High voltage electricity company Transgrid has been privatised by the NSW government for $10.258 billion, via a 99-year lease to a consortium comprised of a Canadian pension fund, the Abu Dhabi Investment Authority and local infrastructure funds.
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Announcing the deal on Wednesday morning, Premier Mike Baird said more than $3 billion worth of debt attached to the business would need to be paid off.
This leaves the net return to the NSW government at about $7 billion.
[The deal is the first of three electricity asset privatisations the government is undertaking.]
The deal is the first of three electricity asset privatisations the government is undertaking. Photo: Nic Walker
"This result is a stunning result for the people of NSW," he said. "It means there is, for the people of NSW, better transport, roads, schools and hospitals."
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The deal - the first of three electricity asset privatisations the government is undertaking - removes much of the politics from the transaction, which had focused on the national security implications of Transgrid being bought by the Chinese government-owned State Grid Corporation of China.
Any involvement in the deal by a Chinese government-owned entity had sparked security concerns, given Transgrid's role in supplying power to Canberra and its extensive fibre optic cable network that carries sensitive data for government departments.
Mr Baird said all four bidders for Transgrid had been cleared by "all authorities and all agencies", including the Foreign Investment Review Board.
Federal Treasurer Scott Morrison said FIRB had imposed "stringent" licence conditions on the privatisation of Transgrid.
These include that Transgrid's operation and control be undertaken solely from Australia and that foreign consortium members retain an interest of no more than 50 per cent.
As well, half of Transgrid's board - including an independent chair and director - must be Australian citizens and residents.
"These safeguards are more stringent than any previous conditions imposed on acquisitions of critical infrastructure," Mr Morrison said.
"I am confident that these comprehensive safeguards address national interest considerations and will help underpin NSW electricity users having reliable electricity supply into the future."
Mr Baird said the winning consortium had lodged "clearly the strongest bid" in terms of price, risk and terms and conditions.
The consortium members are Hastings Funds Management, the ASX-listed Spark Infrastructure, the Abu Dhabi Investment Authority, Canada's Caisse de Depot et Placement du Quebec (CDPQ), and Wren House, part of the Kuwait Investment Authority.
Spark Infrastructure chief executive Rick Francis said there would be no change to network reliability under the new owners.
However, he believed Transgrid could be run more efficiently than it has been while in public hands.
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.
"So that asset may well be still in very good shape and still live to survive another 10 years, for example," he said.
Mr Francis said the consortium partners "see a very strong future for the electricity grid in this country" amid technological changes and the rise of renewable energy.
Five-year job guarantees for workers were a condition of the electricity privatisation legislation passing the NSW Parliament and will apply to about 1,000 Transgrid employees.
The NSW government will now move to offering the long term lease of 50.4 per cent each of electricity distributor Ausgrid and Endeavour Energy.
The government has previously hoped to reap about $13 billion from all three transactions, all of which would go towards infrastructure. On Wednesday Mr Baird would not be drawn on how the Transgrid result effects those expectations.
"We still have two leases to go, but obviously this is a fantastic start," he said.
But Greens MP John Kaye said the "over the odds" sale price meant NSW electricity consumers "have been served up on a platter" and demanded to know what deals had been done with the government.
"The people of NSW have lost control over their energy future to a consortium of multinational corporations that care nothing for households or the clean energy future," he said.
