L&G provides £200m of debt finance towards Gas to the West project

Work is continuing on Gas to the West scheme
Work is continuing on Gas to the West scheme

MUTUAL Energy has secured £200 million of financing from Legal & General to support the expansion of the gas network in Northern Ireland.

The funds raised will be used to cover the construction costs of the ongoing Gas to the West project, which is bringing natural gas to the towns and villages including Coalisland, Cookstown, Derrylin, Dungannon, Enniskillen, Magherafelt, Omagh and Strabane.

With the agreement and support of its Gas to the West partner SGN , the Utility Regulator and the Department for the Economy, Mutual opted to raise the required funding now ahead of construction completion, taking advantage of current competitive lending rates, and due to its mutual status, this will result in savings for customers.

Mutual Energy's chief executive Paddy Larkin said: “This is a fantastic deal for customers and means the cost of debt repayments will be around 35 per cent less than anticipated when we won the Gas to the West tender in 2014.

"It equates to an additional saving of about £50 million in present value terms over and above the customer savings already expected from the bidding process.”

He added: “This is now our group’s fourth major debt deal bringing important investment into Northern Ireland. We're delighted that an investor such as Legal & General has won the competitive process.”

Mutual Energy - which is advised on the project by international law firm Pinsent Masons - was also able to work with Phoenix Natural Gas to part fund some of the Gas to the East project, further expanding the benefits to these customers.

Utility Regulator chief executive Jenny Pyper said the development was great news for Northern Ireland’s natural gas consumers and sends a strong message about the level of confidence investors have in the region’s regulated energy industry.

"We now look forward to work advancing on the Gas to the West project which will bring an affordable, cleaner and convenient form of energy to around 40,000 new customers,” she added.

Tom Sumpster, head of infrastructure finance at L&G Real Assets, said: “We are delighted to be providing 100 per cent of the debt financing to support Mutual Energy’s subsidiary West Transmission in a deal which helps to further diversify our clients’ investment portfolio, both in terms of asset class and geography, and evidences our ongoing commitment to financing assets that benefit local communities.

"As owners and operators of existing pipelines, as well as electricity and gas inter-connectors between Northern Ireland and Scotland, Mutual Energy are well placed to deliver this much needed gas network expansion to the west of Northern Ireland.”