NSW electricity privatisation – a quick look
There’s nowhere near enough evidence in the public domain for a proper evaluation of the announced privatisation of NSW electricity, but there’s enough to do a quick retrospective evaluation of the last such proposal, under the Carr government in 1996 and 1997. At the time, estimates of the sale price for the whole industry (generation, distribution and retail) were “up to” $22 billion (an overoptimistic figure based on extrapolation from Victoria). If entirely used to repay debt (unlikely, this is NSW after all!) that would have saved the government around $1.5 billion per year. Instead the government got dividends of around $1 billion a year, and also extracted at least $5 billion in special capital repayments. So, the total stream of payments was about the same, and the present value was, if anything, a bit higher since the capital repayments came early.
Coming forward to 2007, the government looks set to get more than $15 billion for generation and retail alone, even with a range of restrictions that would reduce the sale price substantially. In general, distribution accounts for at least half the value in the industry, implying a value upwards of $30 billion.
Short analysis: By not selling in 1997, the public lost nothing in terms of cash flow, and accrued at least $8 billion in capital gains.