Australia to ban Chinese from leasing Sydney power grid

CANBERRA, Australia (AP) " Australia announced on Thursday it plans to block Chinese bidders from leasing a major Sydney electricity grid on national security grounds.

Treasurer Scott Morrison said Chinese state-owned State Grid Corp. and Hong Kong-registered Cheung Kong Infrastructure Group had until next Thursday to respond to his preliminary view that their leasing a 50.4 percent stake in Ausgrid over 99 years would not be in the national interest.

The decision almost certainly sinks the deal for the New South Wales state-owned electricity network that would have earned more than 10 billion Australian dollars ($7.6 billion). The money would have been spent on Sydney rail and road infrastructure projects.

Morrison declined to detail the security issues raised by the deal.

"The issues are real, they're matters obviously of national security interest to the Commonwealth and elaborating on those obviously would not be in the national interest either," Morrison told reporters.

"When it comes to foreign investment, particularly in an asset such as this, the national security issues are paramount," he said.

Some security analysts said a Chinese-controlled Ausgrid could become vulnerable to being shut down by cyberattack as hackers linked to Russia had done in the Ukraine in December.

Hackers used a coordinated attack to take down part of western Ukraine's power grid, blacking out more than 225,000 people after hitting regional electric power distribution companies. U.S. officials called it the realization of a nightmare scenario " hackers able to take down a critical system on which a country depends.

Chinese foreign investment, particularly from state-owned companies, has become increasingly contentious in Australia as China takes a more aggressive stance in territorial disputes in the South China Sea.

Such investments have to be approved by Morrison after investigations by the Foreign Investment Review Board establish that they are in Australia's national interests.

He has recently added emphasis to the national security aspects of that decision-making process by appointing a former spy agency chief and former defense consultant to that board.

Morrison said the message from the Ausgrid decision to potential foreign investors was that Australians "have a robust process for examining foreign investment."

This story has been automatically published from the Associated Press wire which uses US spellings

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