Overseas investment decision for case 200720035 - Contact Energy Limited

The application has been approved as it met the criteria.

The Overseas Investment Office is satisfied that the individuals with control of the Applicant collectively have business experience and acumen relevant to the overseas investment, and that the Applicant has demonstrated financial commitment towards the overseas investment. The Overseas Investment Office is further satisfied that each individual that exercises control over the Applicant is of good character and is not an individual of the kind referred to in section 7(1) of the Immigration Act 1987.

Contact Energy Limited (Contact) proposes to acquire the freehold estate in the subject land from Landcorp Farming Limited (Landcorp). Contact already holds a registered encumbrance and easement over the land. Contact will acquire the land under its right of first refusal arrangement with Landcorp. Contact proposes to acquire the land rather than continue to rely on its easement rights because the intensity of its geothermal operations are planned to increase. Contact will use the land to support and develop its geothermal energy operations in the Wairakei area. Contact also proposes to enter into a lease or licence with local farming interests to use the surface of the land for grazing or other activities that are compatible with geothermal energy operations.

The land is the site of Contact's proposed new Te Mihi power station. Over time, Te Mihi will replace the existing Wairakei power station, which is nearing the end of its useful life and is unlikely to run beyond 2026. The first two generating units of the Te Mihi power station are intended to commence operations in 2010, and the station will be complete with a third unit in 2015. The Te Mihi power station will generate about 220 MW of electricity, 60 MW more that the Wairakei power station. The Te Mihi power station will also comprise more modern plant and equipment and will therefore use geothermal fluid in a more efficient manner than the existing Wairakei power station.

The land overlies a significant part of the Wairakei-Tauhara geothermal field. Contact has existing geothermal fluid production wells, equipment and pipelines on the land which were installed under its easement rights. Contact also proposes to drill a number of new wells on the land to further access geothermal fluid and steam.

The proposal is likely to result in the following benefits:

1. the creation of new job opportunities and to the retention of current staff connected with the Wairakei operations that might otherwise be lost;
2. increased production of energy through geothermal activity, which is likely to lead to enhanced domestic services in New Zealand;
3. the introduction of additional investment for the development of new electricity generation;
4. the owner of the relevant land undertaking other significant investment in New Zealand with the proceeds of sale;
5. the giving effect to and the advancement of the government's strategy on renewable energy resources;
6. the enhancement of the ongoing viability of other overseas investments undertaken by Contact; and
7. Contact has previously undertaken investments that have been and are of benefit to New Zealand.