With Solid Energy facing liquidation no doubt there will be analysis about why this is happening and who is to blame. I believe that blame is clear and it should be applied to the incompetence of this Government.
This is what I wrote in October 2013:
This just in from Stuff:
If Solid Energy was partly privatised, it probably would not be in the mess it is in now, Prime Minister John Key says.
Continuing to defend the Government’s sell-down of state assets, Key said today a deal to bailout Solid Energy might not have been necessary had the company been partially floated.
“My own personal view is if we’d had the mixed ownership model applied to Solid Energy, it may well not have gotten itself in the mess it did,” he told Firstline.
“That’s because the external analysis would have rung a lot of bells and demanded a lot more accountability,” he said.
He also said other state-owned assets such as TVNZ and NZ Post, had proven not to be good long-term investments to hold on to.
So let me get this right. Solid Energy is fully under Government Control, subject to Ministerial and Treasury oversight, has in the past been worth a huge dividend flow, and Key thinks that external analysis and oversight would have improved performance?
This is as damning an acknowledgement of failure as you can imagine.
Mind you given this Government’s performance I think that the acknowledgement is appropriate.
The performance has been blighted by such actions as:
- Insisting that Solid Energy should borrow to increase dividends even though they were told that coal prices were softening.
- Failing to monitor the change in the coal market and to adjust Solid Energy’s business model.
- Claiming that it had blocked Solid Energy’s request for a capital injection of a billion dollars of Crown money when Solid Energy had actually proposed the income stream from dividends be diverted.
- Using the sale proceeds from the partial privatisation program to prop up Solid Energy to the tune of $100 million.
Key is right and there is a problem. The solution is not to partially float Solid Energy however. The only solution that will directly address these problems is to change the Government and elect a group of people who are competent.
Those comments are just as valid now. Increasing debt at a time coal prices were softening was bound to result in disaster.
The figures are daunting. Solid Energy lost $181.9 million in the last reported financial year (2014). For some reason the interim report on results to December of each year has not been published for 2014. Perhaps the figures were too depressing.
Of course as Barak Obama recognises reduced coal mining is good for the planet. But I doubt this is the motivation for National performing in the way that it has. And a caring Government would have a plan B for the mining areas and clearly there is no plan B.