Jason Krupp at Stuff reports:
Mighty River Power says years investing in overseas geothermal projects have given it the confidence to go it alone internationally at a time when Kiwi development opportunities are drying up.
The state-owned energy company yesterday announced it had reached a deal with GeoGlobal Energy (GGE) to withdraw from the GGE Fund after five years.
Mighty River is taking two Chilean development projects and a minority stake in US firm EnergySource with it, currently held by the GGE fund. In exchange, GeoGlobal will take control of the fund’s interest in Germany, and other non-EnergySource related assets in the US.
Mighty River has been a big investor in the GGE Fund for more than five years, with the bulk of the US$250m committed to the venture already invested. It will also pay GGE US$24.8 million (NZ$29.1m) to exit the fund.
“The fund was a way to learn about the international market, and we learned about what works and doesn’t work, and it is timely for us to move on,” said MRP chief executive Doug Heffernan.
NZ taxpayers should not be having their money at risk in a company that is investing in risky projects overseas. I don’t think there is anything wrong with MRP investing as they have. Business always has a degree or risk. Only those with no business experience fail to understand this. They think business is a licence to print money.
The only companies the Government should own are those that provide some sort public service (Radio NZ but not TVNZ) or maybe monopoly infrastructure providers (Transpower – but once could actually have that as a club-type membershp).
Take Solid Energy. That used to be a profitable company. But it has been hit by two major external factors. A drop in the price of coal due to China over-supply and a global move away from coal as fracking has opened up shale gas as an alternative energy source.
If Solid Energy had been sold some years ago, then private owners would bear the risk of the business downturn. There is no strategic reason for the Government to own a mining and energy company.
But now the taxpayer is going to be left having to finance a likely bailout of Solid Energy. Rather than spend money on hospitals or schools, the taxpayer is going to have to bail out a mining and energy company that it shouldn’t even own. I doubt it will ever be sold now – the global market has changed fundamentally. So we will be left with a dog that will cost taxpayers money.
I want a Government that invests in schools and hospitals – not coal mines and hydro-dams. It’s a great pity they were not all sold many years ago.