By Stephen Mayne, former spindoctor for Victorian Treasurer Alan Stockdale

The proposed merger and then demerger of Alinta and AGL is in large
part a squabble over energy assets privatised by the Kennett Government
during the spectacular $30 billion sell-off in the 1990s.

While every other state has worried about ownership and control of
their energy assets over the years, the Victorians ran a global auction
with no strings attached and the state’s finances have never looked back.

The contrast with the incompetent and parochial actions of the West
Australian Liberal Government are stark indeed, although they must be
proud of their baby, AlintaGas, now entering the takeover fray on the
east coast.

Richard Court and his then energy minister Colin Barnett decided to
sell AlintaGas in 2000 but they were only ever going to allow a
cornerstone investor to take 45% because West Australians had to be given
a chance to buy a slice of a company that had to be controlled out of
Perth.

Wesfarmers, AGL and Kansas-based Aquila made the shortlist and it was
the Americans, along with their listed Australian offshoot
United Energy and AMP, who won the day with a $319 million bid to take 45%.

This was the equivalent of $4.41 a share, but just a few months later
the WA Government floated the other 88 million shares at just $2.25 a
pop and 110,000 West Australians shared in the bonanza of a 27% first
day stag profit.

Fast forward five years and Alinta shares peaked at more than $12
last October, meaning those West Australians had seen their $198
million investment surge to more than $1 billion. They dipped 23c to
$10.74 this morning in light of the $1.2 billion AGL cash splurge but
WA taxpayers have still received nothing like full value.

Sure, Melbourne isn’t home to many energy company head offices, but who
really cares about that when you’ve fetched $30 billion and the lights
stay on? We get full value for our assets and West Australian taxpayers
didn’t.

You really need to look at Crikey’s world famous power sell-off list
to keep track of all the deals over the years, but you certainly won’t
see a takeover bid for Santos any time soon because those short-sighted
parochials in Adelaide still have a 15% ownership limit prescribed by
the state Parliament which dates back to the days of Alan Bond.

AGL is Australia’s oldest listed company but it only lost its 5%
shareholder limit a couple of years back. This was imposed to fend off
Sir Ron Brierley’s takeover plans in the 1980s and Sir Ron remains on
the board to his day.

Electricity assets remain largely state-owned in NSW and Queensland,
which is why any serious assets shuffling in the industry inevitably
comes back to the 15 different privatisations that the Kennett
Government drove through between 1994 and 1999.

As NSW Treasurer Michael Costa mulls adding forests to his plans to
sell the Snowy, he really should bite the bullet and put the electricity
sector on the market because infrastructure prices are booming and
there are willing buyers all over the place. Besides, based on
Queensland Rail’s recent forays interstate, the Beattie Government
might also lob a bid or two.

Peter Fray

Get your first 12 weeks of Crikey for $12.

Without subscribers, Crikey can’t do what it does. Fortunately, our support base is growing.

Every day, Crikey aims to bring new and challenging insights into politics, business, national affairs, media and society. We lift up the rocks that other news media largely ignore. Without your support, more of those rocks – and the secrets beneath them — will remain lodged in the dirt.

Join today and get your first 12 weeks of Crikey for just $12.

 

Peter Fray
Editor-in-chief of Crikey

JOIN NOW