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Northern Ireland Energy Holdings Limited (NIEH) is set to purchase the natural gas transmission business and assets of Phoenix Natural Gas in a deal worth £99.3 million (€125m).
The newly acquired company will be renamed Belfast Gas Transmission Limited. The acquisition has been financed with a bond issue, and will see NIEH's mutual business model extended further to bring real benefits to energy consumers.
The transmission line runs 26 km from Ballylumford Power Station to a pressure reduction station at Tory Town on the northern shore of Belfast Lough and then 9 km across the Lough to Knocknagoney pressure reduction station.
The transmission line, known as the 'Belfast Gas Transmission Pipeline' transports the natural gas supply to the Greater Belfast and Larne markets. The lower pressure distribution system will continue to be operated by Phoenix.
Bill Cargo, Managing Director of NIEH's existing gas pipeline subsidiary Premier Transmission, said: "As a mutual company we are always interested in acquiring assets where the company can deliver value in the interest of energy consumers here.
"This sizeable acquisition will bring significant benefits for energy consumers in Northern Ireland and will have a positive impact on natural gas prices".
The deal will deliver real cost savings to consumers. The cost of operating the pipeline will reduce from £9.6 million a year to about £4.5 million, a reduction of over 50%.
The reduction is attributable to the lower financing costs under NIEH's mutual model, and the fact that there are no shareholders and therefore no dividend distribution. The life time savings of the deal are expected to be in the region of £25 million (NPV).
Mr Cargo added: "Northern Ireland Energy Holdings offers a unique and well proven mutual model for financing transmission assets at a lower cost to the consumer and a solid track record of managing strategic energy assets safely and efficiently. The company combines a non-profit ethos with a private sector approach to its business."
(VB)
