February 25, 2014 7:00am by David Farrar

Genesis float in March

The Herald reports:

Prime Minister John Key has confirmed the Government will go ahead with the partial privatisation of Genesis Energy over the next month or so but has underlined the sale will be the last one under a National Government.

Finance Minister Bill English would give further detail about the Genesis sale including a broad timetable in a speech on Wednesday.

Mr Key said Genesis would be the last state owned enterprise (SOE) floated by his Government under its Mixed Ownership Model either before or after this year’s election.

It is good to see Genesis go ahead.

It is also no surprise that no further sales are planned. The five companies selected in 2011 were the obvious ones. They were all commercial trading enterprises, with competition. Other SOEs would be more problematic to sell.

My hope is that the partial asset sales have broken through the obsession that the Crown can never ever sell an asset, and can only acquire assets. Decisions should be made on a case by case basis. One can have a view that the Government should own Transpower, but now own Orcon – one of around 50 ISPs.

Mr Key again underlined the Genesis float would be the last asset sale under his Government.

“The truth is there aren’t a lot of other assets that would fit in the category where they would be either appealing to take to the market or of a size that would warrant a further program or they sit in the category that they are very large like Transpower but are monopoly assets so aren’t suited.”

I agree Transpower is not a great candidate for sale. However I would make the point that what matters more is that it is price regulated by the Commerce Commission, than it is owned by the Government.

Here’s the SOEs and Crown entities we do have left, and my thoughts on their potential for sale:

Airways – no, monopoly
AsureQuality – could be sold, but has some strategic importance to Govt
Landcorp – keep company, but farms should be sold to private sector where possible
MetService – too small to bother selling
NZ Post – I’d sell it on the basis its core business is disappearing and it may become unprofitable in a decade or so
KiwiRail – stuck with it – no one would pay a cent for it
Solid Energy – sell when market recovers, if it does
Transpower – no, monopoly
Kordia – some strategic importance for communications
Animal Control Products – never even knew this was an SOE! Sell before someone notices it
Quotable Value – sell, no need to own a valuation business
Public Trust – sell, almost all their functions have many competitors
TVNZ – sell while we can get money for it. Future business model looks shaky