2 March 2018
The Turnbull 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.
The historic agreement will generate more reliable energy, cheaper electricity, better infrastructure and more jobs for NSW and Victoria.
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.
The agreement also builds on the Turnbull Government’s substantive energy sector reforms to ensure reliable and affordable energy for businesses and households.
In a win for Australian energy consumers, the agreement will pave the way for the Snowy 2.0 pumped hydro project to proceed to a final investment decision by the independent Snowy board.
The purchase will see this iconic infrastructure remain in Australian Government hands and NSW and Victoria will receive a fair market value for an important energy asset. The deal will be contingent on the Victorian Parliament confirming the sale and the Commonwealth Parliament passing an appropriation bill.
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 is a critical player within the National Electricity Market. The company owns and operates 5,500 MW 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.
The Commonwealth thanks the Secretaries of the Australian, NSW and Victorian Treasuries that have worked on this complex deal since May 2017. All jurisdictions have worked cooperatively in securing this important transaction.