Meridian Energy is considering the sale of its 50 percent stake in the $A1 billion Macarthur wind farm in the Australian state of Victoria to book gains made available by the global drop in interest rates.
The state-owned enterprise's chief executive Mark Binns told BusinessDesk the company stood to earn a "bond-like" return over the 25-year life of its joint venture arrangements for the massive 420 megawatt windfarm, which it is building with Australian energy generator and retailer AGL.
The project is expected to be producing full power early this year and will be the largest in the southern hemisphere.
Meridian won an international award for the way the finance arrangements were structured in a ground-breaking deal announced in September 2011 under previous CEO Tim Lusk, whom Mr Binns replaced almost a year ago.
"The way Macarthur is structured, we don't participate in the ups and downs of the electricity market," says Mr Binns, who confirmed Meridian was "considering exiting" its stake in talks that include AGL. "It's an AGL risk. It doesn't totally fit with our strategy."
By comparison, its 70MW Mt Millar windfarm in South Australia is wholly-owned and operated by Meridian.
A timeframe for decisions is uncertain, but "not imminent", he says. "We can stay in the 25-year deal or we can look at selling. While interest rates are low, there's a profit to be made."
He would not be drawn on whether an exit from Macarthur could see a capital return to the government ahead of the proposed partial privatisation of Meridian, the most valuable of the three SOE power companies, independently valued at $6.5 billion in 2011 in work undertaken for the Treasury's Crown Ownership Monitoring Unit.
Assuming legal challenges are overcome, the sale of up to 49 percent of MightyRiverPower is planned in the second quarter of this year, with a second partial float of either Meridian or Genesis Energy possible by the end of the year.
Treasury papers released over the Christmas break warned the government that capital markets would struggle to absorb three partial SOE floats in one year.
There was "no link" between thinking on Macarthur and the asset sales programme, Mr Binns says, and capital returns from the partially debt-funded investment could be used for balance sheet strengthening.
He declined to comment on the extent of debt and equity components in the Macarthur funding arrangements, although statements at the time of the deal cited "term facilities totalling $A386 million to complete Meridian's funding commitment to the project".
"The addition of the Macarthur investment to Meridian Energy Australia's portfolio of operating and development assets represents a further step in developing Meridian Energy Australia as an integrated energy participant in the Australian market," the company said at the time.
As well as Mt Millar, Meridian is due to start construction of a wholly-owned 131MW windfarm at Mt Mercer in Victoria. The company's website says construction was due to start last month, with first power forecast in 2014.