CURRENT SITUATION ON RAILWAY FUNDING


 

22 February 2001

The Prime Minister, John Howard, and Chief Minister Denis Burke on Monday night announced that the Commonwealth and Northern Territory Governments would each provide $26.5 million in stand-by financial support for the Adelaide to Darwin Railway.

Mr Howard said:  “We in the Federal Government are prepared to join the Northern Territory and South Australian Governments in delivering that extra commitment so that the project can commence.”

Chief Minister Denis Burke said the stand-by funding would allow the project to proceed while the consortium explored further avenues for private sector investors.

The stand-by support is not a grant, but a commercial arrangement.  The important elements are that the stand-by support:

·        is not a grant, but essentially finance by way of loans and investment

·        the stand-by facility is “up to” $79 million, and is required only if alternative investors cannot be found

·        the first portion, if required, would not be payable for 18 months, and the remainder up to six years away

·        Because it is commercial, the support, if called upon, can be sold to private sector investors and funds returned to the Government.

There is only just sufficient time between now and the start of the Dry Season to achieve financial close if all parties work together, in an environment of certainty, with all parties committed and working with complete dedication.

The start of construction at the commencement of this Dry Season is a fundamental requirement of the project and critical to avoiding escalating costs which could affect the financial structure of the project.

Several alternative investors have been referred to the Asia Pacific Transport Consortium.  These options are being pursued by the consortium.

The above stand-by support by Government does not preclude bringing in another investor. However it provides for this to be done in an orderly and professional manner without prejudicing other financiers, contributors and supporters of the project.

The support announced on Monday night is part of a package of $79 million proposed to be shared by the Commonwealth, Northern Territory and South Australian Governments.

What is the additional financial support?

The support of up to $79 million is not  additional grant funds, but is provided, if necessary, on a stand-by basis on commercial terms.

The standby support is stand-by finance to provide loans and investments to the project on commercial terms, should it be required because alternative investors are not available or unable to complete the due diligence, negotiations and financial documentation in time for financial close.

If alternative investors are found, the amount of the stand-by facility will be reduced accordingly.

When is the stand-by funding required?

The stand-by funding, to the extent required, could be called between the period of September 2002 and 2006.

Why commit the additional support now?

Because there is only just sufficient time between now and the start of the Dry Season (4-6 weeks) to achieve financial close if all parties work together, in an environment of certainty, with all parties committed and working with complete dedication.

The start of construction at the commencement of this Dry Season is a fundamental requirement of the project and critical to avoiding escalating costs which could affect the financial structure of the project.

The above stand-by support by Government does not preclude bringing in another investor. However it provides for this to be done in an orderly and professional manner without prejudicing other financiers, contributors and supporters of the project.

Internet

http://www.nt.gov.au/railway


Return to Railpage Online News