The New South Wales government is ready to privatize state plantation forests as part of a new round of sale and lease in 2020 to finance ambitious infrastructure projects.
The other half of Ausgrid, the other half of WestConnex and some water resources are also in the center of the government’s attention.
Forestry Corporation’s long-term lease of 230,000 hectares of softwood plantations is expected to be one of the first off-block assets in the new year.
State forests produce about 14% of Australian timber, including most supplies to the housing industry.
The transaction, which should receive $ 1 billion, is likely to be announced early in the New Year and will include long-term land lease and the right to grow timber, not land sales. In the last three months, a bank and a financial services company UBS conducted a research study, while KPMG worked on tax implications and Minter Ellison on legal structures.
Sales will be controversial in regional areas such as Bathurst, Oberon, Bega, Tumut and the Northwest, where major employers are large softwood plantations.
Forestry Corporation also manages 34,000 hectares of hardwood plantations and has about 2 meters of coastal native forests, Cypriot forests and red rubber forests. They are not designed as part of the agreement.
However, their future might be uncertain when the softwood division that earns money is sold or rented. Green groups call for greater protection of indigenous state forests, especially after this summer’s fires, which put pressure on habitats for koalas and other indigenous animals.
It is understood that the government would also like to sell the remaining half of the electricity distributor to NSW Ausgrid – a company that owns power poles and conductors around the state – but the proposal is suspended.
This is a controversy over the sale of the initial 50% Ausgrid in 2016 when the then Federal Treasurer, Scott Morrison, quoted national security concerns to block the winning bid by a consortium of Chinese government-owned state network and Cheung Hong Kong. Kong Infrastructure.
The stake was then sold for $ 16 billion to the Australian consortium, which consists of the industrial super-investment vehicle IFM Investors and the largest supranational fund in the country, AustralianSuper.
Investors are said to have issued a government on resale, but Morrison’s rhetoric about China’s influence in Australia has caused investors to hit the pause button on the proposal for the remaining half.
Investors are trying to pay about $ 10 billion to $ 11 billion for the second, because the network is considered a waste asset that loses value, partly because of the use of solar panels.
There is also speculation that the government will attempt to sell the remaining 49% of the huge WestConnex project in road traffic during 2020. The sale of the first half of 2018 to the largest private road operator in Transurban increased $ 9.3 billion, but raised criticism of the risks of having one major operator that manages so many roads in the state.
Other businesses the private sector is expanding include some of Sydney Water’s assets and the possibility of building an extension to the Sydney desalination plant and other new projects.
The existing plant was put into operation last January and is in operation at 100% capacity, providing 15% of the city’s water demand. The contribution document recommended 30% of the capacity of the barrier system as a critical threshold on which to base the enlargement planning. The Greater Sydney dam system now has a capacity of 44.3% and is declining.
Although investors want Sydney Water’s assets to be considered as privatization, this proposal is considered too politically controversial in the dry.
The most likely outcome will be the involvement of the private sector in new projects, which could include dams associated with the possibility of pumping hydro-power.
Acting Treasurer Damien Tudehope said to Guardian Australia: “The NSW government is not currently planning to undertake further privatizations, but will always act in the best interests of the NSW people.
“The asset recycling strategy objected to by NSW Labor has released additional funding for infrastructure projects and allowed the government to accelerate the delivery of critical projects, including Sydney Metro City and Southwest, More Train, More Services, regional road freight transport. Corridor and light rail Parramatta. “
However, it is clear that significant work has been done on the sale of softwood plantations (eTender portal has scope studies) and Guardian Australia understands that up to 10 bidders have shown interest in it.
Natural resource spokesman Paul Scully said that ALP remains against the sale of state softwood plantations. He warned that privatization would result in significant regional job losses and the loss of important assets such as Blowering nursery schools and firefighters. He also asked questions about what would happen to the thousands of kilometers of roads maintained by Forestry Corporation.
Victoria sold her softwood plantations in 1998, while Queensland earned $ 603 million when it sold the Queensland forest plantations in 2010. However, NSW has by far the largest stock of wood.
James Tremain of the Conservation Council warned of the negative environmental impact of privatization.
“Privatization is most likely to lead to worse environmental outcomes for forests, because a private company will always try to maximize its profits by fully exploiting resources,” Tremain said.
“NSW EPA failed to force Forestry Corporation, a government enterprise, to comply with environmental laws. What hope would a private company comply with the law?
“If the government continues to sell, it should first remove the original logging division and use the money from the transaction to finance the fair transition of affected communities and workers.”