The Australian Government has blocked firms from China and Hong Kong from bidding for the lease of 50.4% of Ausgrid, the New South Wales electricity distribution network.

The electricity distribution network has approximately 1.7 million customers and is valued at more than $7.5bn. The decision will prevent the Chinese electric utility company State Grid and Hong Kong’s company Cheung Kong Infrastructure from bidding.

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Australian treasurer Scott Morrison said: “Following careful consideration and consistent with the formal process required, I have today informed the bidders for the lease of 50.4% of Ausgrid, the New South Wales electricity distribution network, that my preliminary view is that the foreign investment proposals put to me for this transaction are contrary to the national interest, in accordance with the required provision on the grounds of national security.

“In particular, during the review process national security issues were identified in critical power and communications services that Ausgrid provides to businesses and governments.”

"The decision follows the UK Government's decision to postpone approval for the Hinkley Point nuclear power project."

Though State Grid has not yet commented on the blocking of Ausgrid sale, Li Ka-shing-owned Cheung Kong Infrastructure of Hong Kong has removed itself from the decision.

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In a statement to BBC, Cheung Kong Infrastructure said: “We believe that the Australian government must have reasons beyond the obvious which led them to make today's announcement.

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“The issue is unrelated to Cheung Kong Infrastructure (CKI).”

The Australian government’s decision follows after the UK Government decided to postpone approval for the Hinkley Point nuclear power project, in which China's energy company General Nuclear Power will own a minority stake.

Image: Ausgrid building in Sydney, New South Wales. Photo: courtesy of Sardaka.