Gas networks sell-off likely to boost Orion

By RICHARD BRADDELL

WELLINGTON - The Christchurch- based electricity lines company Orion is to offload its North Island gas networks in a tender closing at the end of next March.

The networks, which serve business and residential users in Auckland, Wellington, Hawkes Bay and several central North Island centres, are likely to sell for considerably more than the $270 million valuation provided by Orion to the Ministry of Commerce under disclosure regulations.

Formerly known as Southpower, the businesses were acquired through the takeover of Enerco, which was finally completed in February this year.

But the previous October, Southpower moved to sell Enerco's non-industrial gas retailing business to Contact Energy for $105 million, a transaction which occurred at the same time as Southpower sold its electricity retailing business to TransAlta.

After the sale of its energy retailing and ahead of its final takeout by Orion last February, Enerco had a market capitalisation of about $380 million.

Owned 87.6 per cent by the Christchurch City Council, with the balance held by the Selwyn and Banks Peninsula district councils, Southpower had planned to become a national energy retailer.

However, its managing director, Chris Laurie, said those ambitions had been frustrated by the Government's ordered split of electricity lines and energy businesses in which Southpower opted to become a lines company under the new name of Orion.

The decision to sell follows an independent review conducted by Ord Minnett, which will also be managing the sale process.