Public float to clinch power sale
Robert Wainwright and Andrew West, smh
March 6, 2008
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A TWIN public float of state-owned electricity assets and a sweetener of up to $10,000 worth of shares for some employees are being promoted to break the deadlock over privatisation that has paralysed the Government.
But the proposal from the former Labor premier Barrie Unsworth, chairman of a special committee on privatisation, is set to inflame unions and community groups because it exceeds the Government's original plan to lease out power stations.
The Herald understands that at last night's meeting of the committee Mr Unsworth presented a proposal that would consolidate three publicly owned power stations into two companies and link them with power retailers. The two new companies would go on the market in an initial public offering.
A source told the Herald that Mr Unsworth would recommend floating two separate companies because of consumer concerns about the dominance of a single supplier on the market. "I imagine that Victoria, for example, would have concerns about a single, monster company on its doorstep," the source said.
To sweeten the deal for unions representing 14,000 power workers, staff would also receive up to $10,000 worth of shares as an incentive payment, depending on their length of service.
But far from being an ice-breaker, any proposal that involves selling power stations as well as power retailers is likely to be rejected by unions. Even the Treasurer, Michael Costa, the strongest proponent of privatisation, has only pushed for leases of between 55 years and 99 years on the power stations.
According to sources close to the committee, the Government would merge the assets of three public corporations - Delta Electricity, Macquarie Generation and Eraring Energy - into two companies, roughly equal in size.
The Herald understands that one of the options if for Eraring to be carved up and its assets merged into the other two.
The new companies would also incorporate the rich assets of the three publicly owned retailers - Energy Australia, Integral Energy and Country Energy - and then be released onto the market in a Telstra-style float directed at small investors.
The Iemma Government has already tried to convince unions to support a public float. But at a meeting last month, union leaders rejected it as a potential disaster worse than the Cross City Tunnel debacle.
The 11-member committee, comprising representatives of the Government, community and environment groups, and unions, was locked in discussions for more than three hours last night, trying to complete its recommendations, which it will hand to the Premier, Morris Iemma, tomorrow.
The Government has ensured that the five union and community representatives - four of whom are likely to oppose privatisation - are outnumbered by supporters, including two Labor backbenchers, three public servants and Mr Unsworth.
Union leaders were refusing to comment publicly on the plan last night, but one of the state's most senior officials has warned Mr Iemma and his cabinet to "get into the brace position" because of an inevitable crash landing on privatisation.
He said the proposal was designed to appear "democratic", by aiming the sale at individual rather than institutional investors, but remained a privatisation of a public asset.
"We haven't seen the proposal in its entirety, but our stance is unchanged," he said. "It would need to be a lot more than an IPO [initial public offering] to win support."