Treasurer rejects gas pipeline sale

Darnell Taylor
November 10, 2018

APA Group owns 15,000 kilometres of pipelines, or about 56 per cent of Australia's gas pipeline transmission system, including 74 per cent of New South Wales and Victorian pipelines.

FIRB was unable to reach consensus, he said, "expressing its concerns about aggregation and the national interest implications of such a dominant foreign player in the gas electricity sectors over the longer term".

Following Mr Frydenberg's preliminary decision, CK Group moved to defend its investment record in Australia.

"I intend to make a final decision under the formal process within two weeks", Frydenberg said in a media statement.

Frydenberg said in a statement that the sale "would result in an undue concentration of foreign ownership by a single company group in our most significant gas transmission business".

The Australian Competition and Consumer Commission in September gave the green light to the takeover, but the Treasurer said that decision was based on broader considerations than those studied by the competition regulator.

APA's spokesman had no immediate comments. New laws created to counter foreign influence were enacted this past summer, and the rhetoric eased on both sides after Turnbull was replaced as Prime Minister by Scott Morrison in August.

The Treasurer stressed that Australia's foreign investment policy was not discriminating against any investor and country, and that his decision was not an adverse reflection on CK Group.

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Morrison, who served as treasurer before replacing former Prime Minister Malcolm Turnbull in August, has blocked several deals involving China-linked companies in the past three years, drawing ire from the government in Beijing.

CK Infrastructure Holdings is part of the business founded by Hong Kong billionaire Li Ka-shing.

APA Group shares, which had never traded at the $11 offer price, fell back to pre-bid levels at $8.48, an nearly five-month low, wiping $1.2 billion off its market value.

"CK Group companies are already a substantial investor in Australia's gas and electricity sectors and a significant provider of infrastructure services that millions of Australians rely upon".

Her visit is the first by an Australian foreign minister in nearly three years and signalled a thawing of relations made frosty by China's anger at debate in Australia about foreign ownership and claims of foreign interference.

Last year, CK Infrastructure received approval for a A$7.4 billion takeover of pipeline owner DUET Group. The government rejected a bid by CK Infrastructure in 2016 for the electricity network Ausgrid, saying it would undermine national security. APA shares closed on Thursday at A$9.51, compared with CK's offer price of A$11.

Australia will continue to welcome foreign investment not contrary to national interest, he said.

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