Bord Gáis partner in bid for Viridian energy assets pulls out

STATE-OWNED Bord Gáis Éireann's partner in its bid for energy group Viridian's businesses has pulled out.

It is understood that British-based International Power, which emerged as Bord Gáis's partner, pulled out of the joint bid recently.

The group has given no reason for its decision, and neither it nor the State-owned gas and energy group would comment on the process.

The move does not rule Bord Gáis out of continuing with its bid for Viridian's generating assets, which include two power plants in Co Dublin and a number of wind projects.

Viridian's owner, Bahrain-based merchant bank and venture capitalist Arcapita, bought the then quoted company in 2006 for £1.62 billion (€2 billion). Recent reports indicated that Arcapita is looking for bids for the company that are at least in this region.

Other bidders for Viridian include German energy giant RWE, and one financial institution.

Airtricity owner Scottish & Southern Energy and Spanish group Endesa were also named as bidders, but have dropped out.

The Government is expected to increase Bord Gáis's borrowing limit over its current level of €1.7 billion.

This will allow the company the scope needed to finance its expansion plans. These include entering the electricity market, and developing its own conventional and renewable generating plants.

The group's strategy is ultimately to position itself as a "dual fuel" supplier in the Irish market. Most European utilities offer customers both electricity and gas, and regulators here are keen to promote this approach, as they believe it boosts competition.

It will also allow the State company to pursue targets such as Viridian's operations. Earlier this year, it was one of a number of bidders for the ESB power plants at Tarbert in Kerry and Great Island in Wexford, which were ultimately sold to Endesa.

Bord Gáis is building a gas-fired power plant, with a capacity of around 400 megawatts, in Cork.

Energy industry news service, Sparkspread.com, recently reported that Bord Gáis and International Power ran a beauty parade of investment banks at the beginning of the month with the aim of selecting an adviser. The outcome of that process is not known.

International Power is a London-quoted energy player with investments in assets in Britain and Europe.

The group held a presentation for investors earlier this week, but made no reference to its efforts to enter the Irish market.

Viridian supplies 760,000 customers throughout Ireland and is the holding company for Northern Ireland Electricity, which is a regulated utility.

© 2008 The Irish Times

This article appears in the print edition of the Irish Times