Hon Tony Ryall
Minister for State Owned Enterprises

Hon Dr Lockwood Smith
Minister Responsible for Contact Energy Ltd

• MINISTERIAL STATEMENT
• OUR POLICIES FOR PROGRESS
• MEDIUM TERM FISCAL GAINS
• TARIFF REMOVAL BY 2006
• SCOPING OF CONTACT ENERGY LTD
• SUPER CHANGES
• SUPERANNUATION 2000 TASKFORCE
• HOUSING PACKAGE
• IMMIGRATION PACKAGE
• TOURISM PACKAGE
• KIWI INNOVATION

"Any move to sell Contact Energy would bring real benefits for the public through debt repayment, and more competition in electricity bringing lower prices to businesses and households.

"The Government is considering the sale for the following reasons: The electricity industry reforms are bringing increased competition to electricity generation. Introducing a private sector company to compete with the remaining three SOE generators will make those SOE's more competitive and deliver lower prices to New Zealanders.

• For Contact to enhance its position in this competitive environment, it needs to make significant investments that are better funded by private investors, not taxpayers. It is already expanding by taking over private sector electricity retailers.

• Proceeds from any sale will go towards reducing public debt. The savings in interest costs free up valuable funds for higher priority spending such as health and education."

"Commercial advisers will conduct a detailed review of the company, considering issues that may affect a sale, and an assessment of the best timing for a sale. The Ministers said the commercial advisors had been asked to assess sale options ensuring widespread public ownership. "Given the success of the float of Auckland Airport shares, we want to provide further opportunity for New Zealanders to invest in a high quality utility business." The Government already has several other substantial business divestments underway including:

• the sale of the Crown's shares in Solid Energy (formerly CoalCorp);
• a public float of the principal properties of Government Property Services Limited;
• ECNZ's sale of a number of small hydro stations; and
• the Crown's small shareholding in Rotorua and Palmerston North Airports.

"Any returns from these sales have not been incorporated into Treasury forecasts. Completing the sales will improve both the debt and fiscal positions."

Contact Energy has a book value of $860 million. An announcement on a commercial adviser will be made in the next few weeks.