NSW government leases ports for $5.07 billion

Date: 16.04.2013

Ports Botany and Kembla have been leased to the NSW Ports Consortium with $4 billion net proceeds to be invested in infrastructure

NSW government leases ports for $5.07 billion

April 16, 2013

Port Botany and Port Kembla have been leased to the NSW Ports Consortium for with net proceeds of around $4 billion to be invested in Restart NSW, the state’s infrastructure fund.

NSW Treasurer Mike Baird announced the 99 year lease of the state-owned port assets on Friday.

He says the deal is the largest ever NSW government transaction in terms of net proceeds, with over $4.31 billion from the Port Botany package and A$760 million from Port Kembla.

"This is a massive boost to our delivery of our record infrastructure program across the state," Treasurer Baird says.

Net proceeds from the two leases will be invested in the government’s infrastructure fund, Restart NSW, with 30 per cent of funds reserved for projects in regional areas and a further $100 million dedicated for infrastructure projects in the Illawarra.

Baird says there are now vital funds for the delivery of WestConnex, Bridges for the Bush, the Pacific Highway and the Princes Highway.

"The Government has now funded its commitment to WestConnex and there is $100 million for spending on new infrastructure projects in the Illawarra region," Baird says.

The NSW Government will retain regulatory oversight of the ports as well as responsibility for a range of maritime safety and security functions, including the role of Harbour Master, the dangerous goods function and pilotage.

A small number of Sydney Ports Corporation and Port Kembla Port Corporation employees will transfer to the port lessee.

"Enterprise agreement employees will receive a two year employment guarantee, a transfer payment of up to 30 weeks pay, continuation of current superannuation arrangements, transfer of all sick leave and the ability to transfer or cash out annual and long service leave," Baird says.

These employees will transfer on the same terms and conditions.

"Remaining Sydney Ports Corporation and Port Kembla Port Corporation employees will continue to manage and administer those important maritime functions which will remain with the State," Baird says.

NSW Ports Consortium comprises Industry Funds Management (IFM) Australian Super, QSuper and Tawreed Investments Limited, a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA).

QSuper’s investment in Port Botany and Port Kembla will be managed by Global Infrastructure Partners (GIP).

Baird says each member of NSW Ports is a highly experienced asset owner who will ensure the operational integrity of the ports and will bring greater access to capital to ensure the ongoing development of the critical trade gateways of NSW.

"I congratulate NSW Ports on
its successful bid and, on behalf of the NSW Government,
look forward to a long and successful working relationship" he says.

Baird adds there is still work left to do to reverse Standard & Poor's decision to change NSW’s triple credit rating outlook to negative.

"Releasing mature assets so that we can reinvest in new ones is the responsible approach," he says.

The transaction is expected to close on 31 May 2013.