The Australian Government has announced new conditions that all future applications for the sale of electricity transmission and distribution assets, and some generation assets, will attract ownership restrictions or conditions for foreign buyers.
Electricity distribution and transmission infrastructure are critical national assets and a key national security safeguard is the diversity of ownership of these assets.
This approach will allow the government to actively manage the level of ownership and control from investors in a single asset or within a sector.
Each case will be assessed on a case-by-case basis, taking into account a range of factors such as the cumulative level of ownership within a sector, the need for diversity of ownership and the asset’s critical importance.
Parties interested in acquiring or selling critical infrastructure assets are encouraged to engage with the Foreign Investment Review Board as early as possible to identify if ownership restrictions or conditions may apply.
Where required, ownership restrictions will be flagged to the market as early as possible in the sale process.
The government is committed to an open foreign investment regime that strikes the right balance in managing national security risks, while promoting job opportunities and enabling economic growth. With electricity distribution assets, the stakes are higher, and Australians expect additional foreign investment protections in place.
The chief executive of Infrastructure Partnerships Australia, Brendan Lyon, said to The Australian, “Codifying the processes for electricity asset ownership is sensible, because it provides a level of certainty about the process that will be applied which is very important in the wake of the surprise rejection of bidders for the NSW electricity grid in 2016.”
The new foreign ownership conditions will apply to all future sales of transmission and distribution assets – the poles and wires – and some generation assets, and codify many conditions already in effect, which to date have simply been enacted on a case-by-case basis.