Mutual Energy has secured GBP200 million (US$260.0 million) financing from Legal & General to cover construction costs of the Gas to the West project. This involves the delivery of an 80km extension to the existing gas network in Northern Ireland through a mainly underground pipeline running from Portadown to (near) Enniskillen.
Once complete, the new pipeline, which will be operated by Mutual Energy subsidiary West Transmission Ltd, will provide gas to around 40,000 residents and numerous businesses in eight towns that have historically relied on oil and coal.
Mutual Energy and SGN were awarded licences by the Utility Regulator for Northern Ireland to build and operate the project in February 2015. Construction is already underway, with the developers having secured up to GBP32 million (US$41.6 million) funding from the Northern Ireland Executive.
Mutual Energy has also disclosed that it has also worked with Phoenix Natural Gas, the largest gas distribution business in Northern Ireland, to part fund some of the Gas to the East project. The Utility Regulator was closely involved in approving the deal.
Legal & General Investment Management (LGIM) Real Assets, on behalf of its client Legal & General Retirement Institutional, is providing 100% of the debt financing for the project.
The developers have raised the required funding now ahead of construction completion to take advantage of current competitive lending rates. This means that the cost of debt repayments will be around 35% less than anticipated when Mutual and SGN won the Gas to the West tender in 2014.
This amounts to an additional saving of about GBP50 million (US$65.0 million) in present value terms over and above the customer savings already expected from the bidding process.