New South Wales taxpayers will feel “rightly dudded” by the sale of an ageing coal-fired power station that likely netted the private owners hundreds of millions of dollars in profit, critics including the state opposition have said.
Delta Electricity said it sold the 1,320-megawatt Vales Point power station in the NSW Hunter region to Sev.en Global Investments, owned by Czech billionaire Pavel Tykač.
Delta Electricity did not disclose the size of the sale of the asset, which it had bought for just $1m from the state government in 2015. Media reported the buyer paid more than $200m for the plant, providing a fat return, topped up by $130m in dividends paid to Delta’s owners, Trevor St Baker and Brian Flannery, in the past three years alone.
St Baker said Delta continued to believe “around-the-clock dispatchable generation” remained necessary for the national electricity market “well into the future”. He implied the plant may extend beyond its expected closure in 2029.
“[T]here are opportunities to grow the business [and] this can be better accomplished in a portfolio with Sev.en’s other baseload-capable generation interests,” he said in a statement. “The sale will facilitate this growth as Sev.en has shown a commitment to the sector and an ambition to expand, both in Australia and globally.”
Vales Point supplies about 11% of NSW’s power. Controversy over the price paid by Delta intensified in 2019 when Renew Economy reported the new owners had their rehabilitation liabilities capped at just $10m, leaving taxpayers to pick up potentially hundreds of millions of dollars in clean-up bills.
Sev.en in 2019 bought half of InterGen, a company that operates the Callide C and Millmerran coal power plants in Queensland with a combined capacity of 1,770MW. Sev.en said it specialises in “conventional” energy, and owns nine coalmines in the US states of Kentucky and West Virginia, and four gas-fired power plants in the UK.
“We make strategic investments with long-term commitment,” Sev.en’s chief executive, Alan Svoboda, said. “We always look for ways to make our business more sustainable, support the local communities and take care of the employees.”
NSW Labor’s energy and climate change spokesperson, Jihad Dib, said the sale still needed approval from the foreign investment review board, but it highlighted “how much the government’s privatisation agenda has hurt the people of NSW”.
“The people of NSW will feel rightly dudded by the announcement of this sale,” Dib said. “Over the next few years NSW will face serious shortfalls and supply issues, and [energy minister] Matt Kean and the government will be at the whim of private operators to keep the lights on.”
The director of Climate Energy Finance, Tim Buckley, said the plant’s sale to Sev.en was “the worst of all outcomes”.
“Who’s actually going to hold them to account?” Buckley said. “We’ve been fleeced twice. First, with the $1m sales, and secondly, on the clean-up costs.”
NSW Greens environment spokesperson, Sue Higginson, said the sale “screams of perverse corporate capitalism and serious systems failure”.
“[St] Baker and Flannery have made this huge profit despite making no contributions to the clean-up operations that will be required when the station closes in 2029 and despite the huge impact that their station has had on local communities, the environment and the climate,” Higginson said.
“As long as private industry operates vital services like energy then we will continue to see financial benefit for individuals being given priority over the wellbeing of NSW.”
A spokesperson for NSW’s Department of Planning and Environment, said the deal was “a commercial matter for the parties involved”.
“Any conditions imposed as a result of the government’s 2015 sale will continue to be binding on the owner of Vales Point,” he said. “Any environmental licence conditions will continue to apply.”
Ben Eward, a public health researcher who has campaigned to reduce pollution impacts in the Hunter Valley, said Vales Point had been granted “very special treatment for a long time”.
Since 2012, the plant had received rolling exemptions allowing it to release twice as much nitrogen oxide air pollution for a MWh of output as the nearby Eraring power station.
“The new owners are from Europe where coal-fired power station
standards allow an average 150mg of such pollutants per cubic metre, and 85mg per cubic metre for new plants,” Eward said, adding Vales Point was allowed as much as 980mg for each cubic metre.
“Can we expect the new owners to upgrade the plant to the standards that would apply in their home town?”
