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Opposition parties are calling on the Government to "pull the plug" on its plans to sell state-owned assets, saying the entire programme is in jeopardy after the sale of Solid Energy was put on hold for commercial reasons.
Finance Minister Bill English said yesterday the state-owned coal company wasn't in financial shape for a partial sale. It was facing a number of commercial issues and was "rethinking its business".
Labour today called on Prime Minister John Key to dump the asset sales programme which also includes selling up to 49 per cent of three other state-owned electricity companies: Mighty River Power, Meridian and Genesis Energy.
Labour's state-owned enterprises spokesman Clayton Cosgrove said Key had "stuffed up" the programme from start to finish.
"I'm calling on him now to pull the plug on it. What we are now down to is the Government defending John Key's pride and his political vanity in respect of these sales.
"John Key is well experienced at floating companies. He is the financial whiz kid and anyone with half a brain could have worked out that because China is slowing down, their appetite for natural resources is slowing down and commodity prices are decreasing, that Solid Energy would come under pressure."
Greens co-leader Russel Norman said the whole asset sales programme was under question after the sale of Solid Energy was put on hold.
There were also questions around Meridian whose largest customer, the Tiwai Aluminum Smelter, was assessing how much power it would keep taking.
Meridian's Manapouri power station was set up to provide energy to the smelter which was New Zealand's biggest electricity user.
"It will have a significant impact on the whole electricity market in New Zealand if 15 per cent gets dumped onto it on the grid. It would be bad for a Government trying to sell these companies because they will be worth less."
There were also questions around the sales of companies, particularly Mighty River Power and Meridian, because of the Maori Council's challenge before the Waitangi Tribunal over water rights, he said.
Asset sales were "always a stupid idea". "As time goes on, they just run into more and more trouble with it."
The Government was a "one-trick pony" with economic policy, Norman said.
"This is their one trick. They will keep trying to push through but they have hit really heavy weather."
English said yesterday the Government would only take the four companies to market if they were in good shape for investment.
"Whether (Solid Energy) ends up being able to be floated would depend on whether they can get in suitable shape for public investors. We wouldn't be planning to float it any time soon."
Solid Energy has previously been valued between $1.69-2.77 billion, offering a potential return from a 49 per cent sale of $827.6m to $1.36b.
However, English suggested a valuation today would give a figure "a bit less".
A projected $200 million cut in revenues at Solid Energy has been sparked by a steep fall in demand and prices for internationally traded coal.
- © Fairfax NZ News
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