Singapore Power Ltd (SP) said that it has entered into a sale and purchase agreement to purchase TXU Australia from TXU Corp of the US for A$5.1 billion (US$1=A$1.36). Victoria-based TXU Australia is one of the largest electricity and gas utilities in Australia.

It owns and operates both electricity and gas distribution networks in Victoria serving 1.1 million customers. It owns the Western Underground gas storage facility with a capacity of 12PJ; owns and operates 1,280MW gas fired Torrens Island Power Station in South Australia, and owns 33% of a gas pipeline in South Australia.

SP already has a presence in the state of Victoria through fully-owned owned SPI PowerNet which owns and operates the electricity transmission grid in Victoria with a 6,000 km high voltage transmission system. SPI PowerNet was acquired in July 2000.

With this new investment, SP will become one of the largest utility groups in Australia. SP will have a diversified portfolio of assets across the energy value chain anchored mainly in the stable and regulated wires and pipes businesses.

In a statement, Quek Poh Huat, SP’s executive director, said: “We believe that the Australian energy market has growth potential. Our confidence in the Australian market is boosted by our successful track record and positive experience with SPI PowerNet. We are confident that this acquisition of TXU Australia will provide us with growing earning streams. Customers of TXU will continue to enjoy the same standard of quality service.”

He added: “This is a very strategic acquisition for SP. We are very pleased with our investment in SPI PowerNet and are confident that this acquisition will prove equally attractive. We are funding this acquisition with our cash balances and debt financing.”

This acquisition is subject to approval from the relevant regulatory authorities in Australia. Morgan Stanley is SP’s financial advisors