New South Wales power assets up for grabs(3)

The Australian state has started a potential sale process of part of the state’s electricity generation assets. However, the government has warned it will pursue an IPO instead if bids fail to meet its expectations.

The state of New South Wales (NSW) in Australia has launched the process of privatising part of its electricity generation assets, in order to maintain its expenditure on key public services amidst declining tax revenue.

The state is seeking a new player to enter its power generation sector through acquiring the trading rights for its three electricity retailers and baseload generating facilities.

However, preparations for an initial public offering of the same assets are also underway as a back-up plan should the results of the competitive bidding process fail to meet the state government’s demands. NSW premier Nathan Rees said in Parliament that a decision on whether an IPO is pursued will be made after initial trade sale offers have been assessed against the state’s competition and valuation objectives.

The government will seek expressions of interest from bidders later this month. The most attractive proposals will then be shortlisted early next year. A sale or alternatively an IPO is then expected to be completed mid-way through 2010.

Rees said the NSW government has already been in discussions with a number of interested parties regarding the assets, including integrated utility companies and private equity houses. Australian energy firms Origin Energy, TRUenergy and Australian Gas Light Company (AGL) have so far been linked to the process.