State Owned Power Companies To Be Privatised
December 1 2011 Categorized Under: Genesis Energy, Mercury Energy No Commented
Prime Minister John Key has announced that New Zealand owned power companies Genesis Energy and Mighty River Power will probably be the first state owned enterprises to be sold under the mixed ownership model.
The two power companies are “likely to be the number one off the block” Key told Radio New Zealand in an interview this week, but he couldn’t confirm when the shares will be sold.
In June, the treasury advised that Genesis Energy and coal miner Solid Energy needed to be restructured to heighten their appeal for the partial privatisation programme.
The government is aiming to raise as much as $7 billion by selling minority shares in electricity retailers Genesis Energy, Meridian Energy, Mighty River Power, as well as coal miner Solid Energy and airline Air New Zealand.
The Prime Minister says that funds raised will be used to pay for new infrastructure projects.
The bulk of the money raised will come from Meridian Energy, which the treasury estimates could raise as much as $3.1 billion in a partial sale to private investors. Mighty River power is expected to raise $1.8 billion, while Genesis Energy could attract $780 million in a partial sale.
Treasury officials favour the partial privatisation in its regulatory impact statement over maintaining the status quo or the SOE’s issuing non-voting equity bonds and using holding companies.
Such a sell down would off little economic efficiency, and the biggest risk would be the perception of an implicit government guarantee.
Many consumers are worried about the effect that partial privatisation will have on their electricity prices believing the sales will cause increases.
State owned enterprises are set up to be profit driven businesses just like others in the private sector. By law, their principle objective is to be as profitable and efficient as comparable businesses that are not owned by the Crown.
Their only non commercial responsibilities are to be good employers and to accommodate the interests of the communities in which they operate. In that effect, SOE’s operate in the public interest no more than private sector companies do.
No date for the sales has been set as yet. John Key states “My guess is no earlier that the latter part of 2012, but we will have to get advice on that”.
Source: Scoop.co.nz Stuff.co.nz