THE Australian Government has reached an agreement with the New South Wales and Victorian governments to take full ownership of Snowy Hydro Limited in a deal that will deliver more than $6 billion in Commonwealth funds for investments in infrastructure across both states.
Initiated by the Federal Government and announced at the 2017 Federal Budget, the deal includes a broad commitment to invest the proceeds in productive infrastructure projects, with NSW set to receive $4.154 billion and Victoria $2.077 billion, reflecting their respective Snowy shareholdings.
In a statement last week, Prime Minister Malcolm Turnbull said the historic agreement will build on the Australian Government's substantive energy sector reforms and generate more reliable energy, cheaper electricity, better infrastructure and more jobs for NSW and Victoria.
The agreement, which is contingent on the Victorian Parliament confirming the sale and the Commonwealth Parliament passing an appropriation bill, will also pave the way for the proposed Snowy 2.0 pumped hydro project to proceed to a final investment decision by the independent Snowy board.
Key terms reached as part of the purchase are:
- The Australian Government will increase its shareholding from 13 per cent to 100 per cent by purchasing NSW's (58 per cent) and Victoria's (29 per cent) shareholdings. The agreed fair market value of the enterprise is $7.8 billion. Allowing for Snowy Hydro's debt as of 31 December 2017, NSW will receive $4.154 billion and Victoria $2.077 billion.
- NSW and Victoria will invest proceeds of the sale into productive infrastructure, further boosting their already substantial capital works budgets and providing a vital boost to the national economy.
- NSW will provide all reasonable assistance to Snowy Hydro in relation to its current and future operations (including planning and approvals process for Snowy 2.0);
- The Australian Government will provide an assurance that Snowy Hydro will continue to be a successful operation. Importantly, it will continue to be in public ownership, and employment levels and existing head office locations will not change;
- There will be no change to current arrangements on water issues; and
- The transaction will not affect allocations of GST for NSW or Victoria.
Snowy Hydro owns and operates 5,500 megawatts of generation capacity, including the iconic Snowy Mountains Scheme. Snowy 2.0 is a proposed expansion of the Snowy Mountains Scheme and will provide an additional generation capacity of 2000 MW to power about 500,000 homes at peak demand.
NSW Premier Gladys Berejiklian described the deal as a huge win for NSW, especially regional NSW, which she said will benefit both from the Snowy 2.0 scheme and the NSW Government's decision to invest 100 per cent of the Snowy transaction proceeds in rural and regional areas of the state.
Victorian Premier Daniel Andrews said the deal was good for Victorian households and good for the state's economy and would allow the State Government to continue to build infrastructure and create jobs.