The source said the biggest problem was international mining giant Rio Tinto's implicit threat to close Bluff's Tiwai Point aluminium smelter if it can't negotiate cheaper power from Meridian Energy.
The smelter consumes about 15 per cent of the electricity produced in New Zealand and if it was to close, the wholesale market would be oversupplied and prices would likely crash.
The sharp reduction in power companies' revenues would have a significant effect on their market value just as the Government looks to raise billions of dollars by partially selling them.
The source said Rio Tinto was in a "a terribly strong bargaining position" with Meridian and the Government.
Apart from the effect on power prices, the closure of the smelter would see a thousand jobs lost directly and about a further 3000 lost indirectly.
Southland's economy would be severely affected and it would be a difficult situation for local MP Bill English, who is also Finance Minister and the driving force behind the asset sales programme.
"He's got a predicament," the source said.
A further threat to the electricity prices came this week as multi-national pulp and paper company Norske Skog said it would halve production at its Kawerau plant which consumes just under 3 per cent of New Zealand's electricity. Norske Skog buys its power from Mighty River.
Another imminent problem is the Waitangi Tribunal's report, due tomorrow, on Maori claims over water.
The tribunal is expected to recommend the Mighty River sale be delayed while those claims are examined in detail.
An Auckland fund manager said the investment industry was looking forward to the Mighty River float but anticipation was being tempered by the mounting uncertainty.
"There's an appetite for it definitely but our sense is it's gone from simmering to lukewarm.
"Everybody is keen to participate but they also suggest that there's no hurry and it's better to ensure that whatever structure comes out is clean. That's a better outcome for everybody, including the taxpayers of New Zealand.
"There is no shame, there is no problem in saying 'hey look, we just need to square a few things off before we go forward'.
"It's about making sure you don't come with a problem child because you don't get the best price for them."
Asked yesterday whether the asset sale timetable remained on track, Prime Minister John Key said: "Let's wait and see.
"There are plenty of challenges but we're working our way through them."
In the House, Mr Key dismissed Opposition leader David Shearer's suggestion the mounting problems meant his Government should "bow to the overwhelming New Zealand public pressure to not sell our assets".
ASSET SALES HEADACHES
Mighty River Power
* The Maori Council's Waitangi Tribunal challenge over Maori water rights.
* Tuwharetoa's threat to go to court over the company's use of Lake Rotoaira and Lake Taupo.
* Major customer Norske Skog halving production at its Kawerau pulp and paper mill.
Meridian Energy
* Pressure from its largest customer Rio Tinto over its contract.
Solid Energy
* Falling global coal prices.
* Its ownership of Pike River mine.
* Transport of coal has been disrupted by the Christchurch earthquake.
Air NZ
* Shares are trading at what it describes as "disappointing" levels.
