Friday, February 19, 2010


Powerless: electricity sale stalls


February 19, 2010

THE state government has delayed the sale of its electricity retail assets, raising questions as to whether the sale will proceed at all before the election next year.

A day after the Herald revealed the government would defer construction of the metro system, in effect meaning the project is doomed, another key project has been postponed.

''The state is stalled,'' said the opposition treasury spokesman, Mike Baird.

''We have full-on paralysis.''

The Treasurer, Eric Roozendaal, announced the deferral of the $5 billion-$10 billion proposed sale of EnergyAustralia, Integral Energy and Country Energy, and electricity trading rights yesterday.

Mr Roozendaal said the sale, first proposed by the premier Morris Iemma in 2007, would be complete by the end of the year, but there was widespread scepticism about this in political and industry circles yesterday.

Sources said the complexity of the government's sale proposal had put off banks and electricity companies alike. Credit ratings agencies had warned that failure to privatise electricity could jeopardise the state's triple A credit rating.

The former finance minister Joe Tripodi, who spent $300,000 on an around-the-world trip to spruik the sale, came up with the complex Gen-Trader model, under which generation trading rights would be sold in a virtual stock exchange with the retailers.

One industry source said: ''There have been issues with getting private sector confidence in the Gen-Trader model. I know we had a lot of trouble getting our head around it.''

After Mr Roozendaal's statement yesterday, potential buyers threatened to walk away. A spokesman for Origin Energy said it would ''consider other, competing, investment options''.

Mr Roozendaal is hiring the former head of the department of premier and cabinet Col Gellatly, another former senior public servant, John Dermody, and the former minister Kim Yeadon to help the sale through, the Herald has learnt.

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