Failure to resolve who owns water could see the float of state-owned energy companies flop, experts say.
Despite an urgent Waitangi Tribunal hearing to consider an injunction on the partial selloff and what rights Maori have to water resources under the Treaty, the Government has indicated that its privatisation plans will go ahead.
But experts yesterday told the tribunal that carrying on with the sale could seriously affect the prices.
Australian financial markets expert Philip Galloway said water resources were closely linked to the companies, through their reliance on hydro-generated electricity. "As an investor I would look at the company and say, 'well, what is it?' and it's a user of water resources and that is the fundamental thing that it does and you very quickly drill down and say, 'well, who owns those resources'?"
It would be hard to remedy questions of ownership after 49 per cent of the company was sold off, he said.
Mr Galloway identified three options for compensation if Maori were found to have ownership rights: royalty payments, share allocation, or new legislation to create a proprietary interest.
Energy expert Brian Cox said the question over Maori ownership would create uncertainty and drive down the share price.
"The more uncertainty you have with regard to sale of the assets, then the lower the price will be for the Crown . . . buying electricity companies there's always a lot of uncertainty, but the more uncertainty in there the lower the price."
If Maori water rights were recognised, it would not have a negative impact on the sale, he said.
The impact on companies using water would be similar to that of the emissions trading scheme.
Uncertainty could also lead to reduced investment in the electricity sector.
Both men agreed the issue of Maori ownership claims had to be included in the companies' prospectuses if the matter was not settled before then.
- © Fairfax NZ News
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