The Government has announced it will delay the initial public offering of up to 49 per cent of shares in Mighty River Power until the period of March to June 2013 (which follows the company's halfyear financial reporting).
The Mighty River Power IPO was originally planned to take place sometime between September and early December this year (following end of financial year reporting). However, the Waitangi Tribunal recommended that the Crown delay the salesprocess and urgently convene a national hui to negotiate a way forward.
Ministers have sought advice on the new "shares plus" concept raised in the Waitangi Tribunal's Report. "Shares plus" refers to the idea that certain Māori interests would be given particular rights and powers in relation to the partially privatised company, above and beyond the rights of other shareholders.
After considering the advice and having discussions with the Māori Party, the Government concluded that the shares plus proposal should not be implemented for the following reasons:
- it is not in the national interest for a particular group of shareholders to be given special rights;
- redress could be achieved in other ways;
- it would not be practical from a strategic point of view;
- it would make the companies less attractive to investors and less valuable; and
- obligations to address Māori grievances rest with the Crown and not with the companies.
Despite this conclusion, Prime Minister John Key said that the Government will nonetheless now undergo a short period of consultation with iwi. Key acknowledged that Cabinet was aware that litigation could still occur after the consultation takes place. It is likely that the delay and consultation process will, however, put the Crown on firmer legal ground than if it had chosen to proceed with the Mighty River Power IPO as originally planned.
Key has stressed that the change in timeframe does not alter the Government's commitment to the share sales programme. Work on various elements of the Mighty River Power share offer is already underway and officials have now begun working to the new schedule for the IPO.
According to Key, based on the new timeframe shares in the other two stateowned power companies, Meridian Energy Limited and Genesis Power Limited, could proceed (in an unspecified order) in late 2013 and the first half of 2014. Last month Finance Minister Bill English announced that a Solid Energy IPO was on hold given the commercial difficulties it is facing.
Meanwhile, the AttorneyGeneral has received a letter from the Māori Council in which the Council calls for a national hui on water rights and the establishment of a national water framework. The Māori Council has said that if these desires are not acceded to it will take the Crown to the High Court to attempt to halt the partial sales programme. In the case of all three power companies set down for partial sale, Mr Key said that arrangements would be made "iwi by iwi, waterway by waterway", in effect rejecting the national settlement of Māori claims to water rights sought by the Māori Council.
The Government has maintained the following position on the issue of water rights:
- In common law noone owns water.
- Māori do have rights and interests in water that will continue to be addressed, through the Treaty process when dealing with historical claims and by other mechanisms, iwi by iwi.
- The partial sale of Mighty River Power does not impact on the Crown's ability to recognise Māori rights and interests in water.
The Government's preferred approach is to develop models for the control and management of water that reflect relevant Māori interests, as seen in its Fresh Start for Freshwater multiparty programme of work.