Solid Energy woes create out-clause for Genesis Energy coal contract
Genesis said it was "considering a number of available options, including stopping further coal deliveries from Solid Energy under the terms of the supply agreement"
Government-controlled electricity and gas supplier Genesis Energy [NZX: GNE] has revealed an out-clause in its contract with struggling state-owned coal miner Solid Energy and is considering cancelling a standing order for coal that it doesn't need to buy now it's proposing to close the coal-fired Huntly power station.
The Solid Energy board today announced it was placing the company in voluntary administration before a two and a half-year period in which it would sell the company's assets to settle debts to its lenders.
Shortly after that announcement, Genesis said in a statement it was "considering a number of available options, including stopping further coal deliveries from Solid Energy under the terms of the supply agreement."
The electricity retailer and generator has an option to exit the contract in certain circumstances, including voluntary administration, a spokesman confirmed.
Genesis intends to close the last two of four electricity generation units capable of burning both natural gas and coal by the end of 2018 and already has 700,000 tonnes of coal stockpiled on-site, and says it has "ample contracted gas supplies to support continued operation of the coal/gas-fired units during their remaining operational life."
Solid Energy's other major customer for thermal coal in the North Island is Bluescope's NZ Steel mill at Glenbrook.
Genesis shares fell 0.6% to $1.68 and have dropped 22% this year.
(BusinessDesk)
Pattrick Smellie
Thu, 13 Aug 2015
Thu, 13 Aug 2015
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
Solid Energy woes create out-clause for Genesis Energy coal contract
50484