SOE heads face sharp tune-up

Simon Power

State-owned enterprise chairs are in for a short, sharp tune-up on the eve of Easter over the performance of their organisations.

Just one hour has been allotted for shareholding ministers Bill English and Simon Power to get the message to 13 chairs of 15 of the taxpayer owned companies on Thursday evening.

Three weeks ago, State Owned Enterprise Minister Power told them in a letter that ministers wanted better performance from their companies, whose profits had fallen 50 per cent.

"The relatively poor (and declining) financial performance of SOEs, coupled with the challenging economic conditions, has brought us to the conclusion that change in the SOE portfolio is urgent and essential," he said.

The SOEs, excluding Ontrack, are worth about $24 billion and represent about 14 per cent of Crown assets.

Since the letter was sent it has been disclosed that the SOEs last year paid $46 million in bonuses and incentive and performance payments, spurring Power to call for restraint.

And last week Genesis Energy announced increases in power charges, a day before details were outlined of a ministerial inquiry into electricity focusing on what Energy Minister Gerry Brownlee said were "out of control" electricity prices.

Real prices have risen about 5 per cent a year this decade.

A spokesman for Power said the hour-long duration of the Beehive meeting was expected to be enough to get the message across.

The electricity generators are expected to attract particular focus.

Over the past five years Meridian Energy, Genesis and Mighty River Power have returned dividends totalling more than $2 billion but had mixed bottom-line results in the latest six months.

Prime Minister John Key yesterday repeated his criticism of the generators, saying they should lift their performance but not at the expense of consumers.

As he did two weeks ago, he again held up Contact Energy as an example of a company with a much higher rate of return.

The minister's letter also warned SOEs some could face tighter disclosure requirements which in some cases could be similar to listed companies.