SP AusNet ditches shared IT services

Listed Victorian power distributor SP AusNet has terminated its shared IT services contract and will bring the functions in-house after its former major shareholder sold down its holdings.

Singapore Power last year announced it would sell almost 20 percent of its 51 percent holding in SP AusNet, and 60 percent of subsidiary Jemena, to Chinese state-owned electric utilities company State Grid.

SP AusNet’s shared IT services provider since 2008 - Enterprise Business Services, a wholly owned subsidiary of Singapore Power - was born out of the consolidation of the SP AusNet and Jemena IT divisions. 

EBS employs around 250 staff and provides IT services - including end-user computing, application support, managed data centre services, and project and advisory services - to SP AusNet and Jemena. 

SP AusNet signed EBS as its exclusive IT services provider in September 2008 for an initial term of seven years. The contract was able to be terminated early providing 12 months’ notice was given.

SP AusNet today announced it had terminated a ten-year management contract - under which the IT function falls - with Singapore Power as a result of its sell-down. It first hinted at the move in its first half 2014 results last November.

The termination of the management contract, which takes effect today, will cost SP AusNet $50 million.

The associated restructure of the IT services function will cost up to $7.5 million, SP AusNet said.

It will transition its share of EBS IT activities into its own core IT function starting Tuesday. EBS staff are expected to be offered employment with SP AusNet.

Payments associated with the restructure will be reflected in the power distributor’s full year accounts, due for release mid May.

SP AusNet did not respond to request for comment by the time of publication.