Meridian sale: Govt blinks

The partial sale of the state-owned electricity generator is scheduled to take place in November. Photo / Simon Baker

Red faces over Treasury's stance on Tiwai bailout spurs 'pre-offer' delay.

The Government postponed an announcement this week on the sale of shares in Meridian Energy, sparking doubts about whether the sell-off will go ahead on schedule in November.

Opposition MPs believe the sale has been stalled by embarrassing revelations about the public bailout of Tiwai Pt aluminium smelter, Meridian's biggest electricity customer.

It is understood the Treasury had been due to announce details of a share "pre-offer" on Thursday or Friday, but abruptly pulled the announcement after news broke of its concerns about the $30m bailout.

On the streets of Auckland yesterday, views were mixed on the impact of the delay.

Simon Dromgool, an engineer from Tauranga, said it would not deter him from buying shares. "I see it as positive long-term investment."

Julie Huckson, a student accountant from Hawkes Bay, said she had analysed Meridian's figures as part of an accounting project and didn't think it looked like an attractive offer.

Yesterday, State Owned Enterprises Minister Tony Ryall declined to comment on any postponement of the announcement, stating only that such procedural matters were "flexible".

"We'll be making a follow-up announcement about the Meridian share offer timetable shortly."

On Thursday, in the face of intense scrutiny from Labour and the Greens, a document "dump" revealed the Treasury advised against making a payment to Tiwai Pt because it would "result in a significant transfer of value from New Zealanders to Pacific Aluminium and Rio Tinto shareholders."

Last month, after threatening to close the smelters, the owners agreed to a new electricity deal with Meridian - propped up by the Government's $30m sweetener.

Labour spokesman Clayton Cosgrove said: "I would have expected some sort of pre-offer any time now because the window is closing and they have to act pretty quickly."

Greens MP Gareth Hughes said problems with the Mighty River Power sale had been a bad look, and the Government would be closely "weighing up the options" for Meridian. "They had 400,000 pre-registering for Mighty River Power ... then getting only 117,000 buyers. Now we've seen the Government bent over a barrel by Rio Tinto. It's not been going smoothly, has it?"

Hughes said the Government should suspend all sales pending next year's referendum - forced by a petition signed by 327,774 New Zealanders - on selling shares in the state power firms and Air NZ.

Cosgrove said the Government remained hellbent on the Meridian float, despite the firm's declining value and opinion polls showing 87 per cent of Kiwis opposed asset sales.

"If [Prime Minister] John Key was still at Merrill-Lynch, he'd be advising against this," Cosgrove said.

"No one in their right minds would be selling revenue-earning assets" to build non-revenue assets such as hospitals and schools.

- additional reporting: Elesha Edmonds