Monday 28th November 2011 1 Comment
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Prime Minister John Key says electricity generators and retailers Genesis Energy and Mighty River Power will probably be the first state-owned enterprises sold to be sold under the so-called mixed ownership model.
Mighty River Power or Genesis Energy is “likely to be the number one off the block,” Key told Radio New Zealand in an interview today, but couldn’t confirm when the stakes will be sold.
“My guess is not earlier than the latter part of 2012, but we will have to get advice on that,” he said.
The sales will require legislative approval, with the State-Owned Enterprises Act needing amendments, he said.
In June, the Treasury said Genesis Energy and coal miner Solid Energy needed to be restructured to lift their appeal for the partial privatisation programme.
The government wants to raise as much as $7 billion by selling down minority stakes in electricity retailers Genesis Energy, Meridian Energy, Mighty River Power, coal miner Solid Energy and airline Air New Zealand, and Key has said the funds raised will be used to pay for new infrastructure projects.
The bulk of that would come from Meridian, which Treasury estimates could attract as much as $3.1 billion in a partial sale to private investors. Mighty River Power could raise as much as $1.8 billion in a partial float, while Genesis Energy could attract $780 million and Solid Energy $830 million. Selling more of its stake in Air NZ could attract $280 million.
According to Budget documents, Treasury officials favoured the partial privatisation in its regulatory impact statement over keeping the status quo or the SOEs issuing non-voting equity bonds and using holding companies.
Such a sell down would offer small to moderate economic efficiency, and the main risk would be the perception of an implicit government guarantee.
Treasury officials also said the government would probably exert less control over board appointments, but that would be offset by improved commercial disciplines.
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