Rat­ing fear on de­lay to port pri­vati­sa­tion

Pilbara News - - News - Nick Evans

The State’s un­der-trea­surer has warned credit rat­ings agen­cies may take a dim view of de­lays to the pri­vati­sa­tion of WA ports, say­ing the sale of Port Hed­land’s Utah Point fa­cil­ity may now not be pos­si­ble un­til late next year.

Michael Barnes warned a Leg­isla­tive Coun­cil com­mit­tee ex­am­in­ing leg­is­la­tion to en­able the sale that on­go­ing de­lays meant the State Govern­ment was un­likely to find a buyer ahead of the March 2017 elec­tion.

He said Trea­sury had hoped to fi­nalise a trans­ac­tion by the end of the year, but that timetable was based on the pas­sage of leg­is­la­tion be­fore June 30.

The com­mit­tee will not re­port back un­til Au­gust 25, mean­ing that, even if all goes well, the leg­is­la­tion is un­likely to pass Par­lia­ment’s Up­per House un­til at least mid-to-late Septem­ber.

Fail­ure to get a sale away this year could expose the Govern­ment to “sub­stan­tial ad­di­tional ad­vi­sory costs” as­so­ci­ated with up­dat­ing fi­nan­cial, eco­nomic, en­vi­ron­men­tal en­gi­neer­ing and le­gal re­ports nec­es­sary for the pri­vati­sa­tion.

Trea­sury is flag­ging costs of $9.9 mil­lion as­so­ci­ated with the sale to the end of June, in­clud­ing $7.8 mil­lion in pay­ments to cor­po­rate, le­gal and other ad­vis­ers.

The Govern­ment hopes to re­alise at least $500 mil­lion for a 50-year lease of Utah Point.

Mr Barnes warned the de­lay could lead to a lower price be­ing of­fered by po­ten­tial buy­ers, and a “neg­a­tive im­pact on other as­set sales”, such as the mooted sale of Fre­man­tle Port.

He said the fail­ure of the sale in this term of Par­lia­ment could lead to the “per­cep­tion from ex­ter­nal par­ties (in­clud­ing credit rat­ings agen­cies) that the State is not able to de­liver on its fis­cal re­form pro­gram”.

Mr Barnes’ re­sponses also risk in­flam­ing ten­sions with the mid-tier min­ers that use the fa­cil­ity, which are op­posed to the sale un­less they re­ceive guar­an­tees that prices will not rise sub­stan­tially and that Pil­bara iron ore ma­jors are per­ma­nently barred from us­ing the ter­mi­nal.

Trea­sury re­sponses also in­clude an ad­mis­sion that anal­y­sis of ex­port vol­umes pre­dicts through­put at Utah Point will fall from about 23 mil­lion tonnes this year, to 13.2 mil­lion tonnes in 2017-18.

Cur­rent vol­umes could only be main­tained if ex­ist­ing users — in­clud­ing At­las, Min­eral Re­sources and Con­sol­i­dated Min­er­als — bring new mines on­line, or new cus­tomers are signed up at the fa­cil­ity, Trea­sury said.

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