❓ Mr. McGowan questions the government's guarantee of a $150 million debt for the Muja AB refurbishment, highlighting potential discrepancies with earlier statements and annual reports. Minister Nahan defends the decision based on Verve Energy's assessment of the project's profitability.
AnsweredQoN 346Legislative Assembly
QuestionView source ↗
MUJA AB — REFURBISHMENT —
GOVERNMENT GUARANTEE
346. Mr M. McGOWAN to the
Minister for Energy:
I
have a supplementary question. I repeat: why did Verve Energy, the Treasurer
and the government guarantee the $150 million debt to the ANZ bank?
GOVERNMENT GUARANTEE
346. Mr M. McGOWAN to the
Minister for Energy:
I
have a supplementary question. I repeat: why did Verve Energy, the Treasurer
and the government guarantee the $150 million debt to the ANZ bank?
AnswerView source ↗
It is quite clear why: the project would not go ahead without
that.
Mr M. McGowan :
After you said it wouldn't cost us a cent.
Dr M.D. NAHAN : The
assessment of the project at that time was that Verve would put in plant worth
negative $19 million. Inalco put in a fixed-price agreement. There was not very
much equity from either organisation put into that; indeed, it was negative equity
from Verve. Verve was going to refresh the plant and generate $240 million and,
according to Verve, it did adequate due diligence to ascertain the financial
and engineering risk of the plant. It obviously told the government of the day
that this was a really good deal, that it knew this plant inside and out —
Mr M. McGowan : Why
wasn't it in the annual reports?
Dr M.D. NAHAN :
Verve's annual report? I was not the energy minister; I do not know if
it was or not.
Mr F.M. Logan : Isn't
that a breach of the Corporations Act?
The SPEAKER :
Order! This is the first question, member for Cockburn. You have the chance to
ask questions if you want.
Dr M.D. NAHAN : The
proposal put forward by Verve, which the government agreed to, entailed Verve
underwriting the loan. The loan, however, was in the joint venture. Verve
argued this case for the reason that it was, according to Verve, extremely
profitable.
that.
Mr M. McGowan :
After you said it wouldn't cost us a cent.
Dr M.D. NAHAN : The
assessment of the project at that time was that Verve would put in plant worth
negative $19 million. Inalco put in a fixed-price agreement. There was not very
much equity from either organisation put into that; indeed, it was negative equity
from Verve. Verve was going to refresh the plant and generate $240 million and,
according to Verve, it did adequate due diligence to ascertain the financial
and engineering risk of the plant. It obviously told the government of the day
that this was a really good deal, that it knew this plant inside and out —
Mr M. McGowan : Why
wasn't it in the annual reports?
Dr M.D. NAHAN :
Verve's annual report? I was not the energy minister; I do not know if
it was or not.
Mr F.M. Logan : Isn't
that a breach of the Corporations Act?
The SPEAKER :
Order! This is the first question, member for Cockburn. You have the chance to
ask questions if you want.
Dr M.D. NAHAN : The
proposal put forward by Verve, which the government agreed to, entailed Verve
underwriting the loan. The loan, however, was in the joint venture. Verve
argued this case for the reason that it was, according to Verve, extremely
profitable.
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