After nearly a year of negotiations, the Commonwealth Government has reached an agreement with the New South Wales and Victorian Governments to take full ownership of Snowy Hydro, as the first step to its proposed Snowy 2.0 project.
Under the deal, flagged in the 2017 Federal Budget, NSW will get $4.154 billion and Victoria $2.077 billion, reflecting their respective Snowy shareholdings. There is a ‘broad commitment’ that the money will be spent on ‘productive infrastructure projects’.
The agreement paves the way for the Snowy 2.0 pumped hydro project to proceed to a final investment decision by the independent Snowy Hydro board.
“The purchase will see this iconic infrastructure remain in Australian Government hands and NSW and Victoria will receive a fair market value for an important energy asset,” said Prime Minister Malcolm Turnbull. “The deal will be contingent on the Victorian Parliament confirming the sale and the Commonwealth Parliament passing an appropriation bill.”
Key terms reached as part of the purchase are:
- The Australian Government will increase its shareholding from 13 percent to 100 per cent by purchasing NSW’s 58 percent and Victoria’s 29 per cent shareholdings.
- NSW and Victoria will invest proceeds of the sale into productive infrastructure.
- NSW will provide all reasonable assistance to Snowy Hydro in relation to its current and future operations (including planning and approvals process for Snowy 2.0).
- The Australian Government will provide an assurance that Snowy Hydro will continue to be in public ownership, and employment levels and existing head office locations will not change.
- There will be no change to current arrangements on water issues.
- The transaction will not affect allocations of GST for NSW or Victoria.
Snowy Hydro owns and operates 5,500 MW of generation capacity, including the Snowy Mountains Scheme. Snowy 2.0 is a proposed expansion of the Snowy Mountains Scheme and will provide an additional generation capacity of 2000 MW to power about 500,000 homes at peak demand.
Snowy Hydro released a Feasibility Study for Snowy 2.0 in December 2017, which declared the project to be ‘both technically and financially feasible’.
The Government has promoted the project as proof of its renewable energy credentials, but critics have branded it as window dressing, because it is not accompanied by any commitment to increasing renewable energy targets.
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