NGC seals Mighty River deal

By CHRIS DANIELS

NGC has agreed to sell its half stake in the Southdown power station to Mighty River Power.

Mighty River, a state-owned power generator, will also buy NGC's contract to purchase 100 per cent of all electricity generated by the small Rotokawa geothermal station near Taupo.

The sales deal will net $39.5 million for NGC, which is selling all its power stations and shifting its focus to gas transmission and metering.

NGC and Mighty River are joint owners of the Southdown station at Penrose, which can generate 118MW of electricity.

The co-generation plant produces electricity and steam. The steam is sold to Carter Holt Harvey's Te Papapa factory. All of the electricity is sold to Mighty River Power.

NGC provides gas to the station under a long-term agreement entered into before the plant was commissioned in 1996.

Mighty River chief executive Doug Heffernan said the SOE was a natural buyer of the Southdown interest, which had "significant value".

"It will allow us to operate Southdown more efficiently so that we can avoid unnecessary gas burn when hydro conditions are favourable and crank it up to provide base-load demand when hydro conditions are weak," he said.

About $7 million of the Mighty River deal is for Rotokawa, with the rest coming from the land and other assets coming from Southdown.

Conditions that need to be met include NGC shareholder approval and Mighty River getting finance. If these are satisfied, the deal will go unconditional by November 28.

* NGC recently adopted the acronym as its official name, replacing Natural Gas Corporation.