The NSW government will net nearly $3 billion after finalising the sale of the final piece of the state’s “poles and wires” electricity assets.
The sale of Endeavour Energy to a consortium led by Macquarie Group’s infrastructure arm is the last chapter in a controversial three-stage privatisation process the state government took to the last election.
Macquarie Infrastructure and partners at AMP Capital, and investors from Qatar and Canada, will pay $7.6 billion for a controlling, 50.4 per cent stake in the company, which distributes electricity to western Sydney and the Illawarra region. Net of debt, the sale will deliver $2.9 billion to fund infrastructure.
Together with the previously completed sale of Transgrid and partial lease of Ausgrid, the sales will deliver final net proceeds of $23 billion to the state’s coffers, a figure which the Premier said exceeded expectations by about $2 billion.
“This is a great day for NSW,” said Premier Gladys Berejiklian. “You gave us your trust. We’re a government who delivered on what we said we would and more.
“It’s more rail, roads, schools and hospitals.”
The poles and wires deals generated an additional more than $10 billion in gross power sale proceeds, which cleared debts on assets, the state government said.
Selling off the assets to fund major infrastructure projects was the state government’s centrepiece policy at the 2015 state election. Former Premier Mike Baird had forecast a total windfall of $20 billion.
The government successfully prosecuted the policy despite initial community angst about private ownership.
But the state’s opposition said the benefits to NSW had been cancelled out by recent cost blowouts to projects such as the Parramatta light rail and Sydney Metro.
“It’s billions in and billions squandered,” said Labor leader Luke Foley.
Mr Foley said the state government had also told voters that electricity prices would fall under privatisation but bills were now headed north: “They said that privatisation would guarantee lower prices; they put their hands on their heart,” he said.
The state government’s election guarantee related to legislating to ensure that network costs, which only partly determine consumers’ bills, would be lower under its sell-off plans.
Consumer bills are likely to rise by between seven and 11 per cent year-on-year, according to a recent study by the investment bank UBS.
The state government said the increased proceeds meant it could now expect to receive more than $2 billion from a federal government scheme to encourage asset privatisations by state governments.
Treasurer Dominic Perrottet said the state government was on track to invest $73 billion in infrastructure over the next four years, as much, he said, as the federal government had committed over the next decade.
Funded projects include the Sydney Metro project and Parramatta Light Rail and $1b in school upgrades.
Canada’s British Columbia Investment Management Corporation and the Qatar Investment Authority had significant stakes in the Macquarie consortium, which has been given the green light by the federal consumer watchdog and the Foreign Investment Review Board.
The company will be leased for 99 years under the terms of the deal.