Frydenberg says he will block Hong Kong firm from buying $13bn gas business
The Morrison government plans to block a Hong Kong-based consortium’s purchase of Australia’s largest gas transmission system on “national interest” grounds.
Treasurer Josh Frydenberg made the announcement on Wednesday, saying he has told CK Group of Hong Kong that he plans to prohibit its $13bn acquisition of APA Group, the owner of 15,000 km of gas pipelines in Australia.
APA Group’s network of gas pipelines is substantial. It represents 56% of Australia’s gas pipeline transmission system, including 74% of New South Wales and Victorian pipelines, and 64% in the Northern Territory.
Frydenberg said the foreign investment review board was unable to reach a unanimous recommendation about CK Group’s bid for APA Group, but it expressed concerns about the national interest implications of such a dominant foreign player in Australia’s gas and electricity sectors over the longer term.
He said he has made a preliminary view to block the sale, but he will make a final decision under the formal process within two weeks.
“My preliminary view is not an adverse reflection on CK Group or the individual companies,” he said.
“CK Group companies are already a substantial investor in Australia’s gas and electricity sectors and a significant provider of infrastructure services that millions of Australians rely upon.
“My preliminary view reflects the size and significance of APA Group. It is about the extent to which the proposal is consistent with Australia’s national interest.
“The application of our foreign investment policy, expressed through my preliminary view, is not discriminatory against any investor or country.”
Frydenberg said his decision was informed with help from the recently established Critical Infrastructure Centre, which sits inside the Department of Home Affairs.
The decision will be welcomed by some crossbench senators, including One Nation’s Pauline Hanson and Centre Alliance’s Rex Patrick, both of whom have called for the deal to be blocked for reasons of national security.
In August, the federal government barred Huawei and ZTE from supplying equipment to Australia’s 5G network, claiming it was necessary to protect national security. Marise Payne, the foreign affairs minister, said its decision was not targeted specifically at Huawei and ZTE but applied to any company that had obligations clashing with Australia’s national security.
Last month, Australia’s spy chief then elaborated on that decision, saying if “high-risk vendor equipment”
was used anywhere in Australia’s evolving 5G network, the future communications system underpinning our water supply and electricity grid and health systems, even self-driving cars, could not be protected.