He said a political compromise to only partially sell the state-owned generators, a subdued market following the global financial crisis and uncertainty over coal supply had greatly reduced the value of the sale for the Keneally government.

"It's far from ideal," he told AFR. "I think the Liberal Party will fight tooth and nail over this so they can actually introduce it themselves in a less distorted form after the election.

"There are ways and means, and I’m sure they could upset things if they really tried. For an incoming Liberal Government, this will be a bonanza in the early years.”

Professor Owen’s comments come as the government is scrambling to put in place long term coal supply arrangements for its three state owned generators. As part of the privatisation, the government is selling the trading rights to the generators’ electricity output (the so-called gentrader contracts) and the collapse of a key coal supply deal last week could affect the price bidders are willing to pay.

“It’s going to be a pretty awful deal for the gentraders if they haven’t got the coal contracts in place as soon as they take over,” said Professor Owen.

That has left the sale process under a cloud as bidders mull their options before a November 1 deadline for final bids. Professor Owen made headlines in 2007, when he released a report, warning former premier Morris Iemma that NSW would suffer power outages next decade without billions of dollars worth of investment in new generation. He recommended the full privatisation of its energy retailers and power plants.

The report set in train events that split the Labor party in half and ultimately led to the ousting of Iemma and his treasurer, Michael Costa.

However the privatisation survived in a compromised form – rather than selling the generators and upsetting the unions, the government is selling the four gentrader contracts instead.

But the sale has hit a number of speed bumps along the way, including an unfavourable competition ruling and more recently the breakdown in the coal negotiations.

Professor Owen said the government had also had to navigate a tricky market environment.
“the global financial crisis gave it a big hit,” he said.
You have to remember one of the potential investors in the market, Babcock and Brown, went belly up.”

Professor Owen says the opposition’s decision to oppose the sale when it was put up by Mr Iemma was politically motivated.

“I thought they were justifiably taking advantage of the split in the Labor party ranks to affect the government,” he said.

“That’s politics. The opposition didn’t really come out strongly. They just stood back and let Labor destroy itself.”