Wednesday 21st March 2012 1 Comment
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Finance Minister Bill English is playing down the likely demands on the government to inject new capital into partially privatised energy companies in the near future, as opposition parties mount fresh attacks on the logic of the plan.
English has been under pressure on the issue, since a main rationale for the government’s asset sales policy is to take pressure off growing levels of public debt, spurred largely by the Christchurch earthquake and the weakness of the New Zealand economy.
However, legislation to allow the sale of minority stakes in state-owned electricity companies MightyRiverPower, Meridian Energy, Genesis Energy and state coal miner Solid Energy requires the government to maintain a controlling stake of no less than 51 percent.
“There aren’t really any large capital demands in the foreseeable future,” English told Parliament’s finance and expenditure select committee at a hearing to review the Budget Policy Statement issued last month.
The SOEs’ capital needs were also likely to be relatively small, compared with the government’s wider annual capital commitments. “We are looking at Crown balance sheet growth over the next 20 years,” he said.
Government MP and committee deputy chair Paul Goldsmith volunteered that partial privatisation would save the government having to find 100 percent of any capital requests from the energy companies once they were only partially government-owned.
Labour, Green and New Zealand First MPs sought to pressure English on how the government would ensure so-called “Mum and Dad” investors would be put to the front of the queue for shares in the forthcoming share floats, and whether there was anything to stop such shareholders immediately selling to foreign investors.
English said the government was confident that the SOEs would remain 85 to 90 percent owned by New Zealanders immediately after the float, including the government’s 51 percent stake, but that there would be no attempt to control how the shares were traded after that, beyond the legislated cap on the size of any one shareholder, to be set at 10 percent.
English suggested government Ministers will face difficulty arguing the case for partial privatisations because the Crown will be an issuer of shares and therefore bound by Securities Act obligations relating to the statements that could be made about investment in any of the companies.
“That does necessarily constrain the sometimes lucid political discussions that go on about mixed ownership,” he said.
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