HONG KONG -- CLP Holdings, one of Asia's largest electric power companies, on Thursday said it will sell a gas plant for 1.78 billion Australian dollars ($1.28 billion) to Queensland Investment Corporation, an investment firm owned by the State of Queensland.
CLP subsidiary EnergyAustralia will sell its entire interest in the Iona Gas Plant, located in Victoria. The plant consists of gas-processing and compression units as well as underground gas storage reservoirs. It provides gas services to both the Victorian and South Australian gas markets, with a capacity of 500 terajoules per day.
EnergyAustralia will also sign a long-term gas storage services agreement with Queensland Investment, one of the largest institutional investment managers in the country, and intends to continue supplying gas to existing customers.
"The sale is consistent with CLP's strategy of restoring value to the business in Australia," CEO Richard Lancaster said in a filing to the Hong Kong Exchange. "We will continue to review our assets," Lancaster added.
Facing fierce competition, CLP's Australian operations have performed poorly. Profit from the country for the first half of 2015 plunged 16% to 493 million Hong Kong dollars ($63.6 million) from a year earlier, while profit from mainland China grew 42% and that from Hong Kong increased 10%. Lancaster said in August that the Australian market is in "extremely challenging" conditions.
Queensland Investment noted the transaction is expected to be completed by the end of the year. "Iona is an attractive core infrastructure asset for our clients with an essential role in the Australian east coast energy supply value chain," said Ross Israel, head of QIC Global Infrastructure.
CLP's stock price rose 1.1% to HK$67.15 at one point during Thursday morning trade, as investors welcomed the deal. CLP, the larger of Hong Kong's two power companies, holds investments in the energy sectors of China, India, Southeast Asia, Taiwan and Australia.