A$13bn NSW privatisation remains on track

The Liberal-National coalition government has been returned to power in New South Wales (NSW), meaning that Premier Mike Baird will be able to go ahead with his planned privatisation of electricity assets.

The first stage of the “asset recycling” plan – using at least some of the proceeds from infrastructure sales to help fund new infrastructure – is likely to see a 99-year lease of 100 percent of Transgrid, operator of the state’s high-voltage transmission network, come up for sale. Expected to follow are 50.4 percent stakes in Ausgrid and Endeavour Energy, which supply electricity to about 2.6 million households in and around Sydney.

Although the government will retain 51 percent of the overall electricity network following the asset sales, the way the leases are to be structured means that the private sector is expected to have effective control. The government has said it hopes to raise A$13 billion (€17.7 billion; $19.2 billion) from the sales, with private sector estimates ranging from A$11 billion to A$16 billion.

Money raised will be channeled to the A$20 billion “Rebuilding NSW” fund which will be allocated to: urban public transport (A$8.9 billion); regional transport (A$4.1 billion); urban roads (A$2.4 billion); education (A$1 billion); hospitals (A$1 billion); culture and sport (A$1 billion); and water security (A$1 billion).

There had been concerns in the investor community that the NSW privatisation plan could falter in the event of an opposition victory, as happened in Queensland where Labor pulled a planned A$37 billion privatisation programme after its victory in January. But NSW – where polls showed Baird retained a high level of personal support – was comfortably held in spite of a 9 percent swing to the opposition.

“The Baird government has unquestionably received a mandate to proceed with the 49 percent lease of the poles and wires,” said Brendan Lyon, chief executive of lobby group Infrastructure Partnerships Australia, in a statement. “This issue is now resolved and the Upper House should respect the mandate and facilitate the passage of enabling legislation.”