Australia's largest state-owned asset privatisation on track

The privatisation of one of Australia's largest electricity asset is likely to remain on track after authorities told bidders they would accept tenders that remain conditional on approval from foreign investment regulators.

New South Wales (NSW) state has been recycling state-owned assets to pay for much needed transport infrastructure and capital works, with the 50.4 percent sale of state owned electricity infrastructure company Ausgrid expected to fetch over 10.3 billion Australian dollars (7,82 billion U.S. dollars).

Final unconditional bids were mean to be received by July 25 after a delay due to the national election, however, it's believed the NSW government has advised the two remaining bidders it would accept conditional offers by that date to keep the process on track, Fairfax Media reported on Monday.

The two remaining bidders, State Grid Corp of China and Cheung Kong Infrastructure Holdings Ltd, both require approval from the Foreign Investment Review Board (FIRB), but a protectionist senate would likely attempt to scuttle the sale.

The senators who hold the balance of power against a ruling government majority all ran on fierce campaigns for stricter controls on direct foreign investment into Australia following a wave of discontent among the local populace.

Fairfax Media reported the surprising moves allowing the acceptance of conditional bids means the consideration process of the rival bids can begin behind close doors, with both federal and state governments closely involved in the negotiation process. It' s standard practice for governments to insist on bids that are firm and free from risk.

The move has the added bonus of allowing the NSW state government to attract the highest dollar possible of Ausgrid which will likely become the largest -- by dollar value -- privatisation of a state owned asset in Australia's history.

The NSW government would remain a 49.6 percent shareholder of the asset which would come under a 99-year lease. In a move to attract investors, however, the government deliberately structured the lease to give operational control to the final buyer, Fairfax reported.

(APD)