9 Feb 2011

English expects share gain from part-privatisation

9:26 pm on 9 February 2011

Finance Minister Bill English expects the Government's remaining shares in any part-privatisation of state-owned enterprises will eventually be worth more than full ownership of the assets now.

Opposition MPs have again claimed that the return from paying off debt with proceeds from sales of SOEs will not match those from retaining full ownership.

Labour Party MP Trevor Mallard says it does not make financial sense to be selling assets which make a return of 15% to pay off debt which charges interest of just 6%.

But Mr English says those returns are not guaranteed, especially if electricity reforms succeed in lowering prices charged by the state-owned electricty generators.

Mr English says the SOEs are proabably undervalued on the Government's books, further pushing up the rate of return.

A sharemarket listing would produce a more realistic valuation, leaving the Government with a more valuable asset, he says.