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EnergyAustralia looks at partial sale options

EnergyAustralia is understood to have been exploring two options for a partial sale.

The first is a 50-50 joint venture with another party and the second is bringing in a partner to take just a small stake.

The energy company has been looking for a passive investor through investment bank Morgan Stanley and is understood to have been in contact with a handful of parties.

It comes as the company’s parent in Hong Kong, CLP, announced on Monday that the Australian subsidiary had made a $HK83m ($15m) loss for 2021.

About one-third of the decline in EnergyAustralia’s earnings was related to non-cash changes in the fair value of energy hedging contracts.

CLP said as the pace of the energy transition in Australia increased, the industry as a whole would face volatile and uncertain operating conditions including an increasingly competitive landscape.

Against that backdrop, it warned EnergyAustralia might continue to be affected by challenging market conditions this year, including lower wholesale electricity prices, higher gas costs and intense competition in retail energy markets. CLP also said the number of bad and doubtful customer debts related to the pandemic had continued to fall.

But earnings in the energy business were adversely affected by lower wholesale electricity prices, accelerated depreciation costs resulting from the advanced retirement plans for Yallourn Power Station and the replacement of expiring gas purchasing arrangements at higher prices.

Sources believe EnergyAustralia, previously known as TRUenergy, could be worth as much as $4bn. It supplies electricity and natural gas to more than 1.7 million residential and business customers throughout Australia.

Its assets include thermal coal, natural gas, hydro-electric, solar energy and wind power.

The Melbourne-based company was founded in 1995 and the group has made efforts to float in the past. Last year it announced it was closing the Yallourn station in mid-2028, four years ahead of schedule, and instead would build a 350-megawatt power-generating battery in the Latrobe Valley by the end of 2026. At the time Yallourn produced about 20 per cent of Victoria’s electricity.

Source: The Australian