Prime Minister John Howard bowed to public anger June 2 and canceled the A$1.7 billion (US$1.3 billion) privatization of giant hydropower generator Snowy Hydro Ltd.
Howard’s surprise decision to withdraw his government’s 13 percent stake from the sale of Snowy Hydro prompted the two state governments holding the rest of the shares also to cancel.
“I have been surprised by the level of public disquiet, which has been much greater than I expected,” Howard told reporters.
Community groups, politicians, and a petition signed by 56 prominent Australians, including actress Cate Blanchett and former Prime Minister Malcolm Fraser, all opposed the sale because of fears private owners would divert more water from the Snowy River.
Analysts said the Snowy Hydro sale would have been well supported by the market, with pre-registration already under way, but it was unlikely a new proposal could be brought forward.
“There seemed to be such a depth of feeling that any government now would be mad to raise the issue again,” said Ken West, a partner at fund manager Perennial Growth Management.
Snowy Mountains Scheme a development icon
Snowy Hydro owns and operates the 3,756-MW Snowy Mountains Hydroelectric Scheme, which consists of seven power stations and 16 major dams. It provides 74 percent of the renewable energy in the mainland power market. The project took 25 years to build, and reversed the flow of the Snowy River, channeling the water through 225 kilometers of tunnels and aqueducts.
“For whatever combination of reasons, there is overwhelming feeling in the community that the Snowy is an icon,” Howard said. “It’s part of the great saga of post-World War II development in Australia.”
New South Wales state, which owns 58 percent of Snowy Hydro and had pushed for the sale to release funds for public spending, said a full sale was now impractical.
“It’s off, the PM with his statement has pulled the rug on the sale,” Premier Morris Iemma told reporters in Sydney.
The Labor Party, Howard’s opposition at a national level, is in government in the states of New South Wales and Victoria.
The decision by the Federal government not to participate would have likely reduced the value of Snowy Hydro in any privatization, a banker involved in the sale process said.
“The New South Wales government definitely needs money but there was no point going ahead, if you have got a sale that is compromised by the Fed,” said the banker, who declined to be named.