Northpower ponders bid for Tongan electricity firm

Whangarei-based lines company Northpower will decide in the next few months whether it wants to bid for Tonga's electricity company.

Shoreline Power is a company looking for a new owner as the new King of Tonga, Siaosi Tupou V, divests himself of his business assets.

Northpower chief executive Mark Gatland said yesterday that the Northland lines company already had a close relationship with Shoreline, and was now interested in buying the business. But it would be "several months" before there was an outcome to negotiations, he said.

Reports that a Tongan deal would cost Northpower $46 million was "in the ball park", but Mr Gatland said any deal would need shareholders' approval.

The King of Tonga was given the electricity company, formerly the state-owned Tonga Electricity Power Board, by the royal- controlled government eight years ago in a 20-year lease.

Mr Gatland said it was around that time that Northpower became involved with Shoreline.

"For some years now we've helped them out. Originally when the old Tonga Electricity Power Board assets got taken over by Shoreline we did an assessment of the network for them and did a network plan for them to get it up to scratch."

With Northpower's help Shoreline had upgraded "an extremely run-down asset".

"There's a relationship there that both sides have valued."

That good relationship had led to Shoreline recruiting a Northpower senior manager, Northpower hiring Tongan line- staff, and sending specialists to Tonga.

Now Shoreline was looking for a company they could be confident could run it well, and Northpower was interested in putting skills developed in Northland to use there.

Mr Gatland said the electricity networks in Northland and Tonga were very similar, although all electricity in Tonga was diesel generated, making prices vulnerable to oil market fluctuations.

Tonga only had about 20,000 customers living on four islands, and most used very little electricity.

Northpower has 600 employees and 49,300 customers connected to a network over the 5700sq km of the Whangarei and Kaipara districts.

"We are really trying to sort out the essence of a deal, if there's one there," Mr Gatland said.

- NORTHERN ADVOCATE (WHANGAREI)