THE state government has agreed to sell Macquarie Generation to AGL Energy, raising about $700 million for infrastructure spending provided the national competition watchdog doesn’t block the deal.
Treasurer Mike Baird said this morning the gross proceeds consisted of $1.505 billion from AGL Energy and cash of $220 million held by Macquarie Generation, which operates the Bayswater and Liddell power stations in the Hunter.
After its debts are settled, the sale would raise $1.165 billion, although further transaction-related costs and superannuation payments would leave about $700 million that the government would place in its Restart NSW infrastructure fund.
However, the Australian Competition and Consumer Commission (ACCC) has raised concerns that AGL’s acquisition ‘‘is likely to result in a substantial lessening of competition in the market’’ for the retail supply of electricity in NSW, and for the wholesale supply of electricity in NSW, Victoria and South Australia.
It will give a decision on March 4.
Three bids were made for Macquarie Generation, but only AGL’s exceeded the government’s retention value for the generator, Mr Baird said.
He said the government would not proceed with a sale if the ACCC blocked the AGL bid.
‘‘There’s no doubt that would be a blow, but…we’ve heard from AGL through our advisers they remain confident that they can meet the concerns raised by the ACCC,’’ he said.
He rejected suggestions less competition could mean higher electricity prices.
‘‘I believe that having a robust competitor in the market adds to competition which puts downward pressure on prices.’’
If the sale is completed, the $700 million would be spent on infrastructure, with the government having promised about 30 per cent would be spent in regional areas.
It is understood the government has earmarked some of the cash to top up its Resources for Regions program for spending in mining-affected communities, such as Muswellbrook and Singleton.
However, Mr Baird declined to confirm that this morning, but said the sale was ‘‘good news’’ for infrastructure spending.
‘‘In terms of the Hunter Region that is a key consideration,’’ he said.
Four year job guarantees and transfer payments would apply for employees.
Bayswater power station.