The government will sell Mighty River Power shares in the first half of 2013 though its inability to pin down Maori over water rights has left financial markets warning of a discount if investors can’t quantify Treaty of Waitangi risks.
Prime Minister John Key said his cabinet today shelved the contentious ‘shares-plus’ proposal that would settle claims to waterways of the Waikato through shares in the state-owned power company and won’t entertain any further talks on the issue. Such a scheme could create conflicts of interest between iwi, he said.
Mighty River is to be removed from the list of companies covered by the State Owned Enterprises Act by order in council, meaning Key can make the change without recourse to the parliament. Officials will work toward a sale of up to 49 percent of the company between March and June next year.
The government argues it can address Maori claims by other means but won’t cede public ownership of the waterways. Litigation may follow for Maori, whose aspirational view on water rights has been galvanised by a series of government-sponsored hui. Tainui tribal authority official Parekawhia McLean resigned from Mighty River’s board last week.
“If the water rights issue isn’t sorted out prior to the offer the market will probably put a large discount on that or require lower pricing on those assets,” said Douglas Lau, portfolio manager at AMP Capital Investors (NZ), which has $16 billion under management in local funds.
Key urged New Zealanders to register to buy shares in the SOE