New South Wales Receives Bids for Electricity Assets

The government of New South Wales, Australia’s most-populous state, has started evaluating bids for the electricity assets it put up for sale and plans to complete the review by the end of the year.

Submissions closed at 3 p.m. Sydney time, the state government said in an e-mailed statement, declining to identify any potential buyers. AGL Energy Ltd. said today it had made an offer, while Origin Energy Ltd. has previously said it planned to bid.

The sale, which includes the retail businesses of EnergyAustralia, Country Energy and Integral Energy, is the “last available opportunity to obtain a significant retail and generation presence in Australia’s largest electricity market,” state Treasurer Eric Roozendaal said in the statement.

New South Wales may raise A$3.5 billion ($3.4 billion) selling the retail assets, David Leitch, an analyst at UBS AG in Sydney, has estimated. The state is also offering development sites for new power plants and contracting the right to sell electricity produced by state-owned generators.

Australian regulators are scheduled to announce Nov. 25 whether purchases of New South Wales power assets by AGL and Origin would raise competition concerns. The Australian Competition and Consumer Commission had previously expected to report its findings on Oct. 28.

Origin spokesman Tim Scott, TRUenergy Holdings Pty spokesman Carl Kitchen and International Power Plc spokesman Trevor Rowe declined to comment on whether the companies had bid.

Competition, Funds

New South Wales Premier Kristina Keneally said Nov. 3 that the plan to sell the assets by the end of the year remains on schedule. The government has said it wants to spur competition in the electricity market, reduce the need for state investment in power generation and strengthen its finances.

Completion of the sale is expected by early 2011, state Auditor-General Peter Achterstraat said in a report earlier this month. He cited “significant uncertainty” surrounding the value of the assets because of the unknown impact of a potential carbon pollution reduction plan in Australia.

The effort to sell the government assets began about 12 years ago, the auditor-general’s report said.

AGL and Origin may spend more than A$5 billion combined, Leitch of UBS said this month. Origin may buy EnergyAustralia and AGL may get Country Energy, Leitch said. TRUenergy, CLP Holdings Ltd.’s Australian unit, was evaluating a bid, CLP Chief Executive Officer Andrew Brandler said Sept. 28.

The government of New South Wales said last month that it intends to keep ownership of the Cobbora coal mine to supply state-owned power stations with fuel.

Source http://www.businessweek.com/news/2010-11-15/new-south-wales-receives-bids-for-electricity-assets.html