Maori Prepare for Battle After Key Delays New Zealand Asset Sale

New Zealand’s government faces a potential legal battle with Maori groups after a water dispute forced Prime Minister John Key to delay the sale of shares in Mighty River Power Ltd. until next year.

Some indigenous groups want preferential rights in the planned partial sale of the Auckland-based electricity generator to compensate for unresolved water rights claims. While the government doesn’t favor such treatment, it needs more time to consult with Maori representatives, Key said in a statement yesterday. The sale was originally planned for the third quarter of this year.

Taking time to consult “is the prudent thing to do,” Key said in the statement. Preparation for the share offer “will continue to proceed, but in the March to June window next year, rather than in 2012,” he said.

The government forecasts it will raise at least NZ$5 billion ($4 billion) over the next three to five years by selling as much as 49 percent stakes in Mighty River and three other power companies, and by reducing its stake in Air New Zealand Ltd. (AIR) Key may face litigation from Maori groups who argue the sale of Mighty River will block their claims on the nation’s waterways.

A report last month from the Waitangi Tribunal urged the government to work out a mechanism to recognize Maori rights to water before going ahead with the sale. The Tribunal is a commission that makes recommendations on claims of breaches of the Treaty of Waitangi, New Zealand’s founding document that gave Maori rights to their land and natural resources.

Legal Dispute

The Maori Council, which represents the interests of some indigenous groups, has told ministers it will take the government to the High Court if it doesn’t follow the Tribunal recommendations, including preferential rights in the sale, known as “shares plus.”

“It is not in the national interest for any group within Mighty River Power’s potential 49 percent minority shareholding to be given such rights,” Key said in the statement.

The government intends to offer shares in two other generators, Meridian Energy Ltd. and Genesis Power Ltd., in late 2013 and early 2014, Key said. Which company will be offered first hasn’t been decided, he told reporters.

“It is quite within the market’s capacity to absorb this number of floats over that period of time,” he said.

The delay will cost the government no more than NZ$10 million, Key estimated. That cost is offset by the greater clarity that the consultation period and possible resolution of any legal challenge will bring, he said.

“I have a responsibility as prime minister to make sure those floats are put on the firmest foundations they can and that are as successful as they can be,” Key told reporters in Wellington yesterday. “That requires me to give the market as much clarity as possible. By dealing with these issues in 2012 and having a slight delay to 2013, we will be providing the market with that clarity.”

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net

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