Australia formally rejects bids by State Grid and Cheung Kong Infrastructure for Ausgrid

Decision based on unspecified national interests, says top Australian official

PUBLISHED : Friday, 19 August, 2016, 7:43pm
UPDATED : Friday, 19 August, 2016, 10:18pm

Australian treasurer Scott Morrison on Friday officially rejected bids by two Chinese companies in the A$10-billion (US$7.67-billion) sale of the country’s biggest energy grid, Ausgrid, after they failed to overcome security concerns.

Last week, Morrison announced that neither State Grid Corp of China or Hong Kong’s Cheung Kong Infrastructure, the preferred bidders, would be allowed to seal a deal.

Despite incurring the wrath of Australia’s biggest trading partner, Morrison stuck by his decision on Friday, saying it was based on unspecified national interests.

“After due consideration of responses from bidders to my preliminary view of August 11, 2016, I have decided that the acquisition by foreign investors under the current proposed structure of the lease of 50.4 per cent of Ausgrid, the New South Wales electricity distribution network, would be contrary to the national interest,” Morrison said in a statement.

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“This is consistent with the recommendation from the Foreign Investment Review Board.”

The decision has caused a rift between Australia and China, just eight months after their A$100 billion free trade agreement took effect.

In reaction, CKI said in a statement Friday afternoon: “CKI reiterates that we believe the Australian Federal Government must have reasons beyond the obvious which led them to make the concerned decision and that the issue is unrelated to CKI.”

It is considering its options in regards to the situation, it added.

China has accused the Australian government of bowing to protectionist sentiment by blocking the bid, as well as an earlier one by a China-led consortium to buy cattle company Kidman.

Beijing’s reaction mirrored comments made following a surprise move by new British prime minister Theresa May to review the building of a nuclear plant part funded by China, with Beijing questioning whether Chinese money was still welcome in Britain.

Australia’s decision to reject the Ausgrid bids underscored the country’s changing political climate since a handful of senators with protectionist leanings took power following elections last month.

Morrison said on Friday that the privatisation of Ausgrid remained central to a plan by the New South Wales state government to unlock capital for local infrastructure projects, but it was not immediately clear how and when it would proceed.

Additional reporting by Eric Ng