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Drax coal-to-Biomass Project Will Be First Backed By UK Guarantee, Says Treasury
The conversion of a coal-fired power station to biomass will be the first project to be backed by a UK Guarantee, the Treasury has announced. 29 Apr 2013 It has provided a £75 million guarantee to power company Drax, enabling the company to obtain private financing from a “wider group of investors” than would otherwise have been possible, it said. Announced in July 2012, the UK Guarantees scheme was designed to benefit up to £40 billion worth of major infrastructure projects which are struggling to obtain funding. It is open to financially credible, nationally significant infrastructure projects, provided that work can begin on those projects within 12 months of the guarantee being given. The Treasury had previously announced that guarantees would be given to the procurement of rolling stock for the new Crossrail route , and for the funding of the £1 billion Northern Line extension to Battersea . However, the Drax project is the first of these arrangements to be finalised. “I am very pleased that the development of Drax has been able to benefit from the UK Guarantees Scheme,” said Chancellor of the Exchequer George Osborne. “This is another example of how we are using the credibility Britain has earned through its determination to deal with its deficit to support investment in the economy.” In a statement, Drax announced a new £75m loan arrangement with Friends Life, underpinned by the Treasury guarantee. The company plans to convert three generators from coal-fuelled to biomass-fuelled. It has obtained financing from several lenders, including £50m from the UK Green Investment Bank. “This further strengthens our balance sheet, as we progress our project to transform the largest coal-fired power station in the UK into an electricity generator fuelled predominantly by sustainable biomass,” said Tony Quinlan, Drax’s finance director. “The benefits are multiple, from securing jobs at Drax and across the UK in the supply chain to providing low carbon, cost effective and reliable renewable power for the consumer. We are delighted to secure the support of Friends Life and Infrastructure UK,” he said. Continue reading
