AUCKLAND — Aerial shots of majestic dams and steaming geothermal power stations amid lush countryside form the backdrop for television advertisements promoting the initial public offering of the government-owned electricity company Mighty River Power.
Selling stakes of as much as 49 percent of several state-owned companies has been a key part of the National Party’s policy since its successful 2011 campaign for a second term in government. On Friday, Mighty River Power is to be the first offering.
But behind the slick marketing campaign, the path to its partial privatization has been halting and messy, putting a big question mark over government hopes that New Zealanders will diversify away from real estate investment.
In late April, the opposition Labour Party and its potential coalition partner, the left-leaning Green Party, said that if elected to government next year, they would create an intermediary between generators and retailers that they say would slash prices for consumers.
The Labour Party says it will reduce power bills for businesses and save households between 230 and 330 New Zealand dollars, or between $190 and $280, per year. That amounts to 500 million to 700 million dollars annually.
“Since the deregulation of the market, electricity prices have risen at twice the rate of inflation,” said Labour’s finance spokesman, David Parker. “The lesson of the deregulation of the telecom industry in the 1980s is: If you don’t get the regulatory framework right before you privatize, you entrench and make worse profiteering.”
The government plans to run the companies on a mixed ownership model, retaining a 51 percent stake but listing the remainder on the New Zealand stock exchange, the NZX. On Wednesday, the government announced that the shares would be priced at 2.50 dollars.
Prime Minister John Key said the Labour Party was playing a “political game” that could deter foreign investment in New Zealand, but he insisted the opposition policy would not delay the I.P.O.’s of Mighty River Power or any other state-owned companies.
“They are policies of the far left that work in countries that want to do that, but if you’re a high-growth, modern O.E.C.D. country like New Zealand, far-left policies should be left for places like North Korea,” he said, referring to the Organization for Economic Cooperation and Development, a group of free-market democracies.
About 440,000 New Zealanders, or almost 10 percent of the population, registered their interest in buying Mighty River Power shares, according to government figures. Provisional government figures also state that about 113,000 will end up as shareholders. The offer will consist of as many as 686 million shares.
The government said Wednesday that 86.5 percent of Mighty River would be New Zealand owned: 26.9 percent by New Zealand retail investors, 8.6 percent by New Zealand institutions and 51 percent by the government.
Chris Marshall, who serves on a community board of the Auckland municipal government, said he was opposed to asset sales on principle but had decided to take advantage of the investment opportunity.
“Right from the start I thought: I don’t think it’s a good idea, but if they’re going to do it I’m going to buy as many shares as I can,” he said. “I think there’s a lot of people in that position.”
A former member of both the National Party and the Green Party, he said he believed the Labour-Green plan was, politically, a “masterstroke” but that he thought it was likely to deter a lot of potential investors.
“I don’t know anyone who’s a mom-and-dad investor who’s actually going for these shares,” said Mr. Marshall, who has traded shares himself for more than 40 years. “I know some friends, who are experienced investors, who haven’t; and one of them, who was going to buy it for himself, his wife, his grandchildren and whatever, he’s decided: ‘I can’t be bothered.”’
Article source: http://www.nytimes.com/2013/05/09/business/global/09iht-privatize09.html?partner=rss&emc=rss
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