NSW TREASURER Mike Baird said on Monday that the sale of the state’s remaining electricity generation assets will proceed ‘only if it’s a good deal for the people of this state’.
The Treasurer was speaking following his announcement of the sale of the Eraring power station in the Hunter Valley and the government’s decision to abandon involvement in the controversial Cobbora coal project near Mudgee.
He said the previous Labor government had created something of a monster with its plan to ‘throw in a coal mine’ in a bid to attract interest in any sale of the state’s generators.
There were added difficulties created by the gentrader arrangement where the previous government had sold the distribution rights to the output from the generators.
Mr Baird announced that the Eraring power station has been sold to Origin Energy in the first of the generator sales.
At the same time the government has dumped plans for the Cobbora project — a decision which has delighted environmental lobbyists but dismayed businesses in Mudgee, Wellington and Dubbo who had been expecting financial spin offs for the local economies from the mine.
The mine may still go ahead if there is private sector interest but there will be no government involvement.
The environmentalists want the government to scrap approvals for the mine altogether.
“We are moving ahead with the clean assets of Delta and Macquarie Electricity and hope to get some competition (in the bidding),” he said.
Speaking on ABC Radio 702 he said the sale price to be sought by Treasury would be based on the current and potential future returns to the government through annual earnings.
On this calculation it would be expected the sale of the generators would bring the government around $3 billion.
“The previous deal was terrible public policy,” he said.
“They were prepared to sign off and sell off for half what it was worth and throw in a coal mine for nothing.”
Asked if potential buyers will be ‘looking for a similar bargain’ he said all transactions will only proceed if there is sufficient value for the taxpayer.
Mr Baird said that if it proved there was more value to the state in retaining ownership of the generators ‘then that is what we will do’.
He said there would only be a sale if ‘there is significant value to the state of NSW’.
FOOTNOTE: Energy Australia holds the gentrader contract for the output from the two local power stations and has long been considered the most likely bidder for the generators.
However the Hong Kong based parent company (China Light and Power) in a quarterly report to shareholders in May said there were currently ‘difficult trading conditions in Australia’.
The report published in The Age newspaper quoted the directors as saying that ‘no decision has been made whether to bid for NSW government generation assets’.
The latest developments in the on again-off again saga of electricity asset sales comes against the now infamous statement made in Lithgow by now Premier Barry O’Farrell that there would be no sale of the generators under any coalition government led by him.