QIC sues EnergyAustralia for A$1bn over Iona gas deal

The Australian fund manager is taking action against the local utility for lack of disclosure during the 2015 sale process of the A$1.78bn plant.

QIC, through its Lochard Energy subsidiary, has issued claims totalling A$967 million ($719 million; €645 million) against EnergyAustralia, blaming the utility for providing misleading information during the sale process of the Iona gas plant in 2015. 

The statement brought by Lochard Energy, lodged in the Supreme Court of Victoria today, alleges that certain information on the technical performance of the plant – on which the consortium relied to make its offer – was incomplete or misleading. 

The argument focuses on the asset’s capacity constraints, of which EnergyAustralia allegedly failed to inform the bidders. QIC contends that despite being aware of the issue, the utility made “express contrary representations” during the sale process. The firm says that the non-disclosure had a direct impact on its ability to assess the investment at the time of the transaction. 

It is understood that the litigation comes shortly before the June expiry of sale warranties, with the two parties still unable to reach a settlement over the issue despite months of negotiations. The total value of the claims are based on the difference between the price QIC paid and the “true value” of the asset, according to claim documents quoted by local media. QIC had not responded to requests for comment at press time.

EnergyAustralia rejects this assertion and will “vigorously defend the action”, it said in a statement. 

QIC told local media that it has never taken litigation against an asset vendor before. “It is not a decision taken lightly, and follows extensive conversations between the parties to reach agreement without resort to legal means,” said a spokesperson for the firm. 

A consortium comprising QIC and its clients acquired the Iona Gas Storage Facility in Victoria in October 2015 for A$1.78 billion. It was one of the first investments made via QIC Global Infrastructure Fund, which closed on A$2.35 billion in March this year. 

At the time of the deal, the fund manager described the asset as an “attractive core infrastructure asset with an essential role in the Australian east coast energy supply value chain”. Iona is a gas processing and compression plant with storage capacity located in southwest Victoria, serving both the Victorian and South Australian markets.