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New Zealand plans further asset sell-off as original revenue targets fall short New Zealand plans further asset sell-off as original revenue targets fall short
(6 months later)
The New Zealand government has announced plans to sell a slice of a third state-owned power company as the final step in a contentious program of asset sales.The New Zealand government has announced plans to sell a slice of a third state-owned power company as the final step in a contentious program of asset sales.
Finance minister Bill English said the government planned to list Genesis Energy on the stock market in mid-April. Between 30-49% of the company would be sold depending on demand, he said.Finance minister Bill English said the government planned to list Genesis Energy on the stock market in mid-April. Between 30-49% of the company would be sold depending on demand, he said.
Over the past year, the conservative government has raised about $NZ4bn ($A3.6bn) by selling 49% stakes in energy companies Mighty River Power and Meridian Energy. It also sold a 20% stake in national carrier Air New Zealand, which was already partially privately owned. Over the past year, the conservative government has raised about $NZ4bn ($A3.6bn) by selling 49% stakes in energy companies Mighty River Power and Meridian Energy. It also sold a 20% stake in national carrier Air New Zealand, which was already partially privately owned.
The government says the program has helped it reduce foreign debt and allowed it to invest in hospitals, schools and roads.The government says the program has helped it reduce foreign debt and allowed it to invest in hospitals, schools and roads.
It is a policy which could be repeated in Australia. The Abbott government is encouraging state governments to dispose of assets to raise money for new infrastructure spending. At last weekend’s G20 finance ministers meeting in Sydney, federal treasurer Joe Hockey held up NSW’s asset sales as a model for countries to follow across the world.It is a policy which could be repeated in Australia. The Abbott government is encouraging state governments to dispose of assets to raise money for new infrastructure spending. At last weekend’s G20 finance ministers meeting in Sydney, federal treasurer Joe Hockey held up NSW’s asset sales as a model for countries to follow across the world.
But opponents of privatisations say it is ideologically driven and unnecessary. More than two-thirds of New Zealanders who voted in a referendum last year said they opposed the sales.But opponents of privatisations say it is ideologically driven and unnecessary. More than two-thirds of New Zealanders who voted in a referendum last year said they opposed the sales.
Genesis Energy is the smallest of the three power companies. An independent 2011 assessment valued the company at NZ$1.8 billion, suggesting the government could expect to reap between NZ$540 million and NZ$900 million from the sale.Genesis Energy is the smallest of the three power companies. An independent 2011 assessment valued the company at NZ$1.8 billion, suggesting the government could expect to reap between NZ$540 million and NZ$900 million from the sale.
English said it will offer bonus shares as a loyalty incentive to eligible small retail investors. Unlike the previous energy company sales, he said, the share price will be announced at the start of the offer period rather than the end.English said it will offer bonus shares as a loyalty incentive to eligible small retail investors. Unlike the previous energy company sales, he said, the share price will be announced at the start of the offer period rather than the end.
The government will almost certainly fall short of its initial goal of raising between NZ$5bn and NZ$7bn from the asset sales program. This is largely due to the state-owned company Solid Energy losing almost all its value due to missteps and a drop in the price of coal, which forced the government to abandon their plans to sell a stake in the company.The government will almost certainly fall short of its initial goal of raising between NZ$5bn and NZ$7bn from the asset sales program. This is largely due to the state-owned company Solid Energy losing almost all its value due to missteps and a drop in the price of coal, which forced the government to abandon their plans to sell a stake in the company.
English said the government “achieved what we wanted to” with the offers and it would not be selling any more assets.English said the government “achieved what we wanted to” with the offers and it would not be selling any more assets.
NZ opposition leader, David Cunliffe, said the asset sales were a bad idea made worse by flooding the stock market with three power companies in the space of a year.NZ opposition leader, David Cunliffe, said the asset sales were a bad idea made worse by flooding the stock market with three power companies in the space of a year.