Contact renews Australian quest

By CHRIS DANIELS energy writer

Contact Energy is tipped to expand its Australian power generation business, saying it is again interested in bidding for assets across the Tasman.

The company, half-owned by United States energy giant Edison Mission, says it is "interested in bidding for certain of the Asia Pacific assets being offered for sale by the Minneapolis-based NRG Energy".

Most of these assets are in Australia and the target of Contact's attention is likely to be a coal-fired station at Flinders, South Australia.

The investments were being pursued by Contact alone, without any co-investment by Edison Mission, the company said.

While a core team of senior Contact staff, led by chief executive Steve Barrett, would investigate the deal, Edison Mission would provide staff to help advise on the project.

If Contact was successful in its acquisition, Edison Mission Energy would provide expert technical advice on coal plant operations, said the company.

Contact pulled out of the running after considering the merits of a $570 million investment in the Flinders plant two years ago.

Although shortlisted with three other bidders, Contact said it decided against making a final bid once the numbers were crunched because it "did not meet its risk/shareholder value criteria".

Contact spent $1.5 million on the Flinders bid before pulling out of the sales process.

It does have one Australian investment, owning 25 per cent of a coal-fired power station near Oakey, west of Brisbane. The Oakey station can be remotely controlled and operated from within Australia or from the Otahuhu B power station in New Zealand.

The company, by making it clear that Edison Mission was not a co-investor in the NRG plan, is trying to convince shareholders that it bears no similarity to another Australian venture, aborted this year, when it tried to increase its stake in a Victorian power station.

It pulled out of the deal after the Stock Exchange's Market Surveillance Panel said it would have to put details of the scheme before its minority shareholders.

The panel cleared Contact of any wrongdoing in its deal to build the Victorian power station under a joint-venture arrangement with Edison Mission.

A two-stage deal to buy into the venture angered some shareholders, who felt that Edison Mission was seeking to disadvantage Contact's New Zealand shareholders.

The "Valley Power" deal in question was a two-part scheme, initially committing $81 million or 4.9 per cent of Contact's shareholders' funds.