One thing all forget here is that governments around the world...

One thing all forget here is that governments around the world are looking at pouring money into Infrastructure. If anyone has been watching Australian politiccs lately you would have noticed the finalisation of the PPP (Public Private Partnership) guidelines, the future fund drawing back on equities and formalising its Private Equity & Infrastructure development plans. The FF is given a presentation to fund managers around the 17th of this month. It has $30billion cash.

The problem BBI and other infrastructure players have is that they do not have access to capital. Paying down corporate debt is one thing, funding organic growth is another to maximise the assets return.

I had a good look at WestNet today and possible developments. Firstly, the WA government is looking to invest $400m for grain transporation on WestNet leased lines (link) http://www.thewest.com.au/default.aspx?MenuID=146&ContentID=109855.

Say Westnet handed back these lease lines for nothing and allowed others (goverment) to develop them. The trains would still need to travel the main lines to get to cities and ports. More traffic, less capex equals higher ROI.

Further the WA government has recently released planning data for the Kwinana Intermodal Model terminal (www.dpi.wa.gov.au/mediafiles/freight_kwinanareport.pdf) . Westnet is one of the stakeholders at it owns the lines that will feed this port terminal. The idea is to reduce truck traffic and use trains. This has the added benefit of less congestion, therefore less greenhouse effect another government goal.

I looked at the Pacific Nation site (train and freight operator). They have commenced a new east west service further indicating increased demand. Link: http://www.asciano.com/articles/Pacific_National_launches_new_East_West_service_-_2_October_2008.pdf


This supports the view I hold view that the assets are valuable and underdeveloped. We all should know that DBCT has more demand than it can deliver on.

If you take this across assets such as WestNet,PD Ports and DCBT which have growth opportunites you can see why Hammill wants strategic partners rather than wholesale sales. Strategic partners will offer growth opportunities, while given enough cash to pay down corporate debt and fund organic growth and actually increase ROI long term. In the present climate government may just be one of these partners under the PPP program in Australia and similar initiatives around the globe.

Hammill being an ex Queensland politician would probably have an ear in government. I still remained impressed by the new boards direction of not fire selling assets and still treating BBI as a going concern. I hope they can achieve their plan as we will benefit greatly in the long term.