BP to pull out of solar energy venture in Australia

BP Plc LSE: BP NYSE: BP plans to withdraw from a venture seeking Australian government funds to build a solar-power generation project in the state of New South Wales.

“We’ve indicated that we wish to leave the consortium and that we won’t be part of the new bid process,” Jamie Jardine, a Melbourne-based spokesman for BP, said by mobile phone today.

BP, Fotowatio Renewable Ventures and Pacific Hydro Pty, which won A$306.5 million ($329 million) in Australian funds last year to build the Moree solar farm, missed a December financing deadline. That prompted the government to reopen the competition to other bidders, including AGL Energy Ltd.

 The company decided to exit the global solar business after 40 years because it has become unprofitable, Mike Petrucci, the chief executive officer of BP’s solar unit, told staff in an internal letter in December. The industry faces oversupply and price pressures after Chinese competitors increased production.

BP and its partners in the proposed A$923 million solar photovoltaic plant had failed to sign power-supply agreements needed to advance with the project, it said in December. The company said Dec. 23 it was sticking with the Australian project, even after deciding to exit the business globally.

“In the past two weeks, we’ve worked with the consortium to refine and develop the proposal, and we believe the new consortium will be an effective one,” Jardine said today.

The Moree venture will be eligible to bid for the funds and have a chance to show it is “still the most meritorious project,” Australia’s Resources and Energy Minister Martin Ferguson said earlier this month. The government also invited TRUenergy Holdings Pty Ltd. and Suntech Power Holdings Co. to update their applications seeking solar grants.

The government expects to make a decision in the second quarter, according to Ferguson.

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