Australia formally rejects bids by State Grid and Cheung Kong Infrastructure for Ausgrid
Australia government has officially rejected bids by two Chinese companies in the sale of the country’s biggest energy grid, Ausgrid. The companies that had bid are State Grid Corp of China and Hong Kong’s Cheung Kong Infrastructure (CKI).
Ausgrid, a state owned electricity infrastructure company, owns, maintains and operates the electrical distribution networks to 1.6 million customers in Sydney, Central Coast, Hunter Region and Newcastle areas of New South Wales. It was formed in 2011 from the previously state owned energy retailer/distributor, EnergyAustralia, when the retail division of the company, along with the EnergyAustralia brand, was sold by the NSW State Government.
Australian treasurer Scott Morrison reported:
“After due consideration of responses from bidders to my preliminary view of August 11, 2016, I have decided that the acquisition by foreign investors under the current proposed structure of the lease of 50.4 per cent of Ausgrid, the New South Wales electricity distribution network, would be contrary to the national interes. This is consistent with the recommendation from the Foreign Investment Review Board.”
“In making this decision, national interest concerns have been paramount. They relate to the transaction structure as currently proposed and the nature of the assets.”
“The proposed 99-year lease of 50.4 per cent of Ausgrid forms a part of the New South Wales Government’s plan to unlock capital to fund investment in new infrastructure across the State. The Australian Government continues to support the New South Wales Government’s plan in this regard.”
A new tender process will be launched. Officials with the NSW government are understood to be planning an offshore road show to drum up global interest.
According to sources, a team made up Macquarie Group, IFM and the Queensland Investment Corporation is expected to bid for Ausgrid after a revised sale process begins.
The deal could reach A$10 billion (US$7.48 billion) to become the country’s biggest privatization sale on record.
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