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ACCC to run eye over generator sale

THE NSW government's planned sale of its electricity generators is expected to run the gauntlet of scrutiny from the competition watchdog, while bids for two of the generators may prove problematic since their output has been sold under long-term contracts.

THE NSW government's planned sale of its electricity generators is expected to run the gauntlet of scrutiny from the competition watchdog, while bids for two of the generators may prove problematic since their output has been sold under long-term contracts.

Even so, industry funds along with electricity industry participants such as TRUenergy are expected to participate, while others such as AGL and Origin Energy are likely to remain on the sidelines.

The NSW government yesterday said it would sell all government-owned electricity generators, after it forced the previous Labor government to abandon its plan for full privatisation, leaving it to pursue a "second-best" option of selling the output of the generators, under the so-called "gentrader model".

Plans to sell the three government-owned distributors have been abandoned, but the merger of three into two companies will be pursued, with a detailed implementation proposal to be given to the government next week. This is expected to result in the loss of hundreds of jobs as two sets of head office staff are merged into one.

The government called on the Australian Consumer and Competition Commission not to block the proposed sale, although the ACCC yesterday refused to give that guarantee.

"The competition watchdog will not allow the sale of the generators to proceed if it believes there will be less competition," the NSW Premier, Barry O'Farrell, said yesterday.

"But, based on the Tamberlin report, I am confident the ACCC will find the sale is in the best interests of taxpayers."

An ACCC spokesman said it would review any proposed sale.

Earlier this year, the NSW government sold output from Eraring Power to Origin Energy and output from Delta Electricity's two Lithgow power stations to Hong Kong-owned TRUenergy. Plans to sell output from Macquarie Generation along with Delta's central coast power stations were abandoned with no bids received.

"It doesn't go as far as we would have liked, but it is a step forward," Brendan Lyon, of Infrastructure Partnerships Australia, said of the state government's plans.

A spokesman for TRUenergy said: "We'd need to see more detail, but it is obviously something we would consider."


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