Fleshing out its plans to sell more than $1 billion worth of power plant assets this year, El Paso Corp. last Monday disclosed in a regulatory filing that it expects to close the sale of a 775 MW power plant in New Jersey during the second quarter of this year.

As part of a non-core asset disposition program, financially strapped El Paso earlier this month said that it intends to divest approximately $1.1 billion of power assets in 2003 (see NGI, Feb. 10), including both domestic and international power generation assets. The company in January received around $240 million in proceeds from the sale of half of CE Generation LLC to a U.S. subsidiary of TransAlta.

Along with the proceeds from the sale of the CE Generation stake, El Paso expects $860 million of power asset proceeds this year, the majority of which will be from power plants with long-term contracts.

El Paso, in an 8-K filing made at the Securities and Exchange Commission, said that the “most significant” plant is the 775 MW Linden cogeneration plant in New Jersey. Several bidders are currently competing in a formal process to acquire the plant “and we expect to close the sale of the Linden plant during the second quarter of 2003.”

Along with the Linden plant, El Paso said that it is in talks for the sale of other domestic power plants in its power generation portfolio. “In our international portfolio, we plan to sell a number of properties in Europe and the Caribbean basin.”

Meanwhile, in the same filing, the company offered additional details on its plans to sell $1.1 billion worth of petroleum assets in 2003. El Paso noted that its Corpus Christi refinery has been under lease to Valero since June 2001 and Valero has an option to buy these assets during the first half of 2003. The anticipated sale of this refinery will reduce long-term debt by applying sales proceeds to the $240 million of debt associated with the lease.

“Other petroleum assets targeted for sale include the Eagle Point refinery and related facilities, our nitrogen chemical plant assets, our Texas and Louisiana crude businesses and miscellaneous petroleum pipelines and petroleum products facilities,” El Paso noted.

Meanwhile, the company also used the filing to detail the expected impact from Standard & Poor’s Ratings Services lowering of El Paso’s credit ratings to ‘B+’ from ‘BB’ earlier this month. El Paso in November it estimated that the cash demand required by lower debt ratings would be around $2.2 billion. “Last week, we stated that we expected total demand to be approximately $2 billion, or $200 million lower than our original estimate.”

El Paso said that although it’s difficult to predict actual cash demand based on last week’s S&P action, “we expect some incremental cash demand, and currently believe that the $2.2 billion original estimate is more appropriate.”

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