Perth-based integrated energy company Aviva Corporation Ltd has entered into a joint venture agreement with a New York-listed company effectively valuing its 400 megawatt Mid West power project development at almost $70 million.
Perth-based integrated energy company Aviva Corporation Ltd has entered into a joint venture agreement with a New York-listed company effectively valuing its 400 megawatt Mid West power project development at almost $70 million.
Aviva and a subsidiary of The AES Corporation will work together to develop both the Coolimba power project and the coal mine, which is set to cost about $1 billion.
The project will play a key role in powering the development of the Mid West by supplying electricity sources directly into the South West Interconnected System, notably the northern end of that including several big resources projects around Geraldton.
Aviva CEO Lindsay Reed said the company went through an extensive process managed by Citi to find a partner.
AES has previously owned assets on Australia's east coast but was part of a major US withdrawal earlier this decade.
Mr Reed said all of Aviva key assets would go into the joint venture to ensure complete alignment between the parties, given positioning of the power station and its nearby fuel source.
Both companies are targeting financial close and the issue of a "notice to proceed" by the end of 2009.
Under the joint development agreement, Aviva will pay 50 per cent of the developers fee, AES will reimburse Aviva for past expenses capped at $7 million and AES will make staged payments to Aviva for the initial assets totaling $26 million.
Also under the JDA Aviva and AES will work to finalise environmental approvals, mining tenure, network connection, mining services agreement and securing off-take agreement with potential customers.
Following the completion of the JDA, both companies will then enter into a joint venture agreement covering the mine and the power station.
Below is the full announcement:
Integrated energy company, Aviva Corporation Limited (ASX:AVA, BSE:AVIVA), and a subsidiary of The AES Corporation (NYSE: AES), a global power company, have entered into a Joint Development Agreement (JDA) for the Coolimba Power project, a 400MW base load facility in the Mid West region of Western Australia.
The Coolimba Power project will serve the demand growth from both the northern half of the SWIS power grid and from new resource projects in the Mid West region.
Aviva and AES are targeting the financial close and issuance of notice to proceed under the EPC contract by end of 2009.
Aviva CEO Lindsay Reed said the Coolimba Power project will provide a secure fuel supply in a region with a growing demand for power.
"We wanted to build a plant with low emissions, and AES's extensive experience in the development and operation of power projects using Circulating Fluidised Bed (CFB) boilers will be help realise that goal," said Mr. Reed.
Since 1991, AES has commissioned five CFB generating plants with capacities between 203MW and 454MW.
This announcement marks a significant step towards developing the Coolimba Power project. Under the JDA, Aviva and AES will work together to develop both the Coolimba Power project and coal mine. As part of the first phase of the JDA, Aviva and AES will finalise:
- environmental approvals;
- mining tenure;
- network connection;
- mining services agreement; and
- off take agreements with potential customers.
Upon successful completion of this phase, Aviva and AES will enter into a Joint Venture Agreement covering the coal mine and power station. Up to and including the completion of financing, control of the project will be shared equally.
Essential terms of the JDA applicable to Aviva include:
- a 50% share of the developers fee payable by the project to Aviva and AES;
- reimbursement of past expenses by AES to Aviva capped at $7m; and
- staged payments for the initial assets totalling $26m.
Aviva ran an extensive partner selection process conducted by advisor Citi. The project will be the first for AES in Western Australia.
