Big Gerry treads lightly on Solid Energy privatisation plans

Earlier today, Solid Energy Chair John Palmer advocated, in a presentation before the start of the NZX Annual Meeting in Wellington, the partial privatisation of Solid Energy:

“So I guess my prescription is to say that a partially listed model where you have access to the capital that you need, similar to the Air New Zealand model which I think is a good model, is a really important path for a company like Solid Energy.”

Mr Palmer thought there would be little political risk for the Government in its second term, were it to win one, in going down that track with a company such as Solid Energy.

“This can be, with the right sort of management and the right sort of capital, one of New Zealand’s most important companies. It should be,” he said.

Yes, that quote is from the Sydney Morning Herald.  I can just imagine the executives at the foreign-owned mining giants like BHP Billiton drooling all over their shoes at the prospect.

Energy and Resources Minister Gerry Brownlee was quick to see the political risk, and slap down tread lightly on Palmer:

But Brownlee said any sale of state-owned assets would occur only if the Government was elected on that mandate.

”The government has made it very clear we not selling any assets until we go to New Zealand and say that’s our plan.”

What a hopeless response from Gerry!

Solid Energy is hard enough to control as a State Owned Enterprise.  It is already wanting to start coal seam fires in the Waikato to convert coal into gas, with consequent pollution of both the air and the water table.  It is also wanting to mine the dirtiest coal of them all, lignite, on a far greater scale in Southland.

Let Solid Energy loose on the sharemarket, especially given National’s proposed relaxation of Resource Management Act constraints, and who knows how much environmental damage Solid Energy will do.

We need a clearer response to the Solid Energy privatisation proposals, Gerry.  Yes, or no?

And we want it now!

10 Comments Posted

  1. Toad, I hope we learn one lesson from that quote that you just provided above – don’t buy trains from the People’s Republic of China (the Waratah trains are being constructed there, with the Australians only doing basic assembly work).

  2. Indeed, Sam:

    [Downer EDI] didn’t do itself any favours when it put out a statement to the ASX on May 21 denying “market speculation and misinformation” that its rail contract, Reliance Rail, needed to raise equity. Implicit in the briefings was that nothing was wrong with the Waratah trains PPP rail contract.

    Less than two weeks later, on June 1, it was forced to come clean and write off $190 million from the Waratah contract due to cost overruns on manufacturing rolling stock and another $70 million in impairments relating to the write-down of goodwill on the British and New Zealand businesses, impairment of assets held for sale and recoverability of legacy customer contracts in the engineering division.

    Downer had a golden opportunity to restore credibility at a packed auditorium on June 2, but it blew it badly. Investors, fund managers and analysts left the meeting with an inadequate explanation of the group’s working capital. They were also left with questions about the quality of senior management, uncertainty about the need for an equity issue, and the likelihood of more write-downs on its Waratah rail project given it is only 30 per cent complete.

  3. ‘Partial privatisation’ would be the worst of both worlds. A company claiming the right to act in the interests of profit-making, while receiving government backing when required. A two-headed monster.


    Is this the same John Palmer who said today something like ‘We are not selling off the family jewels, but we are gold plating them.

    That sounds a bit like Zappa’s ‘We are not groupies’

    Nor are we pimps or whores or fixers or drug dealers or loan sharks or even land developers, no we are your local National Party MP’s (and Govt. execs) selling your country street by street so why not spare us a thought at election time!

  5. Let Solid Energy go feral and they’ll do more damage than the possums, and spread more than just TB.

Comments are closed.