|Wednesday, 5 June 2002|
The creditworthiness of Australian electricity companies could come under pressure thanks to 'uncertain commitment' by banks, according to international ratings agency Standard & Poor's.
"The banking industry has played a crucial role in the establishment and operation of this country's young national electricity market by providing much needed credit support and loans to market participants," said S&P associate director of corporate and infrastructure, Mark Legge.
"The extent of this crucial support is now uncertain. A lack of access to bank funds could severely disrupt and undermine the creditworthiness of the electricity industry."
S&P warnings come as it released the inaugural issue of a briefing paper on evolving credit issues in the Australian energy market.
Late last year, documents from the National Electricity Market Management Company revealed that two of Australia's big four banks warned they might cut their exposure to the industry.
A NEMMCO spokesman commented that he was not surprised by S&P raising its concerns publicly over the industry's risk profile.
In other electricity news, a proposal to privatise the NSW electricity consulting entity Pacific Power (International), is having a tough time getting through State Parliament and is creating all sorts of political contortions.
The Carr Labor Government favours a staff buyout or a full sale to private interests while the Liberal Party Opposition is calling for PPI to remain in government hands.
"PPI's relevance to the NSW power industry is that they installed the technology that runs our power stations, and that is needed for their continuing maintenance," said Opposition spokesman for energy, Duncan Gay.
In its heyday, PPI built a string of coal-fired, base-load power stations, each with four 660 megawatt units at Vales Point, Eraring and Bayswater in the Hunter Valley.
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