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Part sale of power company to raise money for Western Australia education and infrastructure

06 Dec 2016, 11:47 am

The Western Australian (WA) government will publicly float 51% of Western Power, the state's main electricity transmission and distribution network, and invest the money raised in education and infrastructure development, it said.

AU$3 billion (£1.8 billion) from the sale will be used to fund investment in schools, technical and further education, transport infrastructure and increased power reliability, the state government said.

The sale will also be used to reduce state debt by about AU$8bn, it said.

There will be no increase in the cost of electricity for WA consumers, nor any reduction in the safety or reliability of the electricity network as a result of the proposal, the government said.

The state government will remain the largest shareholder in Western power, with 49%. "Indicative targets" expect 30% of shares to be sold to Australian superannuation funds and 20% to "mum and dad retail investors, including Western Power employees", Treasurer Mike Nahan said.

"This model will address any national security concerns about foreign ownership. Western Power will not be foreign-owned or controlled," he said.

"Western Power is a regulated monopoly, which means a number of independent regulators will continue to oversee the various parts of the business, including safety, reliability, prices and performance, regardless of who owns Western Power. This will not change," Nahan said.

Infrastructure expert Simela Karasavidis of Pinsent Masons, the law firm behind Out-Law.com, said that the sale will be dependent on the Liberal government being re-elected in the state in March.

"It will be interesting to see if premier Colin Barnett’s re-election hopes will suffer the same fate as that of the Liberals in Queensland in 2015, who also ran with a promise of recycling electricity assets if they were returned to power," Karasavidis said.

"If the Liberals are re-elected and the sale does go ahead, the pricing impact of the government's ‘no foreign ownership’ criteria, will also be interesting to watch," she said.

WA announced last year that it would sell Freemantle Port, state-owned betting business TAB, the Forest Products Commission and other state assets including the Kwinana Bulk Terminal, the Utah Point Terminal, and Port Hedland to raise money for infrastructure.

The sale of the port has hit problems and been delayed, Karasavidis said.