Foreign Investment Review Board

Centre Alliance Senator Rex Patrick has called on the Foreign Investment Review Board (FIRB) to block the sale of APA to a consortium consisting of Hong Kong based CKI Infrastructure Holdings Limited and Power Assets Holdings Limited.

“This week inside Parliament I was asked to and did vote on the national security legislation that, in part, sought to protect Australia’s critical infrastructure. At the same time, outside the Parliament, CKI was conducting due diligence on a proposed purchase of APA, a company that holds a monopoly on the East Coast’s gas pipeline network”, said Rex.

APA owns 15,000 kilometres of gas pipelines across Australia. It is a monopoly owner of the gas line that keeps gas-fired powered stations running, large gas energy users in operation and domestic customers in supply.

“If we allowed this proposal to proceed we would be piping-mad”, said Rex. “A sale of APA would be prejudicial to our national security interests as it would further expand Chinese control of vital energy infrastructure”, said Rex.“Indeed it also raises serious national economic concerns”.

In April 2006 the ACCC released a report into the East Coast Gas Market. They stated in no uncertain terms that ‘there is evidence that a large number of existing pipelines have been engaging in monopoly pricing’.

“It was monopoly situations like this that motivated last year’s changes to misuse of market power provisions in Section 46 of the Competition and Consumer Act. If anything, we should be breaking up APA, not placing control of it into the hands of a foreign investment," said Rex. 

CKI also owns a 51 per cent share of SA Power Networks and Victoria Power Networks. South Australia has been grappling with SA Power Networks' monopoly power and the effect that has on power prices. Earlier this year SA Power Networks lost a case in the Federal Court challenging a decision by the Australian Energy Regulator (AER) to hold prices down. According to the AER, poles and wires charges make up approximately 38 per cent of the bill of a typical residential customer in South Australia. Had SA Power Networks won, this would have resulted in higher electricity bills.

“East coast businesses and consumers, only just having experienced recent relief from overly expensive gas prices, don’t need a reversal of fortunes in gas prices”, said Rex. “While I acknowledge that the Consortium has proposed a divestment package of some of APA interests, on balance this acquisition should not be allowed to proceed”.