(Reuters) - Australia’s Genex Power Ltd (GNX.AX) on Friday said it won’t be able to line up funding for its pumped hydro project until next year, after failing to sign a power sale agreement from the project.
The setback knocked the small-capitalisation company’s shares down to A$0.165, off 39%, by 0615 GMT, having earlier touched a more than three-year low with a drop of as much as 46%.
Under a preliminary agreement reached last December, Genex had hoped to finalize a power purchase agreement in 2019 with EnergyAustralia and sell an equity stake in the 250 megawatt project to the country’s no.3 electricity retailer.
Genex said on Friday EnergyAustralia, owned by Hong Kong’s CLP Holdings (0002.HK), had advised that it could not agree to the deal spelled out in the term sheet last December.
“In light of this development, Genex wishes to advise that it no longer anticipates that it will reach financial close on the project in calendar 2019,” the company said in a statement to the Australian stock exchange.
As a result of the EnergyAustralia setback, agreements Genex reached for a total of A$635 million ($438.34 million) in funding from the government’s Northern Australia Infrastructure Facility and Japan’s J-Power (9513.T) would both lapse in December, Genex said.
Genex said it would work with the government fund, J-Power and EnergyAustralia to restructure the financing, which it now hopes to seal in 2020.
“There is more work to be done before we can commit long-term,” an EnergyAustralia spokesman said in emailed comments, adding that the company hoped an investment decision could be made “sometime next year”.
The project, which Genex plans to build at an abandoned gold mine in outback northern Australia, is seen as the most promising of a range of pumped hydro projects. It would store energy like a battery to back up variable wind and solar power.
Reporting by Anushka Trivedi in Bengaluru; Editing by Sonali Paul and Kenneth Maxwell