Queensland Investment Corp launch $1bn suit against Energy Australia

Queensland Investment Corp claims the provider failed to disclose capacity problems before its sale of Lochard Energy.

Energy Australia CEO Catherine Tanna.

Queensland Investment Corp has launched an almost $1bn claim against Energy Australia over the sale of Lochard Energy after it failed to disclose capacity problems at the Iona underground gas storage facility.

QIC has alleged that despite suffering capacity problems at the time of the sale in October 2015, Energy Australia, failed to make the information available to bidders in the 2015 sale.

Proceedings lodged in the Supreme Court of Victoria this morning allege that despite being aware of the information EnergyAustralia made “express contrary representations” during the sale process.

This meant that the bidders could not have identified the problem during due diligence.

QIC won Lochard with a $1.78bn in October 2015 and made it a foundation asset of its Global Infrastructure Fund that had raised $2.35bn from 10 international investors in March this year.

Iona is a major underground storage facility used by Energy Australia, Origin Energy and AGL Energy to store gas for domestic distributions and electricity generation peaks including the approaching Victorian winter.

QIC discovered the capacity problems during reviews of the sale warranties and was in discussion with EnergyAustrlaia — owned by the Hong Kong-listed China Light and Power — up until the claim was lodged.

It is seeking damages of $967m, more than half the purchase price.

The launch of litigation comes as the expiry of sale warranties in June approaches and follows

months of discussions to try and resolve the issue out of court.

However, it is understood the capacity problems have not affected customers and consumers or the broader energy market and nor would the legal proceedings.