The depth of Solid Energy’s financial woes have been laid bare with the Government confirming the company is in talks with bankers over its debt levels.
The Solid Energy board was working with Treasury, advisors and the banks about further restructuring options, with the aim of returning the company to a sustainable financial position, Finance Minister Bill English said.
“Despite restructuring, Solid Energy’s financial position has continued to deteriorate. It is in constructive discussion with banks,” English told a media briefing this afternoon.
He confirmed there had been differences of opinion for some time over the direction of the company.
“There will be the opportunity for us to go back and look pretty hard at the governance and the monitoring.”
The Government would not let the company go into receivership, English said. He would not directly answer questions about a taxpayer-funded bailout, but would not rule it out. …
State-owned Enterprises Minister Tony Ryall said a number of factors had weighed against the company, in particular world coal prices dropping by 40 per cent.
We should have sold Solid Energy years ago. Taxpayers should not be forced to be investors in risky commercial enterprises such as mining. There is no strategic need for the Government to own a mining and power company – just as we also don’t need to own companies that run hydro-dams.
Labour and Greens go on about all the dividends from these companies, and overlook the risk – as we have seen with Solid Energy.
We shouldn’t own a loss making rail company either.
Governments should focus on what they are good at – passing laws, developing policy, regulation etc. The private sector should run companies, receiving both the benefits of them when successful – but also having to foot the losses when not sucessful.
Sadly this means Solid Energy will probably never be sold, and potentially remain a taxpayer liability for some time.
I just hope the Supreme Court upholds the High Court decision, so the Government can get on with at least reducing its shareholding in these competitive commercial companies.