5 Dec 2012

Contact gets 'non-earning asset' off books

12:47 pm on 5 December 2012

Contact Energy has made an after tax gain of about $14 million dollars from the sale of its New Plymouth power station to the Port of Taranaki and Methanex, the company says.

The listed energy firm closed the gas and oil-fired station five years ago when asbestos was discovered at the site.

Port Taranaki plans to expand its operations on to most of the 21 hectare property, while Methanex New Zealand is buying the section of land where its two storage tanks are located.

Contact entered into two separate agreements with the companies in a deal worth $24 million.

The Port of Taranaki paid $15.5 million for the majority of the power station land adjacent to its site and says the deal means it can expand and create more operational land.

As part of the agreement with the port, Contact can repurchase part of the site in future if it wants to develop it for power generation or gas infrastructure.

Contact chief executive Dennis Barnes says that's unlikely in the immediate future given the market is oversupplied with power.

"So it actually means that we just get an asset off our books which isn't earning us any money."