Home > Federal government block sale of Ausgrid to Chinese consortium

Federal government block sale of Ausgrid to Chinese consortium

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Federal Treasurer Scott Morrison has made the preliminary decision to block the sale of Ausgrid to a Chinese consortium.

Citing issues of national security, Mr Morrison told reporters on Thursday afternoon he was limited to what he could say.

“When we assess these applications – and I stress we do this on every case, case by case, we pursue the national security issues to the nth degree, and that’s what we’ve done. That process has not enabled us to identify suitable mitigations to protect against the national security issues in this case. And that, at the end of the day, is paramount.”

The government was considering leasing a 50.4 per cent stake into Ausgrid, NSW’s state-owned enterprise, on a 99-year contract. As well as servicing the public, it supplies NSW government departments and the stock exchange.

Mr Morrison said foreign investment was welcome in Australia, and promised the government would “actively engage” with the rest of the world, “ because foreign investment capital is important to Australian jobs”.

Chinese state-owned State Grid Corp. and Hong Kong-registered Cheung Kong Infrastructure Group to buy a 99-year lease for half of the New South Wales state-owned electricity network Ausgrid for more than 10 billion Australian dollars ($7.6 billion).

Ausgrid supplies its service to more than 1.6 million homes and businesses in NSW.

NSW Treasurer Gladys Berejiklian said she was confident another buyer could be found in time for the next state budget to record the proceeds.

“No matter what the outcome in a week’s time, ths is a valuable asset with a lot of interest and NSW will continue to process of continuing the transaction,” she said.

She said the infrastructure projects to be funded from the sale would go ahead.

“Our infrastructure strategy is sound,” she said.

Ms Berejikilian said national security was a federal government issue on which the states had no say. She sounded dismayed, however, when she pointed out there were a number of potential bidders only in December and it was the federal government which shortlisted them.

One Nation leader Senator Pauline Hanson, South Australian senator Nick Xenophon and Independent MP Bob Katter have either raised concerns over the sale to a Chinese state-owned enterprise, or are in outright opposition.

Liberals including Tony Abbott supported the sale with condition while others, like West Australian MP Andrew Hastie are opposed.

Recently, Ms Hastie posted an article by the Australian Strategic Policy Institute’s Peter Jennings on his Facebook page that warned of the possibility of electricity infrastructure, such as Ausgrid, being hacked and shut down by foreign governments.

“The problem for Sydney’s poles and wires is that ownership by a Chinese state-owned enterprise makes it enormously challenging to protect the security of the grid without there being a risk that Chinese intelligence services may try to exploit the connection,” Mr Jennings wrote.

State Grid and Cheung Kong Infrastructure, which was founded by Hong Kong billionaire Li Ka-shing made binding bids for the 50.4 per cent stake in Ausgrid late last month.

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