A member of a consortium that won a €1 billion contract just two months ago to build the Republic's new power station may sell its stake to an international energy company or finance house.
A member of a consortium that won a €1 billion contract just two months ago to build the Republic's new power station may sell its stake to an international energy company or finance house.
Mountside Properties has been contacted by several interested parties concerning the potential sale of its 30 per cent stake in Tynagh Energy, the consortium scheduled to build the 400 megawatt plant at Tynagh, Co Galway.
While the idea of a sale so soon after the awarding of the contract may prove controversial, it is understood Mountside does not regard itself as a long-term participant in the project.
Former IFA official and beef processor Mr Martin Blake and his family are major shareholders in Mountside. A spokesman for Tynagh Energy declined to comment on the discussions last night. If a sale goes through, the directors of Mountside could become millionaires, although companies may be slow to buy into a such a long-term project.
While the contract is believed to be worth €1 billion (due to a commitment from the ESB to purchase energy from the plant), this figure refers to turnover and the profit would be significantly smaller. The cost of building a 400 mw station would be about €230 million. The ESB has agreed to buy power for up to 10 years.
The site for the plant is at the old Tynagh mine in Galway. Planning permission has been awarded for the site by Galway County Council.
Tynagh Energy is made up of Mountside Properties, South African bank Investec and Turkish plc Gamma Construction.
There was widespread surprise in the electricity industry late last year when the Tynagh group won the contract. While Investec and Gamma have been involved in energy projects before, Mountside has never operated a major electricity project in the State.
A spokesman for the Commission for Energy Regulation (CER), which awarded the contract to Tynagh, said any changes in shareholdings would need the approval of electricity regulator Mr Tom Reeves. The CER declined to comment on whether it would support a sale by Mountside.
Several companies are understood to have held discussions with Tynagh. Some companies that lost out in the original competition are believed to be involved.
The losers in the competition were: Bord Gaís Éireann/Scottish and Southern Energy; US utility AES Electric; Ireland Power Energy; and Viridian Power.
There have also been reports that Goodbody Stockbrokers has been involved in discussions, although the stockbroker's business development unit declined to comment.
On February 10th, the Tynagh group invited applications to operate and maintain the combined gas plant. A tender notice said Tynagh wanted operators to ensure the "safe, economical and efficient operation, maintenance and repair" of the plant. Responses to this tender are due to be returned this week.
The 400 mw Galway station is badly needed to boost the Republic's supply of energy. ESB National Grid has warned several times about the tightness of supply, although it appears this winter will pass without interruption.
In December, Aughinish Alumina - one of the largest consumers of power in the State - was also awarded a contract for a 100 mw station in Limerick.
While there are likely to be several parties interested in Mountside's stake, other companies are working on plans to develop their projects. Viridian, for example, is studying the idea of developing a second plant at its Huntstown site in north Co Dublin.
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