Economy

Treasurer rejects gas pipeline purchase

Treasurer rejects gas pipeline purchase

Treasurer Josh Frydenberg said he had told the consortium of his preliminary view that the takeover was not in Australia's interests.

It comes just after suggestions the decision could have been delayed into 2019.

Investors had doubts the Foreign Investment Review Board (FIRB) and the treasurer would allow the takeover amid concerns about gas supply and soaring energy prices, which have become hot political issues.

Unitholders of APA had already accepted the $11.00 cash bid, valuing the company at $12.97 billion.

"My preliminary view is not an adverse reflection on CK Group or the individual companies", says Frydenberg.

He said the competition commission had not considered the question of concentration of foreign ownership. New laws created to counter foreign influence were enacted this past summer, and the rhetoric eased on both sides after Turnbull was replaced as Prime Minister by Scott Morrison in August.

That decision has been widely criticised for its own national security implications - Canberra has only agreed to the BRI on a project-by-project basis and is deeply sceptical of possible debt traps - and for Premier Daniel Andrews' naivety.

THE Chinese-controlled consortium behind the proposed purchase of Australia's biggest gas pipeline company has defended its investment record after the Federal Government rejected its bid to acquire the APA Group on national interest grounds.

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More recently Huawei was prevented from bidding on Australia's 5G network.

The decision, while not unexpected, will further test Australian-Chinese relations after a number of similar rejections by the coalition Government to buy-out proposals from companies in the Middle Kingdom.

The decision will be welcomed by some crossbench senators, including One Nation's Pauline Hanson and Centre Alliance's Rex Patrick, both of whom have called for the deal to be blocked for reasons of national security. Its shares closed yesterday at $9.51.

"I intend to make a final decision under the formal process within two weeks", he says.

It was also made despite a pre-emptive offer by CKI to offload APA's WA assets such as the Parmelia, Goldfields and Kalgoorlie pipelines to avoid competition concerns given its ownership of the Bunbury to Dampier pipeline.

Australia's other large pipeliner Jemena, building the Northern Gas Pipleine, is 60% owned by China State Grid, though this was not listed as a factor in Frydenberg's reasoning.

"The application of our foreign investment policy, expressed through my preliminary view, is not discriminatory against any investor or country", the Treasurer said.

Frydenberg said the proposed Aus$13 billion (US$9.4 billion) purchase of APA "would be contrary to the national interest".