The foreign takeover of Australian gas and electricity

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Li Ka-Shing leads CKI back to Australia for their biggest deal yet. Photo: Guardian.

 

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There is growing concerns foreign ownership of vital assets in Australia could put national security at risk, after a $13 billion bid by Hong Kong’s Cheung Kong Infrastructure (CKI) for Australia’s east coast gas pipeline network has been cleared by the competition watchdog.

The move is the latest example in an ongoing series of major changes to Australia’s gas and electricity sector over the last decade, which has seen assets privatised and the majority of ownership transferred to foreign corporations.

THE CKI MACHINE IS BACK

The Mick McCormack-led APA Group, transporter of more than half the gas used across the country, has lured one of Asia’s richest family controlled firms into what would be its largest ever acquisition.

The Australian Competition and Consumer Commission (ACCC) has made the decision to approve a $13 billion sale of gas pipeline infrastructure owner APA Group to CKI this week, and is now waiting for Foreign Investment Review Board (FIRB) recommendation.

Subject to approval, the move will signify a turning point in Australian assets ownership, as CKI will now have the potential to control – with the 100% Chinese government-owned State Grid – nearly all of Australia’s east coast energy distribution assets as a result.

This includes significant shares in privatised state power distributors, such as EnergyAustralia, which is also ownedby foreign Hong Kong-based company, CLP Group.

A map of APA’s gas networks pending approval to be sold to CKI. Photo: SMH

 

CKI and State Grid (which includes Singapore Power) now have a major ownership interest in all of Victoria’s electricity and distribution networks, and all gas transmission pipelines and distribution networks. They also hold a 51 per cent stake in South Australia’s electricity distributor.

The move will allow general consumer pipelines across Australia to also be in CKI’s control.

This includes the Murray Link interconnector, electricity distribution through Powercor, Citipower, United Energy and the Gasnet pipeline, plus distribution through Multinet and the Australian Gas Network.

The company is part of an empire founded by Li Ka-Shing, one of Hong Kong’s largest tycoons whose global interests span everything from property to telecommunications to ports and infrastructure.

The holding company for the conglomerate is one of Asia’s most outwardly-focused enterprises, with investments in more than 50 countries, making Ka-Shing one of the wealthiest men on Earth.

In 2016, the FIRB rejected CKI’s takeover bid for the electricity network Ausgrid, due to national security concerns.

Today, ‘experts’ have called the concerns “overblown” – with the Australian Financial Review stating blocking CKI from buying Australian pipelines would be a win for Beijing” – citing gas assets don’t pose the same risk to national security as telecommunications and electricity assets.

This follows moves earlier this year to allow Alinta, a company owned by the Hong Kong-based Chow Tai Fook Enterprises, to buy AGL’s Liddell power station to stop its closure and ‘keep the lights on’.

The bid is also being scrutinised by the Critical Infrastructure Committee (CIC), an addendum to the FIRB that was formed in February on the back of contentious foreign investment decisions involving Chinese-owned or linked companies. This included the controversial leasing of the Port of Darwin to the Chinese-owned Landbridge Corporation.

POWER GENERATION IN AUSTRALIA

There are four parts that make up the electricity market in Australia: Generation, distribution, transmission and retail operations.

Of Australia’s eight states and territories, only three governments retain full ownership of all elements of their electricity networks: Western Australia; Tasmania; and the Northern Territory.

Queensland also owns the generation, distribution and transmission of electricity, but the retail market has been privatised.

The following is a state-by-state synopsis, excluding QLD, of the foreign entities involved in power generation, pending further expansion upon CKI approval of vital gas pipelines:

South Australia:

In South Australia, Cheung Kong Infrastructure and Power Assets owns a 51-per-cent share, on a 200-year lease, in SA Power Networks Electricity Distribution network.

The transmitter in that state, ElectraNet, is partly owned by State Grid Corporation — at 46.5 per cent, it holds the largest share.

New South Wales:

There are three main electricity distributors in NSW: Essential Energy, Endeavour Energy and Ausgrid. The NSW Government wants to sell half of Ausgrid to fund infrastructure projects.

Last year, the NSW Government awarded a 99-year lease of electricity transmitter TransGrid to a consortium comprising Canadian, Middle Eastern and local investors. The deal was worth $10.258 billion.

Victoria:

There are five electricity distributors in Victoria, with three partly owned by State Grid.

State Grid owns a 20-per-cent share in AusNet Services Electricity Distribution.

It also owns 60 per cent of Jemena, the company which owns Jemena Electricity Distribution Victoria and 34 per cent of United Energy Electricity Distribution Victoria.

Cheung Kong Infrastructure owns a 51-per-cent share in both CitiPower Electricity Distribution Network Victoria and Powercor Electricity Distribution Network Victoria.

The transmission link which transports renewable energy from the Mt Mercer wind farm to the Victorian grid — Transmission Operations (Australia) Pty Ltd Victoria — is partly owned by Cheung Kong Infrastructure at a 50-per-cent share.

Australian Capital Territory:

In the ACT, the government owns 50 per cent of ActewAGL Distribution Ltd.

The other half is owned by Jemena, in which State Grid Corporate hold a 60 per cent share.

The remaining 40-per-cent share in Jemena is owned by Singapore Power International.

Former Army general and now Liberal senator Jim Molan told the Financial Review a significant number of his colleagues were concerned about the takeover bid on national security grounds. A foreign owner could cut off the gas supply at any time.

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RELATED CONTENT

CKI pipeline bid risks veto on national security grounds | afr.com

Senator slammed over stoking Chinese security fears | smh.com.au

State Grid and Australia’s national security interests | aspistrategist.org.au

CK-APA Group takeover to create ‘mother of all monopolies’ | afr.com

Forget assets, China own 10x more land in Australia in 12 months | TOTTNews.com

Chinese investment in Australia’s power grid explained | abc.net.au

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3 thoughts on “The foreign takeover of Australian gas and electricity

  1. THE AUSTRALIAN GOVERNMENT HAS
    BORROWED
    AND
    BORROWED
    AND
    BORROWED
    AND
    BORROWED
    AND
    BORROWED
    AUSTRALIA OWES MORE MONEY THAN ONE COULD IMAGINE

    Consecutive Australian Governments have borrowed & handed the borrowed CASH around like a packet of Minties.
    Paul Keating gave away Australia’s manufacturing jobs – millions of jobs to China –
    WHY ??
    To repay some of the borrowed monies owed by Australia.
    Mining leases are given to foreign nations as repayment for monies borrowed.
    Logging contracts & wood chipping – our forests have been given over to repay money borrowed
    MONEY THAT WAS PASSED AROUND LIKE A PACKET OF MINTIES TO THE MATES.
    MONEY THAT WAS WASTED BY THE HOY POLY OF AUSTRALIA ON ALL MANNER OF RUBBISH.
    Today, Queensland is being torn up & turned into a moon crater by vested interests that Australia owes money to.
    Australia’s health care system = HOSPITALS – AGED CARE – & the like are being GIVEN AWAY to FOREIGN BANKS & MONEY LENDERS to either repay money owed or to borrow new money TO SQUANDER.
    Hospitals sitting on LAND TO THE VALUE OF BILLIONS DOLLARS.

    And you tell me of “foreign takeover of Australian electricity & gas”
    These bastards only know how to bludge money any way they can & guess what – they also like to gamble GAMBLING GLOBE TROTTERS is what they are.
    They gamble at the best casinos, in mahogany calibur rooms, there are stories of the Silver Bodgie flying out to foreign race meets on a private jet.

    Australia – lock, stock & barrel, is owned by its creditors.

  2. What’s more, our creditors will import their doctors & surgeons to work
    THEIR AUSTRALIAN HOSPITALS
    I guarantee you that the eye & ear hospital in Vic. is already in the throws of foreign takeover.
    I’m actually glad that the Australian element will be unemployed – the social worker at the eye & ear simply would not answer the phone & I was in desperate need of her help.
    Soon the nasty Australian bitch will be on the dole – suck eggs U sick can’t.

  3. While I’m here AIDACARE Albion St B’wick has $4400 of my money –
    The money I paid them for a power wheelchair.
    And FOR SEVERAL MONTHS NOW they also have the power wheelchair.
    You see they ordered & delivered to me THE WRONG CHAIR.

    I wonder how many other elderly & disabled people they has stolen from ??

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