NSW Treasurer Gladys Berejiklian is trying to allay security concerns over the prospect of a Chinese government-owned company buying high voltage electricity company Transgrid, insisting the government is "proactively engaging" with the Foreign Investment Review Board on the issue.
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Bids for Transgrid, which is being offered on a 99-year lease by the NSW government, are due on Monday. The government is hoping to get about $9 billion from the transaction, which is expected to be completed before the end of the year.
Among the likely bidders is State Grid Corporation of China, which is in a consortium with Macquarie Bank's infrastructure arm.
Transgrid's role in supplying power to Canberra and its extensive fibre optic cable network carrying sensitive data for government departments has prompted security concerns about selling to a Chinese government-owned entity.
The concerns were first raised by the Construction, Forestry, Mining and Energy Union during the final week of the NSW election campaign in March via a controversial advertising campaign which was branded "disgraceful" by Premier Mike Baird.
Fairfax Media revealed at the time that State Grid was the subject of a massive anti-corruption audit in 2014 which uncovered allegations of graft amounting to more than $1 billion.
State Grid's chairman, Liu Zhenya, has been a key focus of the ongoing inquiry.
The recent furore of the 99-year lease of the Port of Darwin by the Northern Territory government to a privately owned Chinese company, Landbridge Group, which has links to the military, has refocused attention on the NSW government's privatisation of Transgrid.
Foreign government investors must notify the Australian government and get prior approval from FIRB, which examines any potential national security issues.
The Darwin port deal was not examined by FIRB as it involved a private company, prompting US President Barack Obama to ask Prime Minister Malcolm Turnbull to "let us know next time".
On Friday, Labor defence spokesman Senator Stephen Conroy told ABC radio: "I'm very concerned about the next major infrastructure asset which has strategic value, which is the Transgrid network in NSW, which has a fibre optic network included in its assets which services defence bases and defence data centres.
"I mean, these are highly sensitive pieces of national strategic infrastructure and the proper checks, the proper processes must be in place," he said.
Ms Berejiklian said the government would not speculate on potential bidders but said it "has been proactively engaging with FIRB in relation to the electricity network lease transactions."
After Transgrid the NSW government will offer the long-term lease of 50.4 per cent each of distributors Ausgrid and Endeavour energy.
"Following the transactions, the NSW government will retain significant influence over the assets as lessor, as licensor, as safety and reliability regulator, through the planning system, through the National Electricity Market rules and through network price regulation," Ms Berejiklian said.
