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CLP unit plans two gas-fired plants in Australia

South China Morning Post 26 Oct. 2011

TRUenergy’s new stations may be funded by Sydney IPO of the country’s No 2 power utility

TRUenergy, the Australia-based energy flagship of electricity utility CLP Holdings (SEHK: 0002), plans to spend up to A$3.6 billion (HK$29.3 billion) building two gas-fired power plants in Queensland as the country moves towards greener energy sources.

Analysts said the projects could be funded by a potential initial public offering of TRUenergy on the Sydney stock exchange, which could take place next year or the year after.

CLP said yesterday TRUenergy, its biggest asset outside Hong Kong, was seeking government approval to build two high-efficiency gas-fired power stations in Queensland to meet demand in the northeastern Australian state in the next 10 years.

Each of the planned stations, which will use open-cycle or combined-cycle gas-fired technology, would have an initial capacity of 500 megawatts and up to 1,500MW eventually.

That would require an initial investment of A$400 million and a total investment of A$1.8 billion for each plant.

CLP said the application process would take a year and construction could start in 2013, at the earliest.

Some analysts said the proposed investments underlined TRUenergy’s commitment to expansion in Australia despite the country’s new carbon reduction regime.

“It has to build low-carbon-emission plants under the new regime,” an analyst at an Asian brokerage said.

“TRUenergy’s potential spin-off can offer funding for the massive investment plans.”

A CLP spokeswoman yesterday did not rule out the possibility of listing TRUenergy, saying a spin-off could be one of the ways to raise fresh funds.

Earnings at TRUenergy, Australia’s No2 power utility, fell 64 per cent to HK$373 million last year, including a HK$346 million provision for renewable energy arm Solar Systems as that company plunged into liquidation.

TRUenergy took A$3.41 billion in revenue last year, and supplies electricity and gas to 2.8 million customers in Australia.

CLP said the proposed power projects could emit 50 to 70 per cent less carbon than coal-fired stations of similar capacity.

The plants are planned at Ipswich, which is close to areas of projected population growth in southeast Queensland and areas of projected industrial growth in Gladstone in central Queensland.

CLP chief executive Andrew Brandler said the projects were part of the group’s plan to reduce its portfolio’s carbon emissions by 75 per cent by 2050.

TRUenergy stands to benefit from the Australian government’s carbon-tax policy to fight global warming, under which a package of transitional financial aid worth A$5.5 billion would be offered to polluters to help them migrate to a low-carbon regime. TRUenergy is entitled to 25 per cent, or about A$1.37 billion, of the package.

CLP shares fell 25 HK cents to HK$70.70 yesterday.

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