❓ Opposition Leader McGowan questions the Energy Minister about a $150 million debt guarantee by Verve Energy for Vinalco Energy related to the Muja AB refurbishment. The Minister confirms the guarantee was supported by the previous Energy Minister and approved by cabinet, but clarifies the debt was held by a joint venture, not directly by Verve or the state.
AnsweredQoN 345Legislative Assembly
QuestionView source ↗
MUJA AB —
REFURBISHMENT — GOVERNMENT GUARANTEE
345. Mr M. McGOWAN to the Minister for Energy:
I refer to the Muja AB scandal in which, according to the
minister, $280 million has already been lost.
(1) Why did
Verve Energy guarantee a $150 million debt to the ANZ bank for the $2 shelf
company Vinalco Energy Pty Ltd?
(2) Did the then Minister for Energy
approve this guarantee?
(3) Was this guarantee reported to
the Treasurer, and did he approve it?
(4) In what manner was this
guarantee included in the Verve Energy annual reports from 2010 to 2012?
REFURBISHMENT — GOVERNMENT GUARANTEE
345. Mr M. McGOWAN to the Minister for Energy:
I refer to the Muja AB scandal in which, according to the
minister, $280 million has already been lost.
(1) Why did
Verve Energy guarantee a $150 million debt to the ANZ bank for the $2 shelf
company Vinalco Energy Pty Ltd?
(2) Did the then Minister for Energy
approve this guarantee?
(3) Was this guarantee reported to
the Treasurer, and did he approve it?
(4) In what manner was this
guarantee included in the Verve Energy annual reports from 2010 to 2012?
AnswerView source ↗
(1)–(4)
First, we should be careful about some of the statements made. I was
interviewed today and that is where I made the statement about the figure of
$280 million that the Leader of the Opposition referred to. My statement about
$280 million was in response to a question about how much total expenditure had
been made on the project to date—that is, $150 million plus $130 million.
That is what I said. I did not state that it was a loss; there will be revenue
against that. The Leader of the Opposition forgets about that. There will be
revenue. As we have stated, boilers 3 and 4 are operating and have been since
February and March this year. The electricity has been sold to a private
retailer and has been earning income to offset those expenditures. That is the
truth, so the Leader of the Opposition should get his facts right and not make
them up or distort them. We are not arguing that there has not been a loss of
money; we are trying to be accurate, and I encourage the Leader of the
Opposition to do so also.
We
went into a joint venture with Inalco. It put in the plant. Inalco's
parent company, Kempe Group, took on the risk of doing the engineering revamp
of the plant. The joint venture had $150 million in the facilities and that was
to finance the whole project. Those are facts; I have stated them and I have
stated them before. The equity was in the joint venture and I might add that
Verve guaranteed the loan.
Mr M. McGowan : The question is why.
Dr M.D. NAHAN : Okay, just let me
finish. I stated that today; we are not hiding anything.
Mr M. McGowan : I know. The question is
why.
Dr M.D. NAHAN : The Leader of the
Opposition asked questions and he should let me answer them.
The
$150 million was guaranteed by Verve but the debt was in the joint venture,
which was a private sector joint venture that Verve had a share of. The $150 million
did not come on to Verve's or the state's books—it was
a joint venture, therefore the Treasurer did not sign off on it. Verve enters
into joint ventures with other entities such as solar farms and other renewable
energy providers and in doing so it takes equity in a joint venture with the
private sector that is funded largely by debt. That private sector joint
venture underwrites the debt and the debt does not come onto Verve's
books.
Mr M. McGowan : That wasn't the
question.
Dr M.D. NAHAN : I know; I am just trying
to give an explanation.
Mr M. McGowan : Please answer the
question.
Dr M.D. NAHAN : I am.
Mr M. McGowan : So, it wasn't
the question, but you're answering.
The SPEAKER : Leader of the Opposition!
Dr M.D. NAHAN : The Leader of the
Opposition asked whether it came out of Verve's books. No. Did the
Treasurer tick off on that $150 million facility? No, he did not. He is the Treasurer
of Western Australia.
Mr W.J. Johnston : Did he tick off on
the guarantee?
Dr M.D. NAHAN : Yes.
Mr M. McGowan : He did?
The SPEAKER : Leader of the Opposition!
Dr M.D. NAHAN : Then, the issue is the
guarantee. The then Minister for Energy supported it, and cabinet ticked off
and supported the venture Verve put to it, which included the underwriting by
Verve for that loan.
First, we should be careful about some of the statements made. I was
interviewed today and that is where I made the statement about the figure of
$280 million that the Leader of the Opposition referred to. My statement about
$280 million was in response to a question about how much total expenditure had
been made on the project to date—that is, $150 million plus $130 million.
That is what I said. I did not state that it was a loss; there will be revenue
against that. The Leader of the Opposition forgets about that. There will be
revenue. As we have stated, boilers 3 and 4 are operating and have been since
February and March this year. The electricity has been sold to a private
retailer and has been earning income to offset those expenditures. That is the
truth, so the Leader of the Opposition should get his facts right and not make
them up or distort them. We are not arguing that there has not been a loss of
money; we are trying to be accurate, and I encourage the Leader of the
Opposition to do so also.
We
went into a joint venture with Inalco. It put in the plant. Inalco's
parent company, Kempe Group, took on the risk of doing the engineering revamp
of the plant. The joint venture had $150 million in the facilities and that was
to finance the whole project. Those are facts; I have stated them and I have
stated them before. The equity was in the joint venture and I might add that
Verve guaranteed the loan.
Mr M. McGowan : The question is why.
Dr M.D. NAHAN : Okay, just let me
finish. I stated that today; we are not hiding anything.
Mr M. McGowan : I know. The question is
why.
Dr M.D. NAHAN : The Leader of the
Opposition asked questions and he should let me answer them.
The
$150 million was guaranteed by Verve but the debt was in the joint venture,
which was a private sector joint venture that Verve had a share of. The $150 million
did not come on to Verve's or the state's books—it was
a joint venture, therefore the Treasurer did not sign off on it. Verve enters
into joint ventures with other entities such as solar farms and other renewable
energy providers and in doing so it takes equity in a joint venture with the
private sector that is funded largely by debt. That private sector joint
venture underwrites the debt and the debt does not come onto Verve's
books.
Mr M. McGowan : That wasn't the
question.
Dr M.D. NAHAN : I know; I am just trying
to give an explanation.
Mr M. McGowan : Please answer the
question.
Dr M.D. NAHAN : I am.
Mr M. McGowan : So, it wasn't
the question, but you're answering.
The SPEAKER : Leader of the Opposition!
Dr M.D. NAHAN : The Leader of the
Opposition asked whether it came out of Verve's books. No. Did the
Treasurer tick off on that $150 million facility? No, he did not. He is the Treasurer
of Western Australia.
Mr W.J. Johnston : Did he tick off on
the guarantee?
Dr M.D. NAHAN : Yes.
Mr M. McGowan : He did?
The SPEAKER : Leader of the Opposition!
Dr M.D. NAHAN : Then, the issue is the
guarantee. The then Minister for Energy supported it, and cabinet ticked off
and supported the venture Verve put to it, which included the underwriting by
Verve for that loan.
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