Thursday, January 24, 2013

Fallow on asset sales

The Herald's Brian Fallow points out the obvious: the government shouldn't push ahead with asset sales until we know what will happen with the Tiwai Point aluminium smelter:

If Meridian's Manapouri hydro station - which was built for the smelter, and vice versa - were widowed, its life would not be over. It is New Zealand's cheapest power and if it became available to the rest of the country it would have no problem getting dispatched.

The question would be which - and whose - other power stations would then become surplus to the system's requirements.

The consequences for Genesis' coal-fired plant at Huntly, and for Solid Energy which supplies it with coal, would be grave. Good for the planet, maybe, but not for the Government's asset sales programme.

If Tiwai Point shuts down, all the electricity companies are in for a rough time as the market reaches a new equilibrium. Potential investors in Mighty River will be pricing this into their bids - meaning that the uncertainty will cost us money, regardless of the outcome. But National doesn't care - they want to push on regardless. Which means they'll get a bad deal for New Zealand.

But then, getting the best deal for New Zealand isn't their goal - getting the best deal for their donors and cronies is. And the uncertainty and resulting discounting helps that goal. National is transparently ripping the rest of us off to further enrich its clique. And that is not something the rest of us should tolerate.