Treasurer Scott Morrison has made the decision to block two Chinese companies from investing in Ausgrid due concerns for national security.
The two companies, Government owned State-Grid Corp and Hong Kong-listed Cheung Kong, were bidding for the lease of 50.4 per cent of Ausgrid, the New South Wales electricity network, for a period of 99 years.
“My preliminary view is that the foreign investment proposals put to me for this transaction are contrary to the national interest, in accordance with the required provision on the grounds of national security,” Mr Morrison said.
“There has been an extensive period of engagement with the New South Wales Government and the bidders around the proposed lease.
“This has involved a detailed examination of national interest issues and possible measures which could mitigate identified risks.
“Ausgrid’s footprint includes critical power and communication services that Ausgrid provides to businesses and Government. The national security concerns, other country specific and relate to the transaction structure and the nature of the assets.”
Mr Morrison said the review process national security issues were identified in critical power and communications services that Ausgrid provides to businesses and governments.
“I am, of course, open to consider what the bidders put to me, but at this stage no suitable mitigations have been identified that would, for the proposed transaction structure, appropriately address the identified risks,” Mr Morrison said.
“As Treasurer I consider each foreign investment proposal on its merits.”
Mr Morrison said foreign investment is still important and the country needed to continue attracting inflows of foreign capital to ensure the standard of living does not drop.
“The foreign investment framework facilitates such investment while giving assurance to the Australian community that the investment is being made in a way that does not compromise Australia’s national interest,” Mr Morrison said.
“We will continue to welcome foreign investment that is not deemed contrary to our national interest.”