Meridian spends $100m on transtasman hydro assets

By JIM EAGLES

State owned-electricity generator Meridian Energy has made a $104.7 million foray across the Tasman to buy five small hydro-generation units.

The SOE, which only two weeks ago revealed plans for a $1 billion hydro-electricity and irrigation scheme on the Lower Waitaki River, is paying for the Australian purchase from its well-heeled balance sheet.

The company has also indicated it is keeping an eye out for any other opportunities which might arise across the Tasman.

The move has received strong support from Meridian's shareholding ministers. One, Minister for State-Owned Enterprises Mark Burton, yesterday emphasised that Meridian's strategic direction was in line with the Government's policy of "retaining and growing SOEs for the benefit of New Zealanders."

Mr Burton said SOEs were expected to pursue legitimate business opportunities which would add shareholder value.

That could include "appropriate offshore investments, as long as they don't detract from the core business of the company."

Chief executive Dr Keith Turner said yesterday that the purchase of the hydro-generation facilities of Power Facilities Pty was a good opportunity to get a foothold in the Australian renewable-generation market.

"New legislation passed in Australia just before Christmas puts a premium on renewable energy, which makes Power Facilities an especially attractive investment for Meridian," he said.

For its money Meridian will acquire power-generation facilities at four irrigation dams in New South Wales and Victoria plus a fifth which is under construction. They have a combined generation capacity of 62MW.

All the electricity they produce is sold under contract, so the investment will produce an immediate cashflow.

Dr Turner said the company had considerable experience in managing hydro power in New Zealand - where its Waitaki River and Manapouri-Te Anau system has a capacity of 2323MW - so the purchase fitted well with its expertise.

Meridian indicated it had been looking at suitable investments in Australia for some time and would continue to do so. But it has no plans to set up an office across the Tasman.