* New centre will identify critical assets

* Will vet bids by foreign firms for national security risks

* China cried “protectionist” after earlier deals blocked (Releads, adds experts comments, background)

SYDNEY, Jan 23 (Reuters) - The Australian government announced a new infrastructure body on Monday that will, among other functions, check whether foreign-led bids for key assets, including power grids and ports, pose any national security risks.

The Critical Infrastructure Centre will assess risks, advise on transactions and help prevent sabotage, espionage and coercion, the government said in a statement.

The centre, which will also draw up a list of key assets, is meant to improve coordination between the various agencies that might have concerns over asset sales.

Its creation follows a series of controversial foreign investment rulings last year, when the government blocked Hong Kong and Chinese firms bidding for Ausgrid, the biggest power grid in the nation’s most populous state, New South Wales, on national security grounds.

The Chinese government subsequently labelled Australia “protectionist”.

Australia has since imposed foreign investment restrictions on the sales process for a smaller power grid, Endeavour Energy.

In a statement on Monday, the Australian government said foreign investment in critical assets would be assessed on a “case-by-case basis”.

Peter Jennings, the executive director of the Australian Strategic Policy Institute, said significant parts of Australia’s critical infrastructure were owned by foreign entities and he expected the new body would look at the aggregate effects.

Currently, the Foreign Investment Review Board is considering whether to approve the $5.5 billion acquisition of DUET Group by a consortium led by Hong Kong’s Cheung Kong Infrastructure Holdings (CKI).

DUET’s assets include the Dampier-to-Bunbury gas pipeline in Western Australia, which transports fuel for half of the power generation in the country’s biggest export state. It also owns electricity distributors in the state of Victoria.

“I would see DUET’s sale as being something you would expect this centre to look at very closely,” Jennings said.

A source involved with the DUET transaction, who was not authorised to speak publicly, said it was unclear if the creation of the new government body would put the deal at risk.

DUET shares fell 0.7 percent on Monday in line with a broader decline in the Australian market and are trading 5.7 percent below the CKI offer price.

CKI did not respond immediately to a request for comment.

Greg Austin, a professor specialising in cyber security at the University of New South Wales, said the new centre would be in line with similar bodies set up by other nations, like the United States and United Kingdom.

“Everyone is alert to the threat of terrorism against aviation assets - that alertness is part of the defence,” he said. “Now the government is saying, like the British and Americans have, we need to have similar levels of alertness to other threats, especially cyber threats.”

Last September, the British government approved a £18.1 billion ($22.49 billion) nuclear power plant project backed by Chinese cash despite having put in place more stringent oversight of critical infrastructure.

Leigh Duthie, a Brisbane-based partner at law firm Baker & McKenzie, said the new body would give investors more clarity about which assets Australia considered sensitive.

“Chinese investors want to play by the rules and want certainty as to where they can invest,” Duthie said. ($1 = 0.8048 pounds) (Editing by Simon Cameron-Moore)