English flags two part-privatisations for 2013

Finance Minister Bill English

BUSINESSDESK: The sale of shares in state-owned electricity generator and retailer MightyRiverPower is likely to attract more buyers than available stock when it’s floated later this year, and the government is eyeing up two more sales next year, according to Finance Minister Bill English.

During the consultation hui with Maori leaders, English tried to allay fears the 10% cap on individual shareholdings and prospect of oversubscriptions may squeeze out iwi investors, saying the technical details of the float haven’t been developed, but shares will be available on the open market in a report from a Christchurch hui on February 14.

“The first float is likely to be oversubscribed but Kiwi investors will be at the front of the queue,” English said.

The notes report English as saying the MRP sale flagged for the third quarter of this year will be followed by “two more next year”.

Two other electricity SOEs, Genesis and Meridian, are the next most likely candidates for partial privatisation, with coalminer Solid Energy and national airline Air New Zealand potentially further off.

The government is looking to raise as much as $7 billion by selling minority stakes in state-owned energy companies and the national carrier Air New Zealand.

The hui notes were part of a dump of mixed ownership model documents from the Treasury, released just before the long Easter weekend.

That includes Treasury advice on September 29 last year that Treaty of Waitangi obligations could threaten valuations of the floats by creating uncertainty for investors, and that retaining a provision preventing the companies from acting in a manner contrary to the Treaty was inconsistent to aligning the energy firms to other listed entities.

The government ultimately drafted legislation to deal with this concern by transferring existing clauses in the State Owned Enterprises Act relating to Crown obligations to Maori under the Treaty, making it explicit that grievances wouldn’t apply to private shareholders.

The documents also rule out special favours for Maori investors, with English and SOE Minister Tony Ryall saying they made it clear “Maori will not be given access to shares at a concessional price” and if shares were to be used as part of a settlement, the Crown would probably have to buy them on-market, according to a February 28 Cabinet paper.

In the same paper, English and Ryall knocked back a push by the Office of the Ombudsman to keep the companies subject to the Ombudsmen and Official Information Acts, saying “commercial entities operating in a competitive environment” face the best remedy from consumers who can shift their business to a different provider.

“The risk of losing customers provides strong incentives for the companies to be client-focused, and the risk of losing or disappointing shareholders and facing a falling share price incentivises the companies to operate efficiently,” the paper said.

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9 Comments & Questions

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No Liability for private investors if something goes wrong
I assume that means the taxpayer while owning 51% wiould shoulder 100% of the loss

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Refer CEO of Mighty River power in the weekend
$1 billion spent on infrastructure .

Under a privatisation nil spent on infrastructure and $1 billion would have been declared as dividends

Shades of telecom letting the inrastucture go backwards and stripping a monopoly of its cash

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When are they selling Landcorp, Lotto & the TAB?

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John Key's National /ACT government - working for the bank$ters and big investors - NOT the NZ public majority.

How many NZ 'mum and dads' can afford to pay their power bills - let alone invest in power companies - which they already own?

Penny Bright
'Anti-corruption campaigner'

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But, Penny, Mum n Dad can't pay their power bills because the UN has imposed an Emissions Scam on New Zealand. This has caused the CPI to spike through the back ground effect of the ETS on the CPI. The net effet to Mum n Dad over the Un's intrusion? 26.53% net effective GST.

Your thoughts on who is scamming who?

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Based on the fact this could be over subscribed etc then the government should make it clear that any investors who buy and then sell their shareholding prior to a subsequent float of other SOEs will not be allowed to buy shares in that next float.

that way people who just want a quick profit can only do it one.

A bit like buying a Morgan Car - 5 year waiting list and you buy the car for less than it is worth. But if you sell it you are black balled for life.

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Best thing the government can do is squeeze out all iwi and anything to do with Maori investment as Maori source of funds is totally contentious.Maori have got money out of the hard working New Zealand taxpayer for an out of date crusade of which an overwhelming amount of New Zealanders are against.

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Corruption is rife in New Zealand , until there is independent accountability things will only get worse. If you are concerned about how we are being scammed then you can down load the petition for an independent commission against corruption and help collect signatures so that together we can put an end to these scams
www.anticorruption.co.nz

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That photo is out of date.

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