June 14, 2012
ADVISERS to the state government have warned that unless the cap on container movements to and from Port Botany is raised, the government could get $1.5 billion less from its planned privatisation.
The inability to finalise plans to boost transport links to and from the port – both road and rail – has already clouded prospects of concluding the sale in time for the next state budget.
In particular, a dispute between the federal government and a private sector consortium involving Chris Corrigan for an inland port at Moorebank, near Liverpool in the city’s west, which is central to a push to boost container volumes flowing to and from the port by rail, is threatening to disrupt the proposed sale.
More than 2 million containers pass through Port Botany each year, which is forecast to reach the present planning limit of 3.2 million as soon as 2017.
The adviser to the state government on the port sale, investment bank Morgan Stanley, is believed to have told the government that unless it can indicate to the buyer that the planning cap of 3.2 million containers can be raised, this will significantly limit the potential sale price.
”It has told the government $1.5 billion could be knocked off the sale price if this isn’t sorted,” one source close to the negotiations said yesterday. ”Canberra and Macquarie Street need to sit down and resolve this.”
Earlier this week, the state government said it would consider the sale of Port Kembla port along with Port Botany on a 100-year lease, aiming to position Port Kembla to handle any ”spill-over” capacity from Botany.
If it was sold alone, the government could receive about $2 billion for Port Botany, while adding Port Kembla could raise that figure by an estimated $500 million, government sources indicate.
Both the federal government and the private sector have competing proposals for a rail freight terminal at Moorebank, which is central to achieving the state government target of ensuring that 40 per cent of the freight to Port Botany is moved by rail.
The Chris Corrigan-backed private sector consortium has the more advanced proposal although it needs the Department of Defence to vacate the site before its plan can progress.
At recent Senate estimates committee hearings, the Defence Department secretary, Duncan Lewis, said it will begin vacating Moorebank for nearby Holsworthy from the end of 2014.
When releasing the state budget, the NSW Treasurer, Mike Baird said Port Kembla could be of interest to a bidder for Port Botany as an overflow port, once Botany reaches maximum capacity.
Alternatively, advisers to the government may recommend Port Kembla be sold to a losing bidder for Port Botany.
Earlier this week, the state government committed $30 million for studies into expanding Sydney’s road network, which is expected to focus on duplicating the M5 East or extending the M4.