Port of Melbourne is the largest and best-connected port of Australia handling over 2.64 million TEUs with a daily average of over 7,200 containers. The port accounts for 35% of total trade in Australia at a cost of USD 68 billion a year. The draft law on the leasing process of the Port of Melbourne has been introduced since 2015 and is considered an important source for the financing of infrastructure projects. The concession process is part of a series of privatisations in all Australian states, including the Port of Brisbane (in 2010), the Port of Botany and the Port of Kembla (2014), the Port of Darwin (2015). Also, the Government of Western Australia announced the intention of selling Fremantle Port and Kwinana Bulk Terminal.
The Government of Victoria decided on the concession of the Port of Melbourne for 50 years. During this period, the investor will have to extend the port’s capacity through own investments. The bidder selected by the government was Lonsdale Consortium, including Future Fund, QIC, GIP and OMERS, with a transaction estimated at AUD 9.7 billion (USD 7.2 billion). Part of these investors are members in other consortia involved in other port concessions. For example, QIC is shareholder in the Port of Brisbane (26.7%), GIP is shareholder of NSW Ports, OMERS is a Canadian investor that invests in maritime ports and Future Fund is the Australian Government’s sovereign wealth fund. “The long-term lease is an outstanding achievement that underlines the continued high performance of the Victorian economy. We promised to lease the port, get rid of Victoria’s most deadly and congested level crossings and create thousands of jobs, and that’s exactly what we are doing,” Victorian treasurer Tim Pallas said.
Revenues generated by the leasing activity will be directed to the Victorian Transport Fund (VTF) to support the implementation of the project on the elimination of 50 level crossings. Also, VTF will contribute to the financing of Metro Rail, Western Distributor and other transport initiatives. Under the law, a minimum 10% of the net leasing income, outside VTF, will be invested in regional transport infrastructure projects. In addition, USD 148.5 million will be delivered to the Agriculture Infrastructure and Jobs Fund to drive economic growth in the regions.
In conformity with the port demand, a second container port will be built, a project that will be implemented by the selected consortium by allocating necessary investments. As the Commonwealth Bureau of Infrastructure estimates that container freight throughput in the port will increase by 4.8% by 2032, the project implementation becomes mandatory. Melbourne port development is also stressed in Victoria’s recent strategy on 30 years. Projects include improved connectivity, especially on rails. Over the next 5 years, the port rail access policy should be elaborated enabling the establishment of a rail access strategy to be supplied to the next operator in the first 3 years after signing the leasing agreement.
by Pamela Luica
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