ESB International has sold a 50 per cent stake in a 750 megawatt power station in northern Spain as part of a partnership deal with the giant Japanese energy company, Osaka Gas. Emmet Oliver reports.
In a deal that may be built on by the two companies in the years ahead, Osaka is entering the European electricity market for the first time. Osaka is believed to be paying about €70 million for the stake, while also taking a large amount of debt on to its balance sheet.
The station is one of the largest projects ever undertaken by the ESB outside the Republic. The station, near Bilbao in the Basque region, is expected to come into operation in autumn 2005. It will be able to supply 30 per cent of the energy needs of the region.
Yesterday, an agreement establishing the partnership was signed by ESB chief executive Mr Pádraig McManus and Mr Susumu Mita, president of Gas and Power Investments, the parent of Osaka.
Mr McManus told The Irish Times that while the ESB did not always form partnerships, it was preferable to share the risk with partners in a project of this scale.
The finance for the plant, known as Amorebieta, has been put in place by 24 international banks. The plant represents the largest capital investment in the Basque region, said an ESB statement.
Mr McManus said the deal was part of the company's increased focus on overseas deals. He said ESB was committed to holding no more than 60 per cent of the electricity market in the Republic and consequently had to look for growth opportunities in Europe.
He said that, while consultancy contracts were attractive, acquiring generation stations was a priority.
He said the company was considering two or three potential projects but would ultimately settle on one. He said ESB International's investments were starting to pay off handsomely, with Corby in England now the oldest at 12 years.
He said the company talked to several potential partners for the Spanish plant before settling on Osaka.
Mr Mita said neither company was "speculative" in nature and were in the project for the long haul. He said he "strongly hoped" to work on similar projects in Europe or Asia with ESB International.
Osaka Gas is one of the largest natural gas suppliers in Japan. It imports over 5 per cent of all traded gas volumes in the world. In 2003, it had sales of $9 billion and about 6.6 million customers.
ESB International is a wholly owned subsidiary of ESB. It is engaged in engineering and consulting services relating to international power generation projects. It is building a 400 megawatt combined cycle gas turbine plant at Coolkeeragh, near Derry, due to be operational by March.
