Shock deal - power sale to raise $10 billion
By Simon Benson, DT
November 01, 2008 12:00am
THE NSW electricity industry will be sold following a shock deal between Premier Nathan Rees and Labor Party bosses to support a redrafted $10 billion power privatisation plan.
In an 11th-hour salvage job of the state's woeful Budget, Mr Rees will sell the $3 billion electricity retail sector, keep power generation in public hands and create a new "virtual stockmarket" business for trading electricity known as gentailing, which will be sold to the private sector.
The combined value of the sale is estimated to be $10 billion - the majority of which will be paid to the Government in annual leases paid by the new private operators.
However, much of this will replace lost Government dividends.
The sale, which will fall $5 billion short of the original model which ultimately cost former premier Morris Iemma his job, is expected to be under way within 12 months to two years.
It will require no legislation and will keep previous five-year protections for workers and price security for consumers until 2013.
It will also mean the private sector will be expected to build new power plants by 2015, removing a potential $15 billion liability from the Government's books.
Insiders claimed it was the first significant victory for the embattled new Premier.
Others said they would believe it when they saw it. However, the same model has also been criticised in the Owen report, commissioned by the Government to investigate options for the state's power needs.
In a special briefing last night Mr Rees confirmed he had obtained unanimous support for the sale from party officials and would now take the plan to his caucus on the day of the November 11 mini-budget. In a bitter pill for Mr Iemma and former treasurer Michael Costa, the new model was put together by Economic Reform Minister Joe Tripodi, accused of being an architect of Mr Iemma's demise.
In an even greater irony, Mr Rees admitted that former union boss and anti-privatisation campaigner John Robertson, who has succeeded Mr Costa in the Upper House was instrumental in getting the Labor Party committee to endorse the new model.
Mr Iemma and Mr Costa failed to get their plan through because of widespread opposition to leasing of state-owned power generators.
The new plan keeps the generators in public hands but creates a "gentailing" business in which private companies pay a lease fee to the Government for the supply of electricity, which they can sell to the retail market.
Mr Rees confirmed the sale would be included in the mini-budget's forward estimates when they are released on November 11.
Should Mr Rees pursue the power sell-off? dailytelegraph.com.au