Tuesday, January 18, 2011

NSW power sale a 'charity giveaway'

Tuesday, January 18, 2011 » 07:16pm

The NSW opposition has labelled the $5.3b power privatisation a charity fire sale, after costs are included.
The NSW opposition and crossbench MPs have labelled the $5.3 billion power privatisation a charity fire sale, after costs are included.
NSW Treasury Secretary Michael Schur fronted an upper house inquiry into the partial privatisation on Tuesday and described the deal as 'the next best option' to full privatisation or leasing out the power stations.
He also revealed that $1.2 billion would go to pay out the debts of generators Delta West and Eraring Energy, while $360 million had been written into the deal to cover the risk of unplanned power outages.
NSW has retained control of power stations managed by Eraring Energy and Delta West, but sold the generation rights under the complex Gentrader model.
It also offloaded retail assets Energy Australia, Integral Energy and Country Energy.
In a blow to the government, Mr Schur admitted the Gentrader model was not his preferred sale option, saying it had failed to completely 'de-risk' the state against the vagaries of power generation.
'There is only one way we could have got rid of this risk entirely ... the only way you can get rid of this unplanned outage risk is to enter into long-term leases of the assets or sell them,' he told the inquiry in Sydney.
However, Mr Schur denied the Gentrader structure was a 'second-rate option'.
'I have said on more than one occasion ... that the Gentrader option is the next best option available to the state.'
The inquiry is examining whether the multibillion-dollar sale represents good value for the taxpayers, and why eight Eraring and Delta directors resigned in protest at the deal hours before it was finalised last month.
However, the former board members have refused to appear at the inquiry, fearing that because parliament was prorogued just before Christmas they will not be protected by parliamentary privilege.
They have now been summonsed to appear at the inquiry next Monday.
Opposition treasury spokesman Mike Baird said the state would be left with nothing more than short change after the sale.
Mr Baird described the sale as a 'charity giveaway' with the inclusion of the $1.5 billion needed to develop the Cobbora Coal mine near Mudgee, to provide an estimated $1 billion in coal subsidies to the Gentraders.
'If you take away all the costs you see today, then effectively there is a few hundred million for all these assets,' he told AAP.
Chairman of the inquiry, Christian Democrat MP the Reverend Fred Nile, said the $5.3 billion figure for the sale was just a 'gross price'.
'It does appear to be, as we said earlier, a fire sale or a charity giveaway,' he told reporters after the hearing.
'When the top people in the treasury indicate they did not favour the process, it is obviously then being driven politically rather than economically.'
But Mr Schur said the cost of the Cobbora mine should not be included when tallying up the sale.
'The view on Cobbora is that it is a commercially viable, stand-alone entity that will recover its costs of funds,' he told the hearing.
Mr Nile said current board members of the state electricity companies would be invited to give evidence on Friday, after Ms Keneally criticised the inquiry for only seeking input from those directors who quit.
Opposition leader Barry O'Farrell and Mr Baird have also agreed to appear next Monday.