TORONTO (Reuters) - Ontario’s Liberal government said on Tuesday it has not made a decision on the possibility of selling part of provincially owned electrical utility Hydro One, following a newspaper report that it was crafting a plan for an initial public offering.
The Globe and Mail, citing unnamed government and industry sources, said under the proposal the province would float 10 to 15 percent of Hydro One, and possibly follow with additional stock sales, using the cash to fund transport infrastructure upgrades.
A spokeswoman for Energy Minister Bob Chiarelli said the report was “very premature,” adding that the government was committed to retaining a controlling stake of Hydro One and regulating electricity rates.
“The government would always retain an important ownership stake in an asset as vital and strategic as Hydro One,” Chiarelli spokeswoman Jennifer Beaudry said in an email.
A Hydro One spokeswoman referred questions back to the Ontario government.
Ontario, Canada’s most populous province, has seen its debt balloon to C$300 billion ($237.66 billion) since 2009 as the Canadian dollar, high-flying at the time, sideswiped exports and hurt the province’s once-dominant manufacturing sector.
While the province has pledged to balance the budget in 2017-18, it is running a C$12.5 billion deficit this fiscal year.
Proceeds of a Hydro One IPO could help the government fund programs including a C$29 billion 10-year plan to build public transit, roads, bridges and highways.
Premier Kathleen Wynne last year asked a panel led by former Toronto-Dominion Bank chief executive Ed Clark to make recommendations on whether or how to sell assets like Hydro One as well as the province’s corporation for electricity generation, Ontario Power Generation, and the LCBO, Ontario’s liquor sales monopoly.
In October, Clark’s advisory council recommended the province keep all three assets in public hands but noted that selling off the distribution business owned by Hydro One could generate C$2 billion to C$3 billion for the province’s coffers.
Investment bankers have told the government Hydro One’s enterprise value – the combined value of its debt and equity – is roughly C$15 billion to C$16 billion, which means the IPO could raise upward of C$1 billion, the article said.
In February, Ontario sold its remaining shares in General Motors Co (GM.N) for approximately C$1.1 billion, and allocated the proceeds for infrastructure.
($1 = 1.2623 Canadian dollars)
Additional reporting by Jeffrey Hodgson in Toronto; editing by W Simon and Matthew Lewis