Monday 5th March 2012
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Draft legislation to allow the partial privatisation of four state-owned energy companies has been tabled today, with its First Reading in Parliament due on Thursday.
As expected, the Bill will transfer existing clauses in the State-Owned Enterprises Act relating to Crown obligations to Maori under the Treaty of Waitangi and to “memorialised” land for settlement of Treaty claims.
However, the companies will no longer be subject to corporate responsibility obligations or to the Official Information Act. Only ministerial decisions relating to the government’s investment in the four companies will be subject to requests for public disclosure, whereas the businesses’ commercial decisions will be shielded from the OIA.
It will also include clauses requiring that the government remain the majority shareholder of the companies, defined as a 51 percent or greater shareholder, and that no other shareholder be allowed to own more than a 10 percent stake in the companies.
SOE Minister Tony Ryall confirmed the first SOE up for partial privatisation will be MightyRiverPower, owner of the Mercury retail electricity brand, “around the third quarter” of this year.
The other energy companies slated for partial sale are electricity generator-retailers Meridian Energy and Genesis Energy, and coal company Solid Energy. Further shares in Air New Zealand, which is already partially privatised, are also to be offered but it is not dealt with under the new legislation.
The government was taking separate legal advice on a further selldown of Air NZ shares, with some 27 percent of the NZX-listed company in public hands “because of the greater complexity around Air NZ’s existing shareholding," Ryall said.
The inclusion of the contentious Section 9 of the SOE Act in the new bill follows consultation with Maori interests following an outcry at suggestions that reference to the Crown’s Treaty obligations be left out of the bill for fear it would deter private investors.
Instead, the bill will include the clause, while making explicit that it applies only to those shares owned by the government.
Also to be replicated will be Section 27A-D to protect Maori interests in memorialised land owned by the partially privatised companies.
SOE Act requirements relating to social and environmental responsibilities will not carry over into the new bill.
“Like most large commercial entities, the mixed ownership companies will continue to build stakeholder trust and public support for their activities in a number of ways, including through their corporate social responsibility polices,” Ryall said.
Continuous disclosure requirements that come with stock exchange listing would require commercial transparency from the partially privatised companies.
“The rationale for selling minority stakes in the SOEs was that New Zealand “must not get into the kind of debt trap the UK and Europe are in," Ryall said.
"The $5 billion to $7 billion we expect to free up by these partial share floats will go into the Future Investment Fund to build priority assets like schools, hospitals and infrastructure.”
The assets for sale comprised less than 3 per cent of the government's total assets.
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