A few of the non-fluff quotes from today's Murdoch article
"Argy-bargy on transmission line charges stall NQ hydro project":
Renewables developer Genex Power has been forced to again delay a start on its $700m Kidston hydro project in North Queensland as the company negotiates charges with State-owned Powerlink on a transmission line needed to support it."There is talk the company is being squeezed on the line’s operational and maintenance costs, while Powerlink, which declined to comment on those charges, denied it was the cause of the delay."
“It’s frustrating the time it has taken to develop this strategically important asset but we are now working constructively with Powerlink to finalise this last remaining bit of detail,” Mr Kidston said.
Powerlink chief executive Paul Simshauser said they had been ready to proceed for months, having finalised commercial, regulatory and technical requirements in late 2019.“Genex has requested a number of delays throughout the development of the project, including (the) recently announced delay,” Mr Simshauer said.“We are supportive of the project with the Queensland Government maintaining its funding commitment of $132 million. It now relies on the proponent to take the project forward.”
It is thought the two parties are playing hard ball on operating costs which usually are around 2 per cent of capital costs per year, increasing in line with inflation.Hey All,
Some insight here which adds layers to what is known, and assumed. O&M is the issue, again. As we had agreed to it (see OP), it's likely been a point of contention for our JV partner.
At 2% of transmission capex ($232m) you're looking at $4.6m of which we'd have a $2.3m share. This was modelled in my Genex Revenue, Loans & O&M spreadsheet found here -
https://docs.google.com/spreadsheets/d/162Fdy9VPF50OtzgrZNH83Ua7zs8k-GwrPmZCCEuNifcTo be honest, $2.3m may sound relatively minor but it is material from a net perspective, particularly in the first decade while we frontload the NAIF finance. However, the O&M proportionate to K2H will be significantly lessened as K2S and K2W are built, along with the two known wind farms who will share the line. I must admit, I'm extremely disappointed we've been in a position to progress the line and reach financial close and are still stumbling here. It's not hard to gauge Simon's frustration also, but Powerlink/Queensland Government have put the final offer on the table (and it's a fantastic offer) so we need to make it work.
The JV partner is perfectly within their rights to get the best deal. We are inflicting conditions on them that are unique and suit us, and us alone, such as increased repayments in the first decade, and the potential to buy a strategic stake of their interest in the project if EA purchases ours after 30 years, among some.
However, we are now introducing risks which were not present a month ago. While it is unlikely the Liberals will win up here, it's a possibility. So far, the LNP has been extremely supportive of Genex (Matt Canavan & Keith Pitt's NAIF, ARENA increasing to $40mn, co-promotion from local LNP members). The best we can hope for during October is an agreement with Powerlink and the JV with an intention of proceeding to financial close, in Q4.
It is pleasing for it to be publicly reiterated that the project is in our hands to move forward. Let's go.
Regards,
Jeremy
