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Dynegy Sells Gasification Assets

Dynegy Sells Gasification Assets

Dynegy announced the sale of all of its gasification assets to Cincinnati-based Global Energy Inc. for an undisclosed sum last week, effectively exiting the Houston-based company from the gasification business. The sale, which the companies said will close by the end of the year, is not expected to impact Dynegy's earnings.

Through the transaction, Global Energy Inc., an international independent power producer with over 2,000 MW of project activity, will acquire the Syngas facility at the Wabash River Coal Gasification Repowering Project in Terre Haute, IN. Wabash is the largest operating single train gasification plant in the world. Global also acquired the rights, title and interest in Dynegy's proprietary gasification technology and the rights to Dynegy's ongoing projects. Overall, the Wabash River station generates 262 MW, using fuel generated from the gasification process.

"The technology is very promising for converting many carbon-based fuels into a clean synthetic gas which can be used for power generation, chemicals and other energy uses. This sale will enable us to place our technology and assets with a company whose strategic interest is to further develop the technology to its full potential at Wabash and subsequent projects," said Dan Ryser, senior vice president of Dynegy Inc.

Although Dynegy's merger with Illinova did not directly influence this sale, John Sousa, a Dynegy spokesman, said it had an indirect effect. "The merger signifies our desire to focus on energy convergence," he said. "Gasification did not really fit into that. So, from that perspective, the merger did have a role in this transaction." He added that Dynegy first announced intentions to seek strategic alternatives for its gasification operations in April of 1998.

Besides customary closing conditions, the sale is also contingent on the buyout of Dynegy's gasification services contract by PSI Energy Inc., Cinergy's corporate parent. The buyout, which was agreed to in September of 1998, has been approved by the Indiana Utility Regulatory Commission, Dynegy said, and Global is already in talks with PSI about entering into a market-based contract at the site.

John Norris

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