Billionaire owner of ports takes on electricity network
THE Chinese billionaire owner of Hutchison Ports (UK), which owns the ports of Felixstowe and Harwich International, is poised to take on EDF’s power network - the biggest electricity network in the UK.
French company EDF also owns Sizewell B power station, which it acquired when it bought British Energy last year for more than �12billion, but this is not part of the proposed sale.
The deal covers around 170,000 miles of electrical network stretching over London, the South East and eastern England and is worth �5.8bn. It comes as the company bids to cut around �4.6bn from its debts by the end of 2010.
Infrastructure fund Cheung Kong, which is controlled by Hong Kong billionaire Li Ka-shing and also owns UK distribution firm Northern Gas Networks, has acquired the network, including debt.
Cheung Kong and its partner Hong Kong Electric Holdings are reported to have outbid funds including the Abu Dhabi Investment Authority and Australia’s Macquarie to clinch the deal, which resulted in a higher-than-expected price for the network.
Utilities and power distribution networks can be attractive to pension funds because they represent a reliable income stream, and several have changed hands since the credit crunch.
The EDF network serves around 7.8 million customers. It has 170,000 kilometres of underground cables and overhead lines and 66,300 substations.
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The proposed sale was announced as EDF published its half-year results which showed a 3.8% rise in underlying earnings to �8.6 bn, including �1.3bn in the UK.
In the UK, earnings dropped by 2.1% after cold weather and lower wholesale prices were offset by a lengthy power outage at Sizewell B power station, which should be reconnected to the grid in the current quarter.