NZ generator split scheduled for March
The government of New Zealand has confirmed that it will split the state generating company into three on 31 March 1999. It will also sell Contact Energy, the country`s second largest generator, in a public flotation.
ECZN will be divided into Hydro Energy, Genesis Power and a third, as yet unnamed, company based on the Waikato River hydropower stations. Hydro Energy will be the largest of the three, with a 30 per cent share of the country`s generating capacity.
Contact Energy, which accounts for 27 per cent of New Zealand`s generating plant, will fetch an estimated NZ$2bn ($1.1bn), making it the largest state-owned asset to be sold through public flotation. Its sale is expected to generate strong interest from key international power companies as well as the public.
The government plans to sell 60 per cent of Contact through a share issue to the public and 40 per cent to a “cornerstone” shareholder who would provide expertise to the company. Its assets have been valued at NZ1.57bn.
Splitting ECZN is expected to result in a decrease in wholesale prices and end use consumers could see a fall in tariffs of up to ten per cent. Analysts have warned that competition in the market could limit the future earnings prospects of Contact and the other generators.