Australia state committed to energy privatisation

SYDNEY Jan 15 (Reuters) - Australia's New South Wales state, the nation's most populous, will proceed with the privatisation of state-owned electricity assets, despite fierce opposition from union groups.

The move to sell-off the state's power sector will increase market competition and help provide much-needed investment in the industry, New South Wales state Treasurer Michael Costa said on Tuesday.

"We're determined to go ahead with our strategy to secure energy supplies. That is the government's position, we are committed to the reforms and we will not back down," Costa told Reuters at the sidelines of a press conference.

The New South Wales state government said in December it plans to sell the retailing licenses of Energy Australia, Integral Energy and Country Energy, and offer long-term leases on power generating companies, including Macquarie Generation, Delta Electricity and Eraring Energy.

The widely-anticipated sale follows the privatisation of power assets in other Australian states, which delivered governments higher-than-expected windfalls as bidders competed fiercely to acquire more retail customers and increase market share.

Analysts have said the privatisation of New South Wales power assets is also likely to draw strong bidding from potential buyers as it offers one of the last opportunities in Australia for energy firms to significantly bolster their position.

The state government has said that proceeds from the sale, which it has estimated could fetch about A$10 billion ($9 billion), will be used for infrastructure upgrades. It will also invest A$200 million in green energy.

But labour unions have opposed the move, saying the privatisation will lead to higher power prices and loss of jobs. Unions NSW plans to stage a protest outside the state's parliament house in February.

The structure of the sales has yet been finalised but options include trade sales or through listing of a new entity on the Australian stock exchange, Costa said.

Energy Australia has 1.5 million customers while Integral Energy and Country Energy have about 800,000 users each, according to their Web sites.

Australia's largest energy firm AGL Energy Ltd (AGK.AX) and Origin Energy Ltd (ORG.AX) have expressed interest in acquiring the assets. Analysts have also identified CLP's (0002.HK) TRUenergy, Babcock & Brown Power BBP.AX and International Power Plc (IPR.L) as potential buyers.

Credit Suisse and Lazard Carnegie Wylie are advising the state government on the sale. (Reporting by Fayen Wong; Editing by James Thornhill)