$6B gap in Electricorp negossatioms

Press, 10 February 1988, Page 3

$6B gap in Electricorp negossatioms

By

OLIVER RIDDELL

in Wellington

Electricorp has revealed that there is a $6200 million gap between its value on the electricity system and the value placed by the Treasury. Its company secretary, Mr G. A. Baumann, has said that the Treasury valuation had been $10,200 million and the Electricorp valuation $4OOO million. This was revealed in a letter to the chairman of Parliament’s Select Committee on the Treaty of Waitangi (State Enterprises) Bill. This committee asked Electricorp to advise it of the values placed on the assets held by the former Electricity Division of the Ministry of Energy when it handed over to the State-owned . enterprise, the Electricity Corporation, on April 1 last year. Since then, the Treasury and Electricorp have been unable to agree on a valuation and so Electricorp has administered the assets on behalf of the Government instead of owning them. In October last year the Government decided this impasse would be broken by direct negotiations between the Minister of Finance, Mr Douglas, and

the Minister for StateOwned Enterprises, Mr Prebble. But these long-time friends and political allies were unable to agree either. Just before Christmas, to avoid straining their friendship, they appointed a third party, Sir Ronald Trotter, to value the assets for them. Sir Ronald has not reported his decision yet. The $6200 million gap was not the starting point for negotiations. Mr Baumann said it represented the point to which negotiations had closed the gap before the two Cabinet Ministers had been invited to decide. The Opposition spokesman on State-owned enterprises, Mr lan McLean (Nat., Tarawera), said the consumer would pay the difference between the price Electricorp knew it needed and the price the Treasury wanted it to pay. Mr Prebble’s intervention meant that consumers were paying more already than Electricorp knew it needed, he said. Mr McLean said the Treasury was panicking to get more money because it knew its projections of revenue were down and Government expenditure was up.