New Zealand sets May target to start asset sales

New Zealand said Monday that it expects the first phase of a multi-billion-dollar state asset sale programme to be completed by mid-May. Prime Minister John Key said energy company Mighty River Power would be the first of five state assets to be partially privatised under the programme, which is expected to raise an overall total of NZ$5.0-7.0 billion ($4.1-5.8 billion). Under the plan, the government will sell 49 percent of coal producer Solid Energy and energy companies Mighty River, Meridian and Genesis, while retaining majority 51 percent stakes. It will also reduce its holding in flag carrier Air New Zealand from 76 to 51 percent. The sell-off is the centrepiece of the government's blueprint to cut debt and bring the budget back into the black by 2014-15. Key said he expected Mighty River, a hydro-electric generator, to be listed on the stock exchange before the government hands down its annual budget on May 16. "The government's share offer programme is an important policy," he said. "It is expected to free up NZ$5.0-7.0 billion that we can then invest in other assets such as modern schools and hospitals, without having to borrow in volatile overseas markets." The partial sale of Mighty River was initially slated for late last year but was delayed when Maori groups took legal action arguing New Zealand's indigenous people own the water needed to run its power stations. The courts rejected the challenge and Finance Minister Bill English said the government had a mandate to proceed with asset sales as it campaigned on the issue at the last election in 2011. "It has been through the High Court and the Supreme Court, where the government has won both cases, and now, at last, it's time to get on with it," he said. The government did not say how much it expected to raise from Mighty River specifically or release a timetable for the partial sale of the other four assets.