New Zealand delays plans to sell energy companies

AP News
Posted: Sep 03, 2012 3:15 AM

WELLINGTON, New Zealand (AP) — A plan by the New Zealand government to raise billions of dollars by selling shares in state-owned energy companies has been delayed so officials can spend more time consulting with indigenous Maori, who had threatened legal action to try and halt the sales.

Prime Minister John Key said Monday the delay would be only for a few months and he didn't expect any substantive changes to the plan to sell minority stakes in four state-owned energy companies and national carrier Air New Zealand. The government hopes to raise up to 7 billion New Zealand dollars ($5.6 billion) as part of efforts to return to a budget surplus.

Key on Monday said that an initial public offering of shares in electricity company Mighty River Power, which was to take place later this year, would not go ahead until between March and June of 2013.

The asset sales plan was a central platform of the ruling National Party's successful re-election campaign last year, although many New Zealanders oppose it, saying it equates to selling the family silver.

A Maori tribunal last month recommended the government should delay the sales until Maori claims over water rights could be resolved. Some Maori claim they are guaranteed certain water rights under the terms of the country's founding document, the Treaty of Waitangi. The government's position is that, while it recognizes limited water rights, nobody owns the water.

The energy companies rely on water because much of New Zealand's electricity is generated from hydroelectric dams.

The Maori Council, which represents Maori interests and which had threatened legal action, welcomed Monday's decision, calling it a "great result."

Political opponents of the government called it a significant back down.

"National has botched this process from the very beginning," said David Shearer, the leader of the opposition Labour Party, in a statement. "It had no choice but to delay the sale of Mighty River Power. There is now so much risk and uncertainty around it that no investor is going to want to touch it. Selling our best performing assets at rock bottom prices is economic lunacy."

But Key said the government would engage in only a narrow discussion with eight affected Maori tribes about one of the ideas raised by the tribunal, which was to give Maori shareholders rights beyond those of ordinary shareholders. Key said he expected the government would ultimately reject that notion, but he wanted to give Maori an opportunity to fully explain the concept.

"It's full steam ahead," Key said.