With $10.2 billion in hand from the sale of its first tranche of electricity distribution assets, the NSW government is set to reap more than $20 billion from the sale of all three assets on the market.
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On Wednesday, the government sold Transgrid, the high voltage network owner, for $10.2 billion to a consortium of Canadian, Middle East and local investors, which fended off rival bids such as one from China's State Grid.
It is now seeking to sell just over 50 per cent of two other distributors, Ausgrid and Endeavour Energy. Ausgrid distributes electricity in central, eastern and northern Sydney, Newcastle and surrounding areas, while Endeavour handles western and southern Sydney, along with the Illawarra to Sydney's south.
Essential Energy, which has the network throughout rural areas, is to remain in government hands due to political pressure from the National Party which is concerned with a loss of rural jobs if it were sold.
Victoria sold its electricity industry for an estimated $22 billion in the 1990's as it sought to stave off bankruptcy, benefiting from robust demand from US bidders for power generation assets in particular, much of which was lost.
NSW, by contrast, sold its power generators for a pittance - selling one power station, Vales Point, for a nominal $1 million last week - with values undermined by a carbon tax and plunging power demand thanks to subsidies for renewable energy which have fostered surging demand for rooftop solar systems.
But surging demand from pension funds for guaranteed income at a time of record low interest rates is fuelling a boom in demand for infrastructure assets.
Price Commissioner, Professor Alan Fels, the former head of the competition watchdog the ACCC, has signed off on the sale, the NSW government said, with the successful bidder guaranteeing that network charges in 2019 will be lower than they were in 2014.
The winning consortium is composed of Canadian pension fund Caisse de depot et placement du Quebec (CDPQ) with 24.99 per cent, Hastings as the manager of Utilities Trust of Australia with 20.0-2 per dent, the Abu Dhabi Investment Authority with 19.99 per cent and Spark Infrastructure with the remaining 15.01 per cent.
The government was advised by UBS and Deutsche Bank.
