Australia has blocked the A$10 billion sale of its biggest energy grid to State Grid Corp of China and Hong Kong's Cheung Kong Infrastructure Holdings citing security concerns, a blow to the country's privatisation plan.
Nine months after clearing the sale of TransGrid to an investor group 40 percent controlled by Kuwaiti and Abu Dhabi interests, Australian Treasurer Scott Morrison said on Thursday he was rejecting the sale of Ausgrid to the rival Asian bidders because of risks to the national interest.
"During the review process national security issues were identified in critical power and communications services that Ausgrid provides to businesses and governments," Morrison said in a statement.
State Grid, China's dominant power distributor, did not immediately respond to requests seeking comment. Cheung Kong Infrastructure (CKI), controlled by Hong Kong billionaire tycoon Li Ka-Shing, said the decision was not related to CKI.
Australia's decision to reject the bids deprives the New South Wales state government of what would have been a record haul for a single privatisation sale, and also underscores the country's changed political climate since a handful of protectionist senators took power in general elections last month.
The Australian Senate cannot block offshore sales, but Morrison's conservative government needs to maintain favourable relations with the crossbench which now holds the balance of power in the upper house.