MRP float delay to cost from $5m to $10m
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BUSINESSDESK: Delaying the partial privatisation of Mighty River Power will cost the government between $5 million and $10 million, Prime Minister John Key says.
Opposition parties vowed to use the six-month delay to push for cancellation of the unpopular asset sales programme, which is already the subject of an attempt to force a non-binding referendum.
However, Mr Key indicated today the government would not be dissuaded by a referendum from its intention to partially privatise up to five government entities: three electricity companies, a coal miner, and the already partially privatised Air New Zealand.
The general election had served as a referendum on the issue, he says.
While the cost of up to $10 million was significant, the government did not want to risk losing more if the issues around Maori claims to water rights had not been resolved when the float occurred.
"If it provides much greater clarity and certainty for shareholder, it has to be in the Crown's overall interest to take this prudent step," says Mr Key of decisions at Cabinet today to move the sale of up to 49% of MightyRiverPower from its current pre-Christmas schedule to the second quarter of 2013.
Minority stakes in Meridian and Genesis, the other two state-owned power companies, could then proceed in an unspecified order in late 2013 and the first half of 2014, Mr Key says.
In the case of all three companies, the Crown would negotiate first-hand with representatives of iwi with claims to water rights associated with the company in question.
Mr Key is adamant both that the government rejects a national settlement of Maori claims to water rights, which repeated investigations have identified, and that arrangements would be made "iwi by iwi, waterway by waterway".
Among iwi affected by MRP's Waikato River hydro-electricity operations and central North Island geothermal plants are Waikato-Tainui and Ngati Tuwharetoa.
Mr Key told his weekly post-Cabinet press conference it was unlikely Meridian would have settled on new contractual arrangements with Bluff smelter owner Rio Tinto, by the time of the MRP float.
The smelter uses around one-seventh of total national electricity output, so its loss could be disruptive to the electricity market and add to demand for electricity, which has been static for four years.
He reaffirmed the government "utterly rejects" the Waitangi Tribunal's so-called "shares plus" solution, in which Maori would receive both shares and rights in the running of power companies using hydro resources.
Asked whether geothermal resource rents would be on the table during the forthcoming consultation, Mr Key said the process would be "tightly focused" on the "shares plus" issue.
His answers suggest the government's legal advice is that it might have won a court challenge by the Maori Council if it proceeded with the sale this year, but that it would be on firmer ground to undertake the proposed consultation and stage the sale next year.