New conditions on the sale of australian electricity assets to foreign investors

The Australian Government today announces that all future applications for the sale of electricity transmission and distribution assets, and some generation assets, will attract ownership restrictions or conditions for foreign buyers.

These conditions codify those already applied, on a case-by-case basis, to previous transactions.

Electricity distribution and transmission infrastructure are critical national assets and a key national security safeguard is the diversity of ownership of these assets.

This approach will allow the Government to actively manage the level of ownership and control from investors in a single asset or within a sector. Each case will be assessed on a case-by-case basis, taking into account a range of factors such as the cumulative level of ownership within a sector, the need for diversity of ownership and the asset’s critical importance. Parties interested in acquiring or selling critical infrastructure assets are encouraged to engage with the Foreign Investment Review Board as early as possible to identify if ownership restrictions or conditions may apply.

Where required, ownership restrictions will be flagged to the market as early as possible in the sale process.

The Government is committed to an open foreign investment regime that strikes the right balance in managing national security risks, while promoting job opportunities and enabling economic growth. With electricity distribution assets, the stakes are higher, and Australians expect additional foreign investment protections in place.

Today’s announcement gives clarity to potential investors and avoids surprises for state governments and private sellers of electricity transmission, distribution, and generation assets.

In reviewing applications the Foreign Investment Review Board is assisted by the Critical Infrastructure Centre, part of the newly established Department of Home Affairs, to develop whole-of-government national security risk assessments and advice to support government decision-making on critical infrastructure investment transactions.

This advice will be further enhanced once the Centre can draw on ownership information captured in the proposed critical infrastructure assets register contained in the Security of Critical Infrastructure Bill 2017, currently before the Parliament.These measures will take effect from today and form part of the Australian Government’s ongoing commitment to maintaining strong foreign investment while protecting our national interest.