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Australian government pulls out of power project privatization plan
by : Helen Steele
Date : Fri, 02 Jun 2006 15:12:00 GMT
CANBERRA: The proposed privatization of one of Australia 's largest hydroelectric plants, Snowy Hydro Ltd., fizzled out when the Australian government decided not to participate in the A$1.7 billion IPO. lt;br / gt;
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Australian prime minister John Howard announced Friday the government will not sell its 13 per cent stake in the firm, saying he is concerned about the public 's opposition to the sale. lt;br / gt;
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As Howard announced the government 's decision, two state governments holding the balance shares -- New South Wales (58 per cent) and Victoria (29 per cent) -- also announced cancellation of the sale, saying it is not feasible to do so without federal support. lt;br / gt;
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Howard had been supporting the sale, but reversed his stand on the face of severe opposition from the public. Hollywood actress Cate Blanchett had lent her name to the anti-sale campaign while 10 members of the government warned Howard of serious public concerns over the float. lt;br / gt;
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Howard said he underestimated the strength of the feeling when he took the original decision. "I don 't mind acknowledging that, " he said. lt;br / gt;
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He added that the divestment was not an important policy goal for the government. The government intends to sell its remaining A$24 billion stake in telecommunications company Telstra Corp. Ltd. later this year. lt;br / gt;
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The Snowy Hydro complex is situated on the slopes of Australia 's Snowy Mountains and was built between 1949 and 1975. It consists of 16 dams, seven power stations and some 200 kilometers of tunnels and aqueducts and is considered one of the greatest engineering ventures of the country. It provides 74 per cent of the renewable energy in the mainland power market. lt;br / gt;
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Howard said, "For whatever combination of reasons, there is overwhelming feeling in the community that the Snowy is an icon. It is part of the great saga of post-World War II development in Australia. " lt;br / gt;
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The sale was opposed by community groups and politicians. In a petition, some 56 prominent Australians, including Blanchett and former prime minister Malcolm Fraser, opposed the sale because they feared private owners would divert more water from the Snowy River. lt;br / gt;
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The New South Wales state government had announced plans to sell its stake in December and spend the proceeds on hospitals and schools. The state 's prime minister Morris Iemma said in the changed circumstances the sale is "impractical. ' ' lt;br / gt;
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As the project remains under government ownership, it will be difficult for the company to find funding. While it is located in New South Wales, the state government would not want to invest more for the benefit of people outside the state. lt;br / gt;
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The three governments face a $20 million payout to Macquarie Bank Ltd., UBS AG and Goldman Sachs JBWere Pty, which were engaged to manage the IPO.
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