AGL Energy has sold its half equity interest in Mount Isa’s Diamantina Power Station (DPS) to its joint venture partner APA Group for $151 million.
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According to AGL’s ASX release the sale price represented a small premium to the book value of the investment and is in line with the company’s target to sell $1 billion of non-core assets by the end of next year.
The energy retail giant’s Chief Executive Brett Redman said they were selling their stake because the power station was not connected to the national grid.
“As a non-National Electricity Market connected generator, DPS is not a strategic asset to AGL,” Mr Redman said.
“Its sale represents a major milestone in meeting one of our key targets to realise $1 billion in asset sales.”
DPS was opened in November 2014 and comprises of a 242 MW combined cycle gas turbine Diamantina Power Station and the 60 MW open cycle gas turbine Leichhardt Power Station, serving its foundation customers Glencore and Ergon.
AGL said it would continue to supply gas to DPS under the existing gas sales agreement which runs to 2023.
APA Managing Director Mick McCormack said DPS was a quality asset and they were pleased to have had the opportunity to become the sole owner.
“The acquisition fits with APA’s growth strategy to build out our energy infrastructure business and to leverage our asset management, development and operational capabilities,” Mr McCormack said.
“DPS complements our existing energy infrastructure portfolio as it is connected to APA’s East Coast Gas Grid and is underwritten by two highly creditworthy counterparties."
Mr McCormack said APA was well positioned to provide essential energy to businesses and communities in the mineral-rich North West Queensland region well into the future.
DPS receives gas via APA’s Carpentaria Gas Pipeline and supplies electricity under long term contracts with Glencore’s Mount Isa Mines and the Queensland Government owned Ergon Energy, the two main electricity users in the region.
"Importantly, the acquisition enables us to further diversify APA’s revenue base and deliver increased returns to our securityholders,” Mr McCormack said.
The sale is expected to be finalised by March 31.
