AES has entered into agreements to sell its entire interests in its Oman and Pakistan businesses for approximately $200m. As a result of the transactions, $276m of non-recourse debt (as of September 30, 2009) will remain at the Oman and Pakistan businesses and will be removed from AES' consolidated balance sheet.
The transactions are subject to customary purchase price adjustments and approvals, and are expected to close during the first half of 2010.
Paul Hanrahan, president and CEO of AES, said: “These facilities have been very successful investments for AES, particularly when we look at operational and financial performance indicators. Our decision to sell the businesses is in line with our strategy to unlock the value of our portfolio. We continue to see compelling development opportunities throughout the world as countries look for more sources of affordable and sustainable power.”
The businesses are being sold to two separate buyers as a result of an auction process that began in the second quarter of 2009. AES indirectly holds interests in the Oman and Pakistan facilities through AES Oasis, which is owned 61.1% by AES and 38.9% by the IDB Infrastructure Fund. The transactions include the facilities such as 456MW Barka, Oman, and 362MW Lal Pir and 365MW Pak Gen, Pakistan.
AES has a 35% stake in the Barka combined cycle gas facility and desalination plant (91,000 cubic meters per day) and has full ownership of the companies that provide technical services. AES will sell its interests to ACWA Power International, a Saudi Arabian and desalination water company. Barka’s 15-year power and water purchase agreement with the Omani Power and Water Procurement Company SAOC expires in 2018.
AES has a 55% ownership interest in Lal Pir and Pak Gen oil-fired facilities, which under the agreement will be sold to a consortium led by Nishat Mills, a Pakistani industrial firm. Both Lal Pir and Pak Gen provide electricity to the Pakistan Water and Power Development Authority under 30-year power purchase agreements (PPA). Lal Pir’s PPA runs through 2027 and Pak Gen’s PPA ends in 2028.
Until the transactions close, the businesses will be reported as discontinued operations and their earnings will not be reported as part of income from continuing operations.
AES will continue to have presence in the Middle East and South Asia, where it will also pursue potential development opportunities. Earlier this year, the company brought a 380MW Amman East combined cycle gas facility in Jordan into commercial operation and currently has 62MW of small hydropower projects under construction in Turkey. AES entered Pakistan in 1993 as an independent power producer and began commercial operations in Oman in 2003.