Following a decision by the South Australia government to sell the Electricity Trust of South Australia (ETSA) and Optima Energy, it has been revealed that ETSA recommended to the government of South Australia that it be privatized, AAP reports.
The recommendation reflected the Trust’s views about the increasingly competitive electricity market which is developing in Australia.
According to the text of a letter from ETSA to the government, the board of ETSA recommended that the privatization of ETSA should be pursued immediately and that it should be implemented through a float of 100 per cent of the shares in ETSA.
The government blamed Australian federal competition policy for forcing it to sell its electricity interests. Otherwise it would expose taxpayers to financial risks. The government believes it could lose up to $1.33 billion unless the assets are sold. The present government promised not to sell the assets before the election held in October 1997, and the move has prompted criticism from the opposition.
However, in deciding to sell its shares in ETSA, the government has rejected the proposal of a public flotation in favour of a long-term lease, a trade sale.
ETSA responded by pointing out that while a trade sale would bring higher proceeds, a US company was the most likely purchaser. Foreign ownership, it said, could result in a community backlash and the transfer of ETSA’s head office from South Australia.