China Blasts Australian Blocking of Grid Sale

China Blasts Australian Blocking of Grid SaleChina Blasts Australian Blocking of Grid Sale

China voiced anger on Friday over a decision by Australia to rule out on security grounds the preferred Chinese bidders for an energy grid potentially worth more than $7 billion and restart the sale process.

Australia's Treasurer Scott Morrison, who must approve major foreign investments, formally blocked the sale of Ausgrid to State Grid Corp. of China and Hong Kong's Cheung Kong Infrastructure Holdings earlier in the day, Reuters reported.

Last month, Britain said it would review plans to build two nuclear reactors at Hinkley Point with financial backing from China General Nuclear. Prime Minister Theresa May was concerned about the security implications of the proposed Chinese investment, a former colleague and a source said.

The disqualification of State Grid and Cheung Kong Infrastructure prompted the state of New South Wales to restart the tender process for a majority stake in the grid.

"The NSW Government will now move immediately to relaunch the transaction process for the partial lease of Ausgrid and notes the strong market interest for this valuable asset," NSW Premier Mike Baird said in a statement.

The decision to halt the $7.6 billion sale—Morrison made a preliminary decision to block last week before confirming the stance officially on Friday—has caused a rift with China, Australia's biggest trade partner, just eight months after their $76 billion free trade agreement took effect.

China's Commerce Ministry said in a statement on its website that the decision showed uncertainty in Australia's investment environment and would seriously hurt the willingness of Chinese companies to invest in the country.

State Grid said it "found it hard to understand and deeply regretted" the decision, adding it had followed regulations set by Australia in its bid and met all the bidding requirements.

The Ausgrid delay is the latest in a series of setbacks for planned privatizations across the country, including the shelving of energy asset sales in Queensland and the Fremantle Port in Western Australia, both of which were disrupted by a lack of support in their state parliaments. Proceeds from the sale of Australian state-owned assets are designed to be ploughed back into the economy through job-creating infrastructure projects, including public transport networks.