Prime Minister John Key says the government will go ahead with the sale of Mighty River Power shares – but not until early next year.
Mr Key announced, in advance of his press conference yesterday afternoon, that this would be followed by a share float of up to 49% in either Meridian Energy or Genesis.
The prime minister has previously said the partial privatisation of Mighty River Power would go ahead this month.
Last week the Waitangi Tribunal recommended delaying the sale of up to 49% of the state owned company as part of the government's mixed ownership model policy, and also some sort of preferential share deal – a "share plus" option – for the local iwi.
Delay for iwi talks
Mr Key says the a "share plus" option will be discussed with local iwi, although the government is against the idea for the following reasons:
- It is not in the national interest for any group within Mighty River Power's potential 49% minority shareholding to be given such rights
- Almost every form of redress to Maori that could be covered by the shares plus scheme can be achieved in other ways.
- The remaining elements of shares plus in relation to decision rights over management or strategic decisions would not be able to work in practice.
- If the shares plus concept existed it was likely to make the company less attractive to investors, which could be reflected in a lower sale price and therefore be to the detriment of taxpayers
- Following consultation with iwi earlier this year, a careful and deliberate decision was made to ensure the crown's obligations under the treaty continue to rest with the crown, not the companies.
"Ministers have today decided that taking some time to talk about 'shares plus' with relevant iwi is the prudent thing to do. That means preparation for the share offer will continue to proceed, but in March to June next year, rather than in 2012."
He says the decision to delay has been costly 'not more than $10 million, but more than $5 million.' But he is confident it will lead to greater clarity and certainty for investors.
However, he says there could have been a highly devalued float if the sale had gone ahead this year and he cannot see how that would be responsible government.
Mr Key says the government is being cautious and prudent "but prudence is needed".
He will let the Maori Council know the decision and plans for the next five weeks.
He is not planning a national hui or a national settlement and accepts the likelihood of court action is high but is confident the Government is in "a very strong position".