Australia’s Most Populous State to Mull Electricity Network Sale

Apr 27, 2014 10:01 am ET

April 28 (Bloomberg) -- New South Wales will consider selling the state’s electricity network, a transaction analysts estimate might raise $32 billion, to help fund infrastructure projects.

“That is something the cabinet and the government will consider,” State Premier Mike Baird said in an interview on Sky News in Australia yesterday. “Building the infrastructure is probably the critical issue we face.”

Australia’s most populous state has already sold ports and a desalination plant to finance road and rail projects. A full sale of the network carrying electricity to homes and businesses -- assets known as poles and wires -- could bring in A$34.5 billion ($32 billion), Infrastructure Partnerships Australia estimated in 2011.

The model of selling state assets to fund projects needed by local communities is “very compelling,” said Baird, a former banker who succeeded Barry O’Farrell as premier this month. There’s “a huge amount” of capital tied up in the electricity network, Baird said.

O’Farrell had said the government wouldn’t sell the poles and wires without a mandate at the next state election in 2015.

Australia’s antitrust regulator last month blocked the New South Wales government’s planned A$1.51 billion sale of power plants to AGL Energy Ltd.