Australia will not allow the electricity network in its most populous state to be sold to Chinese and Hong Kong bidders, Treasurer Scott Morrison said Thursday, citing national security concerns.

The decision came just months after the government introduced tougher rules for the sale of major Australian state-owned infrastructure to private foreign investors after concerns about a 99-year lease for the Port of Darwin to China’s Landbridge Group.

ausgrid australia power
Photo: Flickr/Ausgrid.

Canberra also recently knocked back the sale of the country’s biggest private landowner, cattle firm S. Kidman and Co., to a Chinese-led consortium, citing national interest.

China’s State Grid Corp and Hong Kong’s Cheung Kong Infrastructure Holdings had bid for the 99-year lease of the nation’s largest electricity network, Ausgrid, with the sale expected to raise more than Aus$10 billion (US$7.7 billion) for the New South Wales state government according to some estimates.

But Morrison said he told the bidders their proposals to secure a 50.4 percent stake in Ausgrid, which supplies power to more than 1.6 million homes and businesses, were “contrary to the national interest”.

“Ausgrid’s footprint includes critical power and communication services that Ausgrid provides,” Morrison told reporters in Brisbane.

“The national security concerns are not country-specific and relate to the transaction structure and the nature of the assets.

“At this stage, the government has not identified mitigations that would appropriately address these concerns.”

South Australia state’s power grid is 51 percent owned by Hong Kong billionaire Li Ka-shing’s Cheung Kong Infrastructure Holdings and Power Assets Holdings.

china state grid

State Grid Corp also has investments in energy infrastructure in the Australian Capital Territory, Queensland, South Australia and Victoria.

But Morrison said there were national security concerns about NSW’s power assets, without giving details about what the concerns were.

Despite Canberra’s decision, the Treasurer added that his government continued to welcome foreign investment, saying some Aus$160 billion in sales were approved in 2013-14.

“We will continue to actively engage with the rest of the world, because foreign investment capital is important to Australian jobs,” he said.

The two bidders have one week to appeal.

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