Solid Energy sale was planned despite bad report

HAMISH RUTHERFORD
Last updated 05:00 19/03/2013

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National included a partial sale of Solid Energy in its election campaign on asset sales despite a ''highly critical'' scoping study, in the hope its fortunes would improve, Prime Minister John Key says.

The Government has said it had a series of disagreements with the board of the state-owned mining company, including over the significance of a report in 2011 on its readiness for partial sale under the mixed ownership model.

Before the election the Government commissioned scoping studies on the state-owned enterprises (SOE) that were being considered for sale if it won the election, with the report on Solid Energy raising issues, Key said yesterday, describing it as ''highly critical''.

Despite Treasury officials also disagreeing with Solid Energy over its expectations for the coal price, the Government included the company in its campaign to raise $5 billion-$7b from selling partial stakes in state-owned enterprises.

As recently as late June last year,  SOE Minister Tony Ryall said Solid Energy was being considered as a candidate for a partial sale.

Key said yesterday that despite the concerns the Government hoped the Solid Energy situation would sort itself out.

''As soon as we got the scoping study I think we were always of the view that Solid Energy wouldn't be at the front of the queue in terms of being part of the mixed ownership model, but it was always the hope that they would be able to get there and resolve some of their issues.''

Last month Ryall and Finance Minister Bill English confirmed the company was in talks with its bankers, struggling under a $389 million debt pile.

They have since blamed a ''perfect storm'' of lower than expected production, falling coal prices and poor returns from other ventures for its perilous state.

Key continued to play down the likelihood of a select committee inquiry into the Solid Energy collapse, saying he could not see what it would achieve.

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