New Zealand's highest court allows state asset sale

WELLINGTON (REUTERS) - New Zealand's highest court cleared the way on Wednesday for the first partial sale of a state power company within months after rejecting a bid by indigenous people to delay any offer until water ownership claims were settled.

The government has a three-to-five-year programme worth up to NZ$7 billion (S$7.22 billion) to sell minority stakes in three power companies, a coal miner, and the national airline to help cut debt and return the budget to surplus by 2015.

Indigenous Maori groups wanted special rights to resources affected by the sales but the Supreme Court said the planned sale would not prevent the government from settling Maori claims to economic or other interests in the water resources.

"It is difficult to see how privatisation will make a material difference to the ultimate outcome," the court said in a unanimous judgement.

The decision will allow the centre-right government to proceed with selling a minority stake in Mighty River Power before the middle of the year.

The government is aiming to sell a stake in a second power company, either Genesis Energy or Meridian Energy, by the end of the year. The two sales could be worth more than NZ$3 billion.

However, the Solid Energy coal mining company is in financial difficulties because falling prices have eroded income while the company has been amassing debt, raising doubts about when it might be sold and whether the government will fall short of its forecast sales' proceeds.

Maori tribes have claimed economic and cultural interests in rivers and lakes, which they said should be recognised by special rights ahead of other shareholders in state power companies using water for generation.

The government has said that no one group owns water and that Maori rights in particular regions can be satisfied through other measures.

In order to sweeten public opinion about the sales, the government has said it will ensure New Zealanders get a preference in share sales, limit the size of individual holdings, and offer bonus shares to locals who hold shares for at least three years.