power stations that operate in communities within the City of Lithgow council area. A key priority for us is to build partnerships across the community.”

The targeted completion date for the Acquisitions is 2 September 2013.  

Edited from various sources by Samuel Dodson

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