Mutual Energy has secured £200m of financing from Legal & General to support the Gas to the West project.
This venture, which will also benefit from government grant assistance, will bring natural gas to Mid Ulster towns, including Cookstown and Magherafelt, reducing reliance on carbon intensive fossil fuel for the customers it serves.
Mutual Energy, with the agreement and support of SGN its Gas to the West partner, the Utility Regulator and the Department for the Economy decided to raise the required funding now ahead of construction completion taking advantage of current competitive lending rates. Due to the company’s mutual structure this will result in valuable savings for natural gas customers.
Paddy Larkin, the CEO of Mutual Energy, has welcomed the news. “This is a fantastic deal for customers and means that the cost of debt repayments will be around 35% less than anticipated when Mutual won the Gas to the West tender in 2014,” he said. “This amounts to an additional saving of about £50m in present value terms over and above the customer savings already expected from the bidding process.”
Mr Larkin added: “This is now our Group’s fourth major debt deal bringing important investment into Northern Ireland. We are very pleased that an investor such as Legal & General has won the competitive process.”
Mutual Energy was also able to work with Phoenix Natural Gas to part fund some of the Gas to the East project, further expanding the benefits to these customers.
The Utility Regulator was closely involved in approving the deal and its Chief Executive, Jenny Pyper, added: “This is great news for Northern Ireland’s natural gas consumers as it represents a significant saving for them. It also sends a strong message about the level of confidence that investors have in Northern Ireland’s regulated energy industry.
“We now look forward to work advancing on the Gas to the West project which will bring an affordable, cleaner and convenient form of energy to around 40,000 new customers in the west of Northern Ireland.”
Tom Sumpster, Head of Infrastructure Finance LGIM Real Assets said they are delighted to be providing 100% of the debt financing to support Mutual Energy’s subsidiary West Transmission.
With construction work on the project now well underway, customers can soon look forward to access to lower cost, cleaner energy.