SYDNEY--Australia's most populous state said Thursday it will go
ahead with the partial privatization of its electricity network, as
it attempts to raise 20 billion Australian dollars (US$16 billion)
to spend on new infrastructure such as roads.
After hiring Deutsche Bank and UBS to study the viability of the
sale, New South Wales state said it would proceed with the
long-term lease of 49% of its electricity grid, or the so-called
"poles and wires." The state has already sold its electricity
generators and retailers.
A successful sale would be the largest so far in a nationwide
push by conservative governments across Australia to privatize
state-owned assets. Last month, Australia's federal government
raised A$5.7 billion from the sale of the country's top public
health insurer, Medibank Private, scoring the largest initial
public offering of a government-owned asset in the country in
nearly two decades.
New South Wales and Queensland state have sold billions of
dollars worth of ports and toll road assets in recent months.
Queensland is also considering selling its electricity grid.
Privatization remains a divisive issue around the world, with
detractors concerned that crucial assets capable of generating
long-term revenues are sold for short-term financial
gain--potentially causing job losses as private owners try to boost
efficiency. Prices for consumers can also rise if monopoly assets
with no competition are sold, though governments often continue to
impose regulatory caps on pricing for essential energy assets.
Australia's economy is struggling to cope with a fading mining
boom, prompting lawmakers to propose asset sales to strengthen the
country's finances.
The study by Deutsche Bank and UBS found the New South Wales
network business was likely to attract a broad range of local and
offshore investors due to their long-term strategic value as
regulated assets, the government said.
"The funding boost will turbocharge the economy," Andrew
Constance, the state's Treasurer, said in a statement.
Funds raised would be injected into major rail and road
projects, hospitals, sports and arts facilities, regional water
security and tourism and environmental initiatives, Mr. Constance
said.
The network is split into three assets: TransGrid, Ausgrid and
Endeavour Energy. An initial public offering of Ausgrid and
Endeavour Energy would be considered should market conditions
indicate this would generate a better outcome than finding a single
buyer, the government said.
Write to Ross Kelly at ross.kelly@wsj.com
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