Treasurer Josh Frydenberg has rejected a Chinese consortium's proposed $13 billion purchase of APA Group, saying the deal would result in an undue concentration of foreign ownership of the country's gas transmission pipelines.
Treasurer Josh Frydenberg has rejected a Chinese consortium's proposed $13 billion purchase of APA Group, saying the deal would result in an undue concentration of foreign ownership of the country's gas transmission pipelines.
CK Group, which already owns the Dampier to Bunbury gas pipeline, had sought to head off concerns by agreeing to sell APA's other assets in Western Australia, including the Goldfields gas pipeline, Parmelia gas pipeline, and the Mondarra gas storage facility.
Mr Frydenberg said in a statement on Wednesday the purchase of APA Group would result in an "undue concentration of foreign ownership by a single company group in our most significant gas transmission business".
The Hong Kong consortium, led by CK Infrastructure Holdings and includes CK Asset Holdings and Power Asset Holdings, purchased DUET Group, which owns the Dampier to Bunbury gas pipeline, in 2017.
He said advice had been received from a whole-of-government assessment, the Foreign Investment Review Board and the Critical Infrastructure Centre.
The preliminary decision came despite the Australian Competition and Consumer Commission approving the creation of the biggest pipeline player on the nation's east coast.
The ACCC expressed concern the $12.98 billion acquisition would give CK Group a monopoly grip on most gas transmission and storage facilities in the west.
But it said the group's undertaking to divest its WA acquisitions had addressed anti-competition worries.
Mr Frydenberg said the concentration of foreign ownership had not been considered by the ACCC.
"The FIRB was unable to reach a unanimous recommendation, expressing its concerns about aggregation and the national interest implications of such a dominant foreign player in the gas and electricity sectors over the longer term," he said.
The APA Group is the largest gas transmission system owner in Australia, owning 15,000 kilometres of pipelines representing 56 per cent of Australia's gas pipeline transmission system.
This includes 74 per cent of NSW and Victorian pipelines and 64 per cent in the Northern Territory.
It also supplies gas for city consumption, gas-fired power generation and liquefied natural gas exports.
"The APA Group is a unique company, widely held amongst investors with significant Australian ownership and management," Mr Frydenberg said.
He said his preliminary view was not an adverse reflection on CK Group or the individual companies.
"CK Group companies are already a substantial investor in Australia's gas and electricity sectors and a significant provider of infrastructure services that millions of Australians rely upon," Mr Frydenberg said.
"The Australian government welcomes CK Group's investments in Australia and its broader contribution to the Australian economy.
"My preliminary view reflects the size and significance of APA Group. It is about the extent to which the proposal is consistent with Australia's national interest.
"The application of our foreign investment policy, expressed through my preliminary view, is not discriminatory against any investor or country."
