Only the market can stop asset sales – Ryall
Sun, 17 Jun 2012 6:15p.m.
By Samantha Hayes
State-owned Enterprises Minister Tony Ryall hasn't ruled out job losses and power price increases with the sale of state-owned energy companies.
But he says there is one factor that could stop the sales going ahead.
Mighty River Power, the first of four energy companies the Government intends to partially sell, could be floated as early as August. State-owned Enterprises Minister Tony Ryall isn't ruling out job cuts.
“I can't guarantee that jobs won't be lost,” he says. “I can't guarantee that there will be more jobs. These are decisions that the boards of these companies operating in a competitive environment will make.”
National has long argued the market will take care of power prices, but critics say it's consumers who will suffer.
“The key role of the current SOEs is that it gives the Government an opportunity to intervene in the market, whereas once they're fully privatised it's just going to be profit maximisation,” says Green Party co-leader Russel Norman.
The Government says it won't be protest action like in Dunedin yesterday that will stop asset sales, but the market.
Treasury has valued Mighty River Power at $3.75 billion. The Government says it won't sell unless it gets a good price. But history shows that even a good sale now can fall far short of tomorrow's value.
In the ‘90s, Wellington City Council sold off 49 percent of Capital Power for $120 million.
Soon after, the remaining 51 percent of the city's Lines company went for $90 million.
Four years later, the Canadian buyer made a handsome profit when it on-sold the company for $560 million.
Four years after that it was sold again, this time back to a New Zealand company for $800 million.
“We've always said that if we don't get a good price for this then the Government won't be looking to sell 49 percent of these companies,” says Mr Ryall.
But the Government admits the limits placed on who can purchase shares and how many mean it won't get anywhere near the maximum market value.
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19/07/2012 9:08:41 p.m.
Ron Oliver wrote:
The Sale of large assets are essentially being pushed by large financial corporates who willingly lend large amounts of money through the banking system and later clean up and take over the assets after financial downturns which are often preplaned in advance.
19/06/2012 10:12:34 a.m.
Selling these assets should be the biggest issue we as Kiwi's need to be addressing. Once its done, there is no going back.
1)The average KIWI will not be able to afford to buy a significant number of shares.
2)Kiwi's who do will likely sell them when / if the price increases, or when they need to the cash.
3) Our assets will inevitably end up on offshore hands.
4)To increase profits, these companies will increase power costs. Its that simple. These profits will go off shore instead of to New Zealand. And the country will be poorer again.
Asset sales are a major error, and worse, difficult/impossible to reverse.
This should be our biggest fight with John Key and his team.
18/06/2012 4:03:33 p.m.
Why aren't we hearing anything about the price regulation on these companies once sold? Or about the systems in place to keep these assets in the hands of New Zealanders?
18/06/2012 3:26:03 p.m.
ok, so... i'm all for secret ballots and the like in elections... but can we get something set up so that the voting papers explode spectacularly if one attempts to vote for these morons in the next election?
... the country, and population in general, would be a hell of a lot better off.
(seriously, the 'left' might have no more idea what they're doing, but at least they're not actively trying to sabotage us in the process...)
18/06/2012 2:41:04 p.m.
When do they come on the market, and how many can I buy ?
18/06/2012 12:17:09 p.m.
Selling our assets to private companies is what has gotten us into this mess we are in. Shareholders are not more important than taxpayers. The gov collects our taxes for taxpayers to benefit taxpayers. Businesses accumulate assets not sell them because when the chips are down like now we will have a backup, doh
18/06/2012 12:17:17 a.m.
"Four years later, the Canadian buyer made a handsome profit when it on-sold the company for $560 million."
In other words we got ripped off.
Its about time politians and people who give us advice were held responsible, if they make promises and they fail to appear and end up costing us nzers lots of money instead then they should never be able to hold that position again.
The real reason nz is in such a mess is because we are generally a bunch of passive suckers, we trust our politians and their so called advisors way to much and let them get away with hell.
17/06/2012 10:53:28 p.m.
i dont get it sell these things, if you want to make a business make money, get it out of the govts hands and into entrepreneurs who want to make money. the govt just use tax payers dollars to make these things work, sell em off, end of story.
17/06/2012 10:12:36 p.m.
The market does not dictate anything. The power companies all put their prices up at the same time just like petrol prices.
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