Bruce Bisset: No point in asset sales now

By Bruce Bisset


Seems to me the only people in the country unaware the whole asset-sale proposal is a dead duck are the 61 members of Parliament occupying the Government benches - and surely even they must now have doubts.

After all, of those SOEs proposed for sale one is technically bankrupt, one is mired in deleterious contractual negotiations, one is heavily targeted for Treaty of Waitangi claims, one is run by a woman who deserted the helm of a major company as it failed, and the last is run by a man who led the first one into its death dive.

A classic case of asset stripping, you might say; because their collective partial sale value (originally put at $5billion to 7billion) must now have reduced to fire-sale level, undermining the entire rationale (such as it was) of the exercise. Even the most unrepentant ideologue should have cause to pause over that.

Not that the Nats are admitting defeat quite yet - though interestingly the argument has switched from accentuating make-believe positives to blaming someone else for the negatives; a first step on the road to retreat.

Solid Energy's rapid fall from an inflated book value of $2.7billion to a pending bailout case (debts of $389million and counting) has much to do with hyperbole and little to do with industry nous or common sense.

Sure, some kudos for looking to diversify into alternative fuels (if making diesel from lignite is "alternative"), but their timing, as the global recession bit and coal prices plummeted, was appalling.

Who jollied them on to take the risk? John Key, and it cost $2billion of taxpayer's money; with more to come.

But who gets the blame? Not former chairman John Palmer, busy flying in another direction as chairman of Air New Zealand and trying hard to pretend his right and left hands are not connected.

No, Labour is the culprit, for encouraging SOEs to diversify in the first place. However, the pertinent decisions were made on Key's watch and with his blessing.

Then there's Genesis Energy, arguably the most robust about-to-be-offered outfit, except that its chairwoman, Jenny Shipley, hit the eject button at Mainzeal one day before the builder went bust.

A finance company she chaired also went under. The former National prime minister insists she be judged on her results. I'm sure intending shareholders in Genesis will do just that. Mind you, given her seat on the board of China's state-owned bank, China Construction - specialising in energy-sector investment - it's not hard to join the dots on where our best asset is heading.

Mighty River Power has just won most of its case versus the Maori Council over the right to privatise itself before the water-rights debacle is sorted, but that has red-flagged an inevitable showdown on Treaty issues - something a canny investor would either see as a discount chance or waive as too risky.

Then there's Meridian Energy, being squeezed by its major customer, Rio Tinto, to drop its price of supply. Amid the sector shambles Rio Tinto is likely to force a better deal than it might have hoped - and goodbye much of Meridian's bottom-line.

Add in the petition to stop public-asset sales, which now has around 390,000 signatures - more than enough to force a (non-binding) referendum - and the question is can the Nats afford to continue to ignore the obvious?

I'm going to bet no. If nothing else, the petition will give them an iron-clad excuse to first delay, and later - assuming an "anti" referendum vote - winningly withdraw this sales programme.

That's the only survivable political option. Now, or very soon, would be a good time to show National still has some smarts.

They might also move quickly to scotch the rumour that Treasury's hiring of Goldman Sachs to run the ruler over State-owned KiwiBank is intended to set up an alternate sale prospect.

That's the right of it.

- Hawkes Bay Today

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