Aus­tralia-led group wins $7bn elec­tric­ity deal over China bid

Kuwait Times - - BUSINESS -

SYD­NEY: An Aus­tralia-led con­sor­tium of in­vest­ment funds from Canada and the Mid­dle East won the bid for elec­tric­ity trans­mis­sion net­work Tran­sGrid yes­ter­day, beat­ing a Chi­nese chal­lenger in a deal worth Aus$10 bil­lion ($7.3 bil­lion).

China’s State Grid was con­sid­ered a frontrunner but the New South Wales state govern­ment said the strong­est bid be­longed to the lo­cally led NSW Elec­tric­ity Net­works con­sor­tium. “The trans­ac­tion will de­liver gross pro­ceeds of Aus$10.258 bil­lion which will help fund a raft of in­fra­struc­ture projects across the state,” NSW Premier Mike Baird said in a state­ment.

The win­ning con­sor­tium in­cludes Cana­dian pen­sion fund Caisse de de­pot et place­ment du Que­bec (CDPQ), the Abu Dhabi In­vest­ment Au­thor­ity’s Tawreed In­vest­ments Lim­ited, and a wholly owned sub­sidiary of the Kuwait In­vest­ment Au­thor­ity (KIA), Wren House In­fra­struc­ture.

The con­sor­tium is led by in­vest­ment fund Hast­ings as man­ager of Util­i­ties Trust of Aus­tralia, while lo­cally listed Spark In­fra­struc­ture, which owns and man­ages en­ergy as­sets, is also part of the group.

The Chi­nese bid had gen­er­ated con­cerns given Tran­sGrid is a crit­i­cal piece of na­tional in­fra­struc­ture un­der­pin­ning the NSW econ­omy and a key part of the coun­try’s elec­tric­ity mar­ket.

State Grid’s loss comes just days af­ter na­tional Trea­surer Scott Mor­ri­son blocked the sale of one of the world’s largest cat­tle es­tates to for­eign en­ti­ties, rul­ing it was not in the na­tional in­ter­est. Chi­nese com­pa­nies Ge­nius Link Group and Shang­hai Pengxin had re­port­edly been in a bid­ding war to se­cure the S. Kid­man and Co Ltd pas­toral em­pire for up to Aus$350 mil­lion ahead of that rul­ing.

And last week a de­ci­sion by the North­ern Ter­ri­tory to lease the Port of Dar­win to a Chi­nese firm prompted a re­view of the rules that al­low Aus­tralian states to sell strate­gic as­sets to for­eign firms with­out fed­eral scru­tiny.

Mor­ri­son wel­comed the award­ing of the 99-year lease for Tran­sGrid to the con­sor­tium. “The For­eign In­vest­ment Re­view Board has been in ex­ten­sive con­sul­ta­tion with the NSW govern­ment for over 12 months to en­sure that na­tional in­ter­est con­sid­er­a­tions are ad­dressed,” he said.

“This con­sul­ta­tion has also in­cluded rel­e­vant... agen­cies that have an in­ter­est in the ac­qui­si­tion of crit­i­cal in­fra­struc­ture.” Once the trans­ac­tion is fi­nal­ized, the state govern­ment will re­tain sig­nif­i­cant in­flu­ence over Tran­sGrid, in­clud­ing as reg­u­la­tor.

Mor­ri­son said he had asked for fur­ther safe­guards that were “more strin­gent than any previous con­di­tions im­posed on ac­qui­si­tions of crit­i­cal in­fra­struc­ture”. These in­clude an in­sis­tence that for­eign con­sor­tium mem­bers hold no more than a 50 per­cent share in Tran­sGrid and that 50 per­cent of Tran­sGrid’s boards com­prise Aus­tralian cit­i­zens and res­i­dents.

“Aus­tralia con­tin­ues to be open for busi­ness and we wel­come for­eign in­vest­ment when it is not con­trary to the na­tional in­ter­est,” Mor­ri­son said.

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