By Stephen Mayne

Could
the Victorian Government seize de facto control of the iconic Snowy
Mountains Hydro-Electric Scheme through its 29% stake if the NSW
Government goes ahead with plans to float its 58% on the market in the
next six months? Or will the Federal Government attempt to increase its
13% stake and exercise more control over Australia’s largest
engineering project which took 100,000 people 25 years to complete.

NSW
Premier Morris Iemma used the cover of the race riots to announce the
controversial sell-off on Friday but given the resounding rejection of
power privatisation plans in 1998, don’t hold your breath. Check out The Australian’s coverage here.

The
Snowy Mountains Hydro-Electric Scheme is one of the world’s biggest and
most complex water supply/hydro electricity projects, so it comes with
plenty of politics. It consists of seven power stations and a flowing
river, with an overall capacity of 3756 MW. It saves 5.5 million tonnes
of carbon dioxide annually and supplies 10% of NSW energy. But
Greenpeace complains that in the process it has flooded a number of
towns like Jindabyne and Adaminaby and has come close to destroying the
ecosystem of the Snowy River.

The business generated revenue of
$440 million last year and produced a pre-tax profit of $199 million,
down from $215 million in 2003-04. A $100 million dividend was paid
out, even though it is still saddled with more than $600 million in
debt and even has a $60 million unfunded superannuation liability.
Iemma reckons he can get $1 billion for his 58% stake even though the
board claims it only has net assets of $1 billion. Check out the
2004-05 annual report here.

The
directors of the SMHEC have been noted for their political connections.
Costello supporter Michael Ronaldson took home the tidy $55,000 annual
fee representing the Commonwealth in between departing his seat of
Ballarat and re-entering the Senate this year, although he didn’t
appear to have any relevant skills.

The NSW Government appointed
former ALP national secretary Bob Hogg last year and the Bracks
Government appointed former ALP economics adviser Bruce Cohen, whose
partner Kim McGrath has been on the staff of the Premier for many years.

Any
public float will need a reconstructed board, especially given that
chairman Robert Barry has been deputy chairman of AWB Ltd since 2000
and presumably did know or should have known something about the $300
million which our monopoly wheat exporter slipped to Saddam’s regime.

All
up, this will generate plenty of heat over coming months. After all,
the Bracks Government only got into office promising to increase the
flow from the Snowy River to independent Craig Ingram. This might
explain its reluctance to sell at the moment, although it was certainly
something that Jeff Kennett’s former Treasurer Alan Stockdale wanted to
do, but NSW would never play ball in days gone by.