Restructuring electricity companies
The discussion about
power prices and the restructure of the State’s electricity sector often
neglects the crucial role of the sector as a fiscal contributor to the overall
State sector.
The affairs of the parent company, aka the
General Government (GG), are usually discussed separately to the affairs of its
subsidiaries, the wholly owned GBEs and State Owned Companies (SOCs) which
together comprise the Total State sector.
The survival of any entity is inextricably
linked to its net operating cash flow, in other words the cash revenue less the
cash operating cash outlays.
The GG’s net operating cash flow for this year
2012/13 is expected to be $154 million. If one disregards capital grants the
net operating cash flow for GG is only $45 million.
Included in GG’s operating cash is $233
million of dividends and income tax equivalents from the GBE/SOCs and also $34
million in guarantee fees, also paid as a consequence of the competitive
neutrality requirements of national competition policy. Almost all these payments
are from the three electricity companies for they are the only profitable ones
(apart from MAIB) and their borrowings comprise 89% of all GBE/SOC borrowings
upon which guarantee fees are based.
Without these payments from GBE/SOCs the GG’s
net operating cash flow would be a negative $222 million. This is after
payments for unfunded super liabilities but before capital and infrastructure
payments, the latter this year budgeted to be $524 million, of which some, but
certainly not all, will come from capital grants of $109 million, asset sales
of $40 million and unspent capital grants from prior years.
GBE/SOC contributions are pretty important for
GG.
