This leaves the net return to the NSW government at about $7 billion.
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The consortium includes Westpac Bank owned Hastings that holds a 20.2% stake, Spark Infrastructure Holding with 15.01%, the Abu Dhabi Investment Authority with 20.02%, Canada’s Caisse de depot et placement du Quebec having 24.99% and Wren House of the Kuwait Investment Authority with the remaining 19.99%.
NSW plans to raise about A$20 billion leasing half of its electricity grid to fund new railways, roads, schools and hospitals.
The government expects to complete the transaction by mid-2016.
TransGrid power lines in western Sydney.
The government says it will retain “significant influence” over TransGrid as lessor, licensor, as safety and reliability regulator and through the planning system.
Treasurer Scott Morrison, who last week blocked the sale of Australia’s largest private landowner to a Chinese buyer, said a number of strict safeguards had been imposed on the consortium, including that TransGrid’s operation and control be undertaken exclusively from Australia.
“Australia continues to be open for business and we welcome foreign investment when it is not contrary to the national interest”, Morrison said. It is now apparent that his hand gesture was a code indicating $10 billion for TransGrid.
Cost savings could be found in getting greater mileage out of the assets by switching to condition based monitoring as opposed to replacing them purely on the basis of their age.
China’s State Grid was considered a frontrunner but the New South Wales state government said the strongest bid belonged to the locally led NSW Electricity Networks consortium.
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The government has previously hoped to reap about $13 billion from all three transactions, all of which would go towards infrastructure. Premier Mike Baird, a former banker at Deutsche Bank AG, won a mandate for the sell-off after being returned in an election earlier this year. “What was done to sweeten up this deal, to make it so attractive to this multinational corporation?” he said.
