Finance Minister says changed market conditions behind Government rethink.
Finance Minister Bill English yesterday acknowledged the sale of Mighty River Power and Meridian Energy in quick succession last year is the reason the Government may end up selling as little as 30 per cent of Genesis Energy over the next month.
Mr English revealed the potentially smaller scale of the Genesis sale, the final leg of his Government's "mixed ownership model" or partial asset sales programme, when he gave further details of the float yesterday.
In advice to the Government three years ago, Treasury said the asset sales programme was viable "over a three- to five-year programme". It said domestic demand for the shares would be up to $2 billion in any given 12-month period but advised careful timing and sequencing of the programme - "for example, maximum tranche of $1 billion in a 12-month period".
The Government, however, chose to sell both Mighty River and Meridian, along with shares in Air NZ last year for a combined sum of $3.95 billion.
Mr English told Radio NZ the Government may sell as little as 30 per cent of Genesis in response to "market conditions". Last year, he said, there were "different conditions of demand", the asset sales were "a relatively new idea" and "previous floats hadn't been done".
"We want to make sure that we get good value for the taxpayer and we've opened up the possibility that one way to achieve that would be to sell less than 49 per cent because there's some indication that might be required."
It was "technically possible" the Government wouldn't proceed with the sale if it did not think it could get enough money for the shares, "but we wouldn't expect that would be the case".
Genesis was valued at $1.7 billion in 2011 but its value will have fallen based on the prices paid for 49 per cent stakes in Mighty River and Meridian Energy. That will make it much tougher for the Government to reach its downwardly revised target of $4.6 to $5 billion in total proceeds from the asset sales programme, particularly if it sells less than 49 per cent of Genesis.
Labour leader David Cunliffe said the Genesis plan was an admission the Government had tried to sell too many power company shares too quickly.
"Not only is it a bad idea to sell off assets in the first place, it's economic idiocy to sell three in the space of a year ... The sharemarket just isn't that interested."
Green Party co-leader Russel Norman said the decision to sell as little as 30 per cent of Genesis "'is an admission that they botched the earlier sales".
"It also raises the question of why they're going ahead with this sale at all."
He said New Zealanders had shown no interest in buying what they already own.