Two-ports deal gains a load of money for NSW
The privatisation of Port Botany and Port Kembla will deliver $5.07 billion to the NSW government to be spent on infrastructure projects including the planned WestConnex motorway and an upgrade to the Pacific Highway.
State Treasurer Mike Baird said on Friday that consortium NSW Ports had agreed to pay $4.31 billion for Port Botany and $760 million for Port Kembla for a 99-year lease.
NSW Ports consists of three Australian companies, Industry Funds Management, Australian Super and QSuper, and Tawreed Investments, a wholly owned subsidiary of the Abu Dhabi Investment Authority.
After debt is repaid, net proceeds total $4.3 billion, which will be funnelled into the state government's investment fund, Restart NSW. There will also be an annual lease payment of about $5 million.
The result is significantly more than the $3 billion anticipated in last year's budget.
Mr Baird said the price was 25 times annual earnings from the ports and "comfortably exceeds" their retention value.
"It's the largest-ever NSW government asset transaction in terms of net proceeds," he said.
Port Botany is the nation's second-biggest container port after the Port of Melbourne. The Port Kembla terminal is about 70 kilometres south of Sydney and is the conduit for coal transported from the south and west of the state.
The chief executive of Industry Funds Management, Brett Himbury, said local investors made up 80 per cent of the consortium, including the superannuation funds representing 5 million Australians.
"This is a fair outcome for everybody," he said. "Clearly the state has benefited with that $5.07 billion. We are nonetheless confident that with a 99-year lease and, as long-term investors, there will be good long-term returns."
Some employees of the Sydney Port Corporation and Port Kembla Port Corporation will transfer to the new private sector owner.
Those on enterprise agreements will receive a two-year employment guarantee, a transfer payment of up to 30 weeks' pay and retain their superannuation and other entitlements and conditions.
The annual container movement cap of 3.2 million will be abolished for Port Botany, which has prompted fears of increased local traffic congestion.
But Mr Baird said the cap was "artificial" because the previous government had agreed to an expansion of Port Botany that "already breached" the limit.
He said the traffic "pinch points" around the port had been prioritised by Infrastructure NSW and WestConnex would provide "significant relief. We will minimise that congestion," he said.