Senate Environment and Communications Legislation Committee, , 8:49:41 to 8:56:37
Discussion regarding the breakdown of Commonwealth investment and the anticipated need for further government support to maintain Snowy Hydro's credit rating.
Topics: Government spending, Renewable energy
Speakers: Hon Sarah Henderson, Dennis Barnes, Hon Murray Watt, Varun Ghosh, Unknown Speaker, Interjection
>> Can you could you just please explain um how much has the Commonwealth invested in Snowy 2.0? So that's a breakdown of equity loans and the like.
So, not all of this is drawn yet, but there's $4 billion of uh permanent equity, so not to be repaid. Uh $1.4 billion of temporary equity, so to be repaid, and $4.5 billion of shareholder loan to be repaid. The temporary equity and the shareholder loan we pay interest on at uh commercial
I am concerned that you are going to be seeking further government support. You you mentioned that before. Um S&P Global issued a statement upon the release of the reassessment titled bulletin higher snowy 2.0 costs necessitate further government support. Do you share the view that additional government investment will be required to complete this project? I mean the
advice we gave to ministers was uh both the cautery assassment and the fact that we would need support to complete the project
>> and how much support do you need?
>> Well, that's subject to the uh department's consideration.
>> No, I'm asking about the advice that you gave government. >> What was that advice and how much did you advise government that you would need Snowy would need to complete the
project? I mean, we didn't ask for a specific level of support or the nature of that support. That's now with the departments to consider what form of that support, what form that support
>> Mr. Barnes, I'm going to ask you again in your assessment, how much contribution from government is required to complete this project? Well, I mean
the the the balance of $10 billion that we've got in the target cost to complete, I believe will have a mix of uh private debt that we will source from uh banks and the like. Uh it will partly be contributed to from our earnings and there will be a requirement for government support. The mix of those I I don't have.
>> So we're talking what 334 what what
billion uh target cost to complete, >> the mix was uh $4 billion of permanent support and 5.5.9 billion of temporary support. It's now with the departments to consider.
>> Okay. So, of the 10 billion additional dollars, are you can I assume then based on what you've just told me that you would be seeking close to half of that in government support?
>> Well, We don't necessarily put a figure on it. We we target a credit rating that supports our operations in the electricity market that is investment grade and the nature of the support has some determination on what that credit rating will be. So I haven't got the split. We didn't recommend a split. That is effectively the request of government now is to consider what that support
would look like. So you said that you'd need another10 billion.
>> It will cost another $10 billion.
>> It will cost another 10 billion. You've made it clear that you are going to need government support.
>> Yes.
>> Did you state a minimum amount of money that you would need?
>> No, we uh said we will now work with departments to determine the right capital structure to maintain our credit rating.
>> Did you make a request to government for
funding? We made a request to work with the government to uh determine the nature of support to maintain our credit rating.
>> And and do you based on what has happened with this horrendous cost blowout? Do you believe that your credit rating is potentially at risk?
>> If the government don't support the company, then the credit rating is at risk and that's the objective of the
>> Okay? So therefore you will need a minimum contribution from government to protect your credit rating. What will that minimum contribution need to be to maintain your credit rating?
>> Well, that's the work that will now be undertaken with departments.
>> So you've got no idea.
>> Well, it depends on the nature of the support.
>> Okay. Well, you did give the comparison before in relation to the previous trunch of money which was close to half. So can I put to you again that you would need something in the vicinity of 50% at least around about that ballpark figure for the project uh to be completed?
>> It really depends on the nature of the
>> No, I'm asking you that though, Mr. Barnes.
>> Well, the nature of the support determines the credit rating outcome.
>> Yes. So I'm saying to you that in in order to maintain your credit rating, is it the case that you would need roughly the same proportion as you just explained in relation to the previous trunch of funding which was around about 50% or approximately $5 billion additional contribution from government.
I >> mean again the work is underway with the departments on the nature of that support
figure. We're not talking $und00 million. We're talking in that ballpark.
We're talking a substantial proportion, but as I say, the work is underway to determine whether
>> is substantial proportion more than 50%.
I >> I think it's best for the work to happen when that's now underway.
>> You've got a pretty good idea because you've just given evidence that a substantial proportion of the $10 billion will be required as a government contribution. So, can you please explain what you mean by substantial
Henderson has now asked essentially the same question in at least a dozen different ways. M Mr. Barnes has shared the information that he has on this. Um, I mean, Senator Henderson can keep asking the same question for the rest of the night if he prefers, but I'd ask you to consider whether we're getting into repetitive question territory.
>> Okay. Thank you, Minister. Uh, I think senators are entitled to explore inquiries in different ways or from different angles. I I can't say that I have precisely followed each of the last half a dozen questions. So, I'm not in a position to rule this one out of order. U, but I think it is also an opportune time for me to say that that's about um 17 minutes. Senator Henderson,
>> move through very quickly. Thank Thank you very much, Chair. >> So, in terms of the advice that you've given government um Mr. Barnes is was that written advice?