Ausgrid sale blocked by Treasurer Scott Morrison

Scott Morrison has blocked the sale of NSW electricity asset Ausgrid to foreign buyers due to security concerns.

Treasurer Scott Morrison has blocked the sale of Ausgrid to foreign bidders.

Federal Treasurer Scott Morrison has killed off the bid for NSW electricity network Ausgrid because of national security concerns in a move that could cost the NSW Government billions of dollars in sale proceeds.

Mr Morrison has confirmed last week’s preliminary ruling that Chinese bidders State Grid Corporation of China and Cheung Kong Infrastructure after giving the bidders a week to try and find an alternative structure that would be acceptable to the Government

“In making this decision, national interest concerns have been paramount,’’ Mr Morrison said in a statement this afternoon.

“They relate to the transaction structure as currently proposed and the nature of the assets.’’

It is the second time Chinese bidders have been blocked from buying Australian assets because of security concerns this year. Mr Morrison objected to Shanghai Penxin’s purchase of the S Kidman & Co pastoral business, Australia’s largest land holding, because one of its station’s is adjacent to the Woomera security facility.

Market sources said rejection of the Chinese bidders — two of the largest infrastructure operators in the world — could knock billions of dollars from the sale proceeds which were estimated to be as much as $13 billion for the 50.4 per cent stake being sold.

Australian energy networks are facing a Federal Court appeal to enforce and Australian Energy Regulator ruling that would strip 30 per cent from Ausgrid’s annual revenue and slash the likely asking price.

Mr Morrison said the Government would continue to work closely with New South Wales to ensure that national security requirements are met under any future transaction process..

NSW Premier Mike Baird this afternoon said he was confident in advice he had received that a successful transaction was possible.

“We are very confident we will achieve a great outcomes ... indeed the money will be in the bank before the next budget,” he said.

There remained many bidders interested in the asset, Mr Baird said.

“We don’t want any bid that doesn’t satisfy national interest and national security ... that’s the case today and that will be the case into the future,” Mr Baird said.

“My frustration is that his should have been determined much earlier.”

NSW Treasurer Gladys Berejiklian was putting on a brave face today after hearing the news.

“There are always twists and turns along the way,” she said.

China’s commerce ministry the decision was detrimental to the economic and trade relationships between the two countries.

“The decision points to uncertainties in Australia’s investment environment and will severely dampen the enthusiasm of Chinese firms to invest in Australia,” Sun Jiwen, a ministry spokesman, said in a statement.

Mr Sun urged Australia to be cautious in using security review measures. He said Chinese companies have strictly followed the rules and co-operated with security reviews by the Australian government

Mr Morrison said he had given both companies one week to respond to concerns over national security.

Additional reporting: AAP