Opposition 'trying to disrupt share sales'

  • 18/04/2013

Labour and the Greens timed the announcement of their electricity reform policy to disrupt the sale of shares in state-owned power companies, the Government says.

Economic Development Minister Steven Joyce has reacted angrily to opposition proposals to restructure the electricity market by creating a state-owned agency which would buy power from all the generating companies and pass it on to consumers at significantly lower prices.

They say it will save the average household up to $330 a year and there would be a 7 percent drop for businesses.

Mr Joyce has described it as a crazy idea, Soviet-style nationalisation, economic sabotage and "truly wacky stuff" devised by desperate politicians.

"Even the idea of it is economic vandalism of the highest order, with the timing designed to try to disrupt the mixed-ownership company floats," he said.

Shares in state-owned Mighty River Power are on sale now and two more companies, Genesis Energy and Meridian, are also due for partial privatisation.

The announcement had an immediate impact on share prices in the energy sector.

Shares in the country's largest listed electricity company, Contact Energy, shed 4.6 percent of their value on Thursday, while shares in Vector, TrustPower and its major shareholder Infratil also fell.

The new policy, which will be implemented if there is a change of government at the 2014 election, is expected to drive down the issue price of Mighty River Power shares.

Labour and the Greens accept the consequences of their policy and say investors will have to take the risk into account.

"People choose to buy shares, they don't choose to buy electricity," said Labour leader David Shearer.

"Kiwis have been stung by high power prices for far too long."

Green Party co-leader Russel Norman said Mr Joyce was hysterical and his comments disgraceful.

"What's crazy is National's plan to let electricity companies continue to suck billions of dollars out of the economy in excessive profits," he said.


source: newshub archive