Finance tutorial from Mr EnglishBy ‘JFW’
The Government has acknowledged the state-owned power company profits it will lose as a result of partially selling them will exceed the savings from the resulting reduction in debt.
Finance Minister Bill English said recently the plan to sell up to 49 percent of the four power companies and to reduce its stake in Air NZ would result in a $6 billion reduction in net debt.
However, it would also result in a “small” reduction in the government’s operating balance. He said: “Profits attributable to minority shareholders (foregone profits) will reduce the surplus, which is partly offset by a reduction in finance costs on the reduced debt. Over the mixed ownership programme, the forecast finance cost savings exceed the forecast foregone dividends,” Mr English said.But, he adds: “However, those savings are less than the total forecast foregone profits of the SOEs, which include both dividends and retained earnings.”