23 October 2013

Meridian flop another failure for National’s asset sales

The Meridian Energy flop is another failure for National’s asset sales agenda, Green Party Co-leader Dr Russel Norman said today.

Only 62,000 retail shareholders have bought shares in Meridian Energy. That compares to 113,000 who bought shares in Mighty River Power and an expected take-up of 250,000 buyers per sale when the asset sales were being planned. 62,000 equates to just 1.4% of the New Zealand population.

Buyers will reap the benefit of paying only $1 per share up front and the remaining 50 cents in 18 months’ time – the total cost to the Crown of these interest free loans will be $50 million. Overseas investors bought 28% of the shares sold (13.5% of the company), meaning the New Zealand taxpayer is paying $14 million to incentivise foreign institutions to buy our electricity company.

“The Meridian flop confirms that National’s asset sales are a failure and a huge waste money,” said Dr Norman.

“Only 1% of Kiwis bought shares in Meridian. The other 99% of us have lost the profits from a strategic asset and can now look forward to higher power prices.

“The Meridian sale cost around $90 million. We know the ‘buy now, pay later’ scheme alone will set taxpayers back $50 million while the fees for brokers, lawyers, and ad-men will add around $40 million to the bill. That’s on top of the $173 million that National’s asset sales have already cost the taxpayer.

“Mr Key has just cost the New Zealand taxpayer $14 million to subsidise overseas buyers as they swoop in to take a chunk of Meridian and its profits.

“The low sale revenue of just $1.88 billion means it’s very unlikely that continued asset sales would raise the $5-$7 billion that National promised.

“National is wasting public money at an alarming rate so that a handful of wealthy investors and large overseas institutions can buy a strategic public asset that Kiwis don’t want sold.

“At every step, John Key has thumbed his nose at the New Zealand public. He should have waited until the asset sales referendum and let Kiwis have their say. He didn’t. Mr Key has acted arrogantly and he has wasted huge sums of public money.

“It’s hard to do a belly flop while simultaneously giving 99% of New Zealanders the fingers, but John Key has shown that it is possible,” said Dr Norman.

Additional information:
Green Party costwatch
Treasury Request for Proposal forecasting 250,000 retail customers per sale

ENDS

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