State-owned Beijing Energy explores partnerships to get approval for Australia solar farm deal

TPC Consolidated

24/07/2024 08:15

* 
      Firm agreed to buy five solar farms for up to $535 mln
from
Lightsource BP
    

        * 
      Deal signed in December but has not received regulatory
approval
    

        * 
      Australia scrutinises investments by state-owned companies
    

  
    By Stella Qiu
       SYDNEY, July 24 (Reuters) - A Beijing-based firm is open
to teaming up with new investors to purchase several solar farms
in Australia, a company official said, as it looks to satisfy
regulatory concerns over the ownership of key energy assets by a
Chinese state-owned company. 
    Beijing Energy International Holding (BJEI)  0686.HK , the
investment arm of the Chinese capital city, announced in
December that it had signed an up to A$813 million ($535.44
million) agreement to buy five solar farms across Australia from
Lightsource BP, a joint venture set to soon be 100% owned by
British oil and gas giant BP  BP.L .
        That would equate to more than 80% of the total Chinese
investment in Australia last year, based on data from KPMG and
the University of Sydney. 
        But the company has been awaiting approval from
Australia's Foreign Investment Review Board (FIRB) for months,
the final step for the deal to be completed. 
    Warwick Smith, a prominent Australian businessman who chairs
BJEI's local subsidiary, said the company had met all of FIRB's
regulatory requirements.  
        "My sense of it is that it's a state-owned enterprise
but it has intentions to reduce its equity levels, so that's a
big plus in its favour," he told Reuters. "It likes to see other
investors involved."
        He declined to give any details of the investors the
company was likely to choose as partners. 
    The Chinese company entered Australia in 2014 when it
purchased a wind farm in New South Wales state. 
    With the acquisition of the solar farms from Lightsource BP,
it would be the largest owner of utility-scale solar projects in
Australia, outpacing France's Neoen  NEOEN.PA  and Spain's FRV,
according to consultancy Rystad Energy.
    Foreign investments into Australia in the renewables sector
have come under heavy scrutiny as Canberra deems the electricity
sector to involve critical infrastructure essential to
maintaining the country's national security. 
    BJEI also has plans to buy an Australian electricity and gas
retailer CovaU, owned by TPC Consolidated Limited  TPC.AX . That
is also awaiting a decision from FIRB, with a revised expiry
date of July 31 just a week away. 
    The Australian government has already blocked some Chinese
investments in the rare earths and lithium sectors over the last
year.
    Bilateral ties are warming, as evidenced by Chinese Premier
Li Qiang's visit to Australia in June, but analysts say Chinese
investments in the country are unlikely to return to the recent
peak of about $11.5 billion in 2016. 
    "China would have to consider more carefully whether the
investment is long-term sustainable and where it fits in the
strategic context," said Hans Hendrischke, a professor at the
University of Sydney.
($1 = 1.5184 Australian dollars)

 (Reporting by Stella Qiu; Editing by Praveen Menon and Jamie
Freed)
 ((yifan.qiu@thomsonreuters.com; +61 0 427901124;))