By Lisa Jucca
HONG KONG, Sept 20 (Reuters) - Australia aims to rework its offer to sell a controlling stake of the country's biggest energy grid to take into account the security concerns that led the government to reject two bids from Asia, Trade Minister Steven Ciobo said.
Ciobo told reporters on Tuesday that while Australia was fully committed to lease Ausgrid - expected to fetch around A$10 billion ($7.54 billion) - and continue with its privatisation programme, security concerns had to be considered when offering the power grid to the market.
In August, Australian Treasurer Scott Morrison rejected offers for Ausgrid by Li Ka-Shing's Cheung Kong Infrastructure 1038.HK and state-owned State Grid of China Corp STGRD.UL , citing unspecified security concerns. The move sparked criticism that Australia was being protectionist. asset and a 99-year lease on it was offered to the market by Australia's most populous state, New South Wales, but the deal required sign-off by the country's treasurer.
Australia's rejection was one of only five made on overseas business applications for investment, excluding residential real estate, since 2001, the minister said.
"We are looking at what a restructured offer (of Ausgrid) may look like," Ciobo said in Hong Kong.
"There is ongoing discussion between New South Wales and Australia Federal government."
The reworked offer would entail some mitigating factors aimed at allaying security concerns, Ciobo said without elaborating.
The rejected Ausgrid bids contrasted with the approval a consortium offer for the Australian Port of Melbourne received on Monday, despite it involving backing from foreign groups whose backers include state-owned China Investment Corp (CIC). SCRUTINY
Matthew FitzGerald, a partner of law firm Herbert Smith Freehills, said that the winning port bid involved several countries with minority interests.
"Clearly on these big infrastructure type deals, it's not that Chinese investors aren't welcome, but if they're seeking a controlling stake and it's seen to be critical infrastructure... that's what causes problems," FitzGerald said.
Ciobo, asked whether Australia would look differently at bids from state-owned enterprises (SOEs) such as State Grid and privately- owned foreign enterprises, said the level of scrutiny would be different but Australia was not discriminating against foreign state-owned firms.
"There is a difference in scrutiny between those two. But Australia has also demonstrated we are happy to take SOEs into the Australian market," Ciobo said.
Ciobo said his immediate priority was for Australia to seek a more comprehensive bilateral trade agreement with Indonesia than the existing one.
"We can certainly put in place a high-quality, commercially meaningful agreement and I want to make sure we do that by the end of next year," he said. "Indonesia presents a terrific opportunity."
In March, the two countries announced they were resuming bilateral trade negotiations that stalled after relations were strained due to disagreements over spying, the execution of Australian citizens in Indonesia and Canberra's tough asylum-seeker policies. ($1 = 1.3261 Australian dollars)