Northern Ireland Energy Holdings set to buy Phoenix

NORTHERN IRELAND Energy Holdings (NIEH) is set to buy Phoenix Natural Gas in a €125 million deal.

NIEH said yesterday it was due to "reach agreement" to buy Phoenix's natural gas transmission business for £99.3 million sterling (€124.75 million) from its current owner, venture capital player Terra Firma.

Phoenix operates a natural gas pipeline from Ballylumford power station which supplies the greater Belfast and Larne markets with the fuel.

NIEH said the deal would deliver savings to consumers, as it would cut the cost of operating the pipeline from £9.6 million a year to £4.5 million, a reduction of more than 50 per cent.

"This 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 company said yesterday.

"The life-time savings of this deal are in the region of £25 million," it added. Commenting on the deal yesterday, Bill Cargo, managing director of NIEH's existing gas pipeline subsidiary Premier Transmission, said the company was always interested in buying assets that could deliver value to energy consumers. "This sizeable acquisition will bring significant benefits for energy consumers in Northern Ireland and will have a positive impact on natural gas prices," he said.

NIEH is paying for Phoenix by issuing a 40-year bond that is repayable at 2.207 per cent.

A spokesman said yesterday NIEH's mutual status meant it could get cheaper financing than most other utilities, which currently have to pay as much as 7 per cent on their loans.

NIEH intends renaming Phoenix as the Belfast Gas Transmission Pipeline.

London-based Terra Firma acquired Phoenix Natural Gas three years ago when it bought East Surrey Holdings, whose businesses also included ES Pipelines and East Sutton and Surrey Water in Britain.