The Bell Bay Giveaway

Kim Booth Greens MR

“Bell Bay Power is strategically important in our generation mix and it beggars belief that the government would give away a valuable public asset when advice showed that retention in public ownership was a viable and profitable alternative that met all Nation Competition requirements.”
BELL BAY POWER STATION GIVE AWAY REVEALED IN LEAKED DOCUMENTS
$32 Million Thrown Away By Incompetent Lennon Government
Kim Booth MP
Greens Shadow Energy spokesperson

Thursday, 8 May 2008
www.tas.greens.org.au

The Tasmanian Greens today released leaked documents that formed part of Bell Bay Power’s 2006 proposal to the Lennon State government, before Labor decided to sell-off the power station, which reveal that the government had before them a proposal to transform the station to become a stand alone viable sustainable generator competing in the National Energy Market (NEM), and which would also have remained in public hands.

Greens Shadow Energy spokesperson and Member for Bass Kim Booth MP said today that the leaked documents, which form a 22-page power point summary of Bell Bay Power’s business case, revealed another sorry saga of deception and incompetence by the Lennon government, and which raises serious questions about the motives behind the sale of Bell Bay Power Station, as well as the true net benefit to Hydro Tasmania that was received.

Mr Booth also called on the government to explain serious discrepancies between the information contained in the documents and statements made in the Parliament by the then Energy Minister, David Llewellyn, regarding the cost of the pipe line capacity.

“These leaked documents that summarise Bell Bay Power’s Business Case that they presented to the Labor government in August of 2006, reveal yet again a sorry saga of government incompetence when it comes to secure the best energy options for Tasmania, as well as revealing the extent Labor will go to misinform the public about the decisions they make,” Mr Booth said.

“The Lennon government sold the Bell Bay power station last year to Alinta, claiming a sale price of $120 million which included $90 million for the pipe line capacity agreement. At the time, Energy Minister David Llewellyn told parliament that, ‘the net benefit of the sale to Hydro Tasmania is $120 million. Alinta will provide an up-front cash payment of $30 million, and will purchase the assets and site. The pipeline capacity agreement between Hydro Tasmania and Alinta, which secured long-term gas supply for the power station, will also be terminated early, saving Hydro Tasmania $90 million’,”[1]

“However this leaked document tells an entirely different story, revealing that Hydro Tasmania had already written off the pipeline capacity agreement to zero in its accounts (see slides 4 and 7), a fact that raises the possibility that Energy Minister Llewellyn misled the Parliament over the true net benefit of the sale of Bell bay Power Station.”

“The document also reveals that the Lennon government ignored advice to create a stand alone SOC (State Owned Company) that would have retained public ownership of the power station while delivering approximate Earnings Before Interest d Tax (EBIT) of over $32 million (see slide 15), as well as “[r]emoving revenue leakage from State electricity businesses to interstate entities’.” (see slide 16).

“The Greens were the only party to vote against the privatisation of the Bell Bay Power Station and raised the issue of the low return to the taxpayer, noting the fact that Hydro were still obliged to pay around $56 million for the three newly purchased gas turbines which went with the sale.”

“This effectively meant that the government gave away Bell Bay Power for a net loss of $16 million plus as yet undisclosed costs of de contamination of the site.”

“The leaked documents reveal that the Lennon Labor government acted against advice that would have seen the public retain control of its energy generation assets and earn between $16 and $20 million per year profit that could have gone into investment in renewable energy projects, concessions on electricity tariffs or gone back into health and education.”

“The documents also show that under this proposal the power stations was to “become a stand alone viable sustainable generator competing in the NEM.” (see slide 22)

“Bell Bay Power station was ruthlessly slaughtered on the altar of privatisation by Lennon Labor who turned their back on the projected $16 to $20 million profits per annum available under public ownership.” (see Slide 15)

‘Lennon’s Basslink gamble has saddled Tasmania with a $92 million dollar per year cable rent and now we discover, by leaked documents, that this incompetent and unaccountable government has torn up a massive $16 to $20 million projected profit per year that could have gone to other public projects.”

“Lennon Labor has axed a valuable plum tree that would have yielded fruit for generations to come and must now come clean with the truth about the reasons why they sold it in the first place.”

“The government has some serious explaining to do to answer the discrepancies between what Parliament was told at the time Bell Bay station was sold, and the details contained in this documentation.”

“Did Labor get bedazzled by the prospect of quick cash, so they convinced themselves to sell of a public asset that could now be assisting Tasmania as it faces an energy shortage?”

“It appears that at the time Labor was too keen to spend money promoting ill-advised projects such as the pulp mill, and racecourses that is was too quick to tear up public assets at fire-sale prices,” Mr Booth said.

Background Information: Relevant quotations from Hansard:

“…the proposed sale of the Bell Bay Power Station represented ‘the best possible scenario that could have been anticipated by the Government,’ [David Llewellyn, Hansard, Wednesday 18 April 2007, Part 2, “HYDRO-ELECTRIC CORPORATION ACT 1995 – SALE OF BELL BAY POWER STATION”]

“the net benefit of the sale to Hydro Tasmania is $120 million. Alinta will provide an up-front cash payment of $30 million, and will purchase the assets and site. The pipeline capacity agreement between Hydro Tasmania and Alinta, which secured long-term gas supply for the power station, will also be terminated early, saving Hydro Tasmania $90 million. [David Llewellyn, Hansard, Wednesday 18 April 2007, Part 2, “HYDRO-ELECTRIC CORPORATION ACT 1995 – SALE OF BELL BAY POWER STATION”]

Attached: Leaked documentation released by Kim Booth MP, Bell Bay Power business case proposal, August 2006 (22 slides).

[1] David Llewellyn, Hansard, Wednesday 18 April 2007, Part 2, “HYDRO-ELECTRIC CORPORATION ACT 1995 – SALE OF BELL BAY POWER STATION”