World Economy

Australia Bars Foreigners From Buying Power Grid

Australia Bars Foreigners From Buying Power GridAustralia Bars Foreigners From Buying Power Grid

Australia’s Treasurer Scott Morrison confirmed he will block foreign bidders from buying a majority stake in state-owned power network Ausgrid, saying the more than A$10 billion ($7.6 billion) deal would be against the national interest.

The announcement, which confirms the government’s preliminary ruling a week ago, scuppers efforts by State Grid Corp. of China and Hong Kong’s Cheung Kong Infrastructure Holdings Ltd. to buy 50.4% of the electricity distributor, Bloomberg reported.

The decision risks souring relations with Australia’s biggest trading partner China that’s accused the government in Canberra of protectionism. It is also a blow to the New South Wales state government, which has spent months negotiating the sale of Ausgrid and may not be able to command the same price tag now foreigners are blocked from taking a controlling stake.

“In making this decision, national interest concerns have been paramount,” Morrison said in an e-mailed statement. “We will continue to work closely with New South Wales to ensure that national security requirements are met under any future transaction process.”

New South Wales Premier Mike Baird said the state government will “move immediately to relaunch the transaction process” and believes market interest in the asset is strong.

CKI, controlled by Hong Kong billionaire Li Ka-shing, said last week it was perplexed by Morrison’s preliminary ruling and noted it had a 25-year track record of managing infrastructure assets including electricity and gas networks in the UK, Australia and New Zealand. Representatives at CKI weren’t immediately available to comment on Friday.

Meanwhile, Moody’s Investors Service has lowered its outlook on Australia’s banks to negative from stable, warning of sluggish profit growth due to slow wage increases, record-low interest rates, strong lending competition and rising household debt.