❓ Hon Paul Llewellyn questions the Forest Products Commission (FPC) regarding an 'Investment Security Guarantee' contract with Lignor Pty Ltd, focusing on potential financial liabilities and risk mitigation strategies related to timber supply.
AnsweredQoN 5592Legislative Council
QuestionView source ↗
(1) Under the above-mentioned contract, is the FPC obliged to sign an ‘Investment Security Guarantee’; contract?
(2) If yes to (1), when is it expected that such contract will be entered into?
(3) If no to (1), -
(a) does the FPC have any intention of signing an ‘Investment Security Guarantee’ contract; and
(b) when is it expected such a contract will be entered into?
(4) If such an ‘Investment Security Guarantee’ contract is entered into, -
(a) what is the amount estimated to be payable by the FPC to Lignor Pty Ltd, should the FPC fail to meet supply;
(b) what strategies are in place related to failure to meet supply to minimise risk for the Government; and
(c) does this include establishment of a Karri plantation?
(2) If yes to (1), when is it expected that such contract will be entered into?
(3) If no to (1), -
(a) does the FPC have any intention of signing an ‘Investment Security Guarantee’ contract; and
(b) when is it expected such a contract will be entered into?
(4) If such an ‘Investment Security Guarantee’ contract is entered into, -
(a) what is the amount estimated to be payable by the FPC to Lignor Pty Ltd, should the FPC fail to meet supply;
(b) what strategies are in place related to failure to meet supply to minimise risk for the Government; and
(c) does this include establishment of a Karri plantation?
AnswerView source ↗
Answered
15 November 2007
Responded by
Minister for Forestry
Response time
21 days
(1) No
(2) Not applicable
(3a-b) The FPC would be a third party signatory if and when the Government through the Minister for Industry and Enterprise agrees to such a guarantee.
(4)
(a) The amount payable would be determined when the Government considers the need for an Investment Security Guarantee (ISG). However, the ISG would only be invoked if the supply of timber to Lignor was affected by a change in Government policy, and would not be payable by the FPC. In contrast, if the quantity was affected due to other circumstances, and a dispute ensued, then under Contract 2899, the Forest Products Commission and Lignor would be obliged to follow the dispute resolution steps stipulated in the Contract. This is the same process that applies to all production contracts entered into by the FPC.
(b) The FPC's principal strategies to meet supply are the same whether or not an ISG is entered into. The FPC's regular contract management strategies are designed to ensure operations deliver timber volumes allowable under (and in accordance with the environmental regulations relating to) the Forest Management Plan.
(c)The establishment of karri plantations has not been raised in the context of risk management. If it were to occur it would be based on a business case taking account of all available markets.
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(2) Not applicable
(3a-b) The FPC would be a third party signatory if and when the Government through the Minister for Industry and Enterprise agrees to such a guarantee.
(4)
(a) The amount payable would be determined when the Government considers the need for an Investment Security Guarantee (ISG). However, the ISG would only be invoked if the supply of timber to Lignor was affected by a change in Government policy, and would not be payable by the FPC. In contrast, if the quantity was affected due to other circumstances, and a dispute ensued, then under Contract 2899, the Forest Products Commission and Lignor would be obliged to follow the dispute resolution steps stipulated in the Contract. This is the same process that applies to all production contracts entered into by the FPC.
(b) The FPC's principal strategies to meet supply are the same whether or not an ISG is entered into. The FPC's regular contract management strategies are designed to ensure operations deliver timber volumes allowable under (and in accordance with the environmental regulations relating to) the Forest Management Plan.
(c)The establishment of karri plantations has not been raised in the context of risk management. If it were to occur it would be based on a business case taking account of all available markets.
Notice: This document is created or edited using unregistered or evaluation copy of rtLib valid for testing or development purposes only. To use it for productive or any other purposes please register it. You may purchase the license on
http://www.rtlib.com
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