By Byron Kaye
SYDNEY (Reuters) - The Australian state of New South Wales is expected to re-elect its conservative government on Saturday, endorsing the country's largest ever privatization, the partial sale of a state-owned electricity network worth around A$17 billion ($13 billion).
Electricity privatization has been a divisive issue in the country's most populous state for two decades, but opinion polls suggest the state premier Mike Baird has won over voters with his promise to use the proceeds to fund road and rail projects to ease congestion in traffic-choked Sydney.
With a population of more than 7 million, New South Wales (NSW) accounts for nearly a third of Australia's national economy with gross domestic product expected to pass A$500 billion in the 2014/15 financial year.
Some of the world's biggest infrastructure investors including State Grid Corp of China [STGRD.UL] and Hong Kong billionaire Li Ka-Shing's Cheung Kong Infrastructure Holdings Ltd have lined up to bid for the NSW power asset, as have several of Australia's top investment funds, according to local media.
An election victory would not just signify a remarkable turnaround for a state government which saw its leader quit over a corruption inquiry in 2014, which lead to Baird's appointment, but revitalize the national government's plan to sell A$130 billion of state-owned infrastructure nationwide.
Two months ago, that national plan took a body blow when the neighboring Queensland state government, which had a stranglehold on parliament with 78 out of 89 seats, was thrown out of office by voters, because it wanted to sell A$30 billion of port and power assets to pay debt.
Luckily for Baird and his privatization plan, NSW voters seem determined to punish the previous center-left Labor government after years of dysfunction, said Peter Chen, a senior lecturer in politics at University of Sydney.
"The public don't understand privatization, they don't like it, they don't think it's a good idea," said Chen, but added voters dislike the opposition Labor party more than the possibility of a state power asset sale.
A poll published on Friday in the state's biggest tabloid, News Corp's The Daily Telegraph, said Baird was expected to get 55 percent of the vote, while a poll in Fairfax Media Ltd's rival Sydney Morning Herald four days ago showed Baird will get 54 percent of the vote.
However, a re-elected Baird may still struggle to gain approval for the asset sale if he does not win outright control of the state's far more complicated upper house, which typically has a large number of minor parties, Chen added.
The sale would also need clearance from the country's Foreign Investment Review Board.
The prospect of a foreign-owned electricity network is not new to Australia. CKI owns 51 percent of South Australia state's electricity network with the rest owned by locally-listed Spark Infrastructure Group. CKI is also one of five companies which owns Victoria state's electricity network.
($1 = 1.2708 Australian dollars)
(Reporting by Byron Kaye; Editing by Michael Perry)