25 November 2015
Media Release - #2015014, 2015

Foreign Investment Approval – 99 year lease of TransGrid

The Federal Government welcomes the NSW Government announcement of 'NSW Electricity Networks' as the successful bidder for the 99 year lease of TransGrid, the New South Wales electricity transmission network.

TransGrid is a critical piece of national infrastructure that underpins the New South Wales economy and is a key component of the National Electricity Market. I expect that the successful bidder will be able to draw on its expertise in operating large infrastructure assets to improve the efficiency of TransGrid's network while meeting the Australian Energy Regulator's regulatory requirements. More efficient operation of the network will place downward pressure on electricity prices over the longer term.

The Foreign Investment Review Board (FIRB) has been in extensive consultation with the NSW Government for over 12 months to ensure that national interest considerations are addressed. This consultation has also included relevant Commonwealth agencies that have an interest in the acquisition of critical infrastructure.

As a result of this extensive consultation, a broad range of safeguards have been implemented through NSW licence conditions which will be imposed on the consortium as well as further conditions I considered necessary and undertakings sought and received from the consortium.

The safeguards ensure that:

  • The operation and control of TransGrid’s transmission system and telecommunications business is undertaken solely from within Australia;
    • Maintenance is also to be undertaken in Australia other than where it is not possible to do this on reasonable commercial terms.
  • Electricity supply data and personal information is accessible and held solely within Australia;
  • Foreign consortium members maintain their interest in TransGrid at no more than 50 per cent;
  • 50 per cent of TransGrid's boards comprise Australian citizens and residents;
  • TransGrid has an independent chairperson and an independent director on the board who are Australian citizens and residents, one of whom is required for all board quorums;
  • Senior personnel in critical positions to hold security clearances; and
  • Audited annual reporting certifying compliance with NSW's critical infrastructure licence conditions and annual reporting to FIRB, approved by the independent chairperson, certifying compliance with the safeguards I imposed.

These safeguards are more stringent than any previous conditions imposed on acquisitions of critical infrastructure. I am confident that these comprehensive safeguards address national interest considerations and will help underpin NSW electricity users having reliable electricity supply into the future.

The TransGrid transaction will allow the NSW Government to take advantage of the Government's Asset Recycling Initiative which is focused on supporting new investment in infrastructure by unlocking capital from state assets. Once the Commonwealth and NSW agree on the infrastructure projects that NSW will invest in under the Asset Recycling Initiative, NSW will be eligible for an incentive payment equal to 15 per cent of the proceeds from the TransGrid transaction that is reinvested into additional infrastructure.

I would like to thank all stakeholders for their constructive engagement with the FIRB over many months to ensure that national interest considerations are addressed.

Australia continues to be open for business and we welcome foreign investment when it is not contrary to the national interest.