The Australian federal government is all set to take over full ownership of Snowy Hydro by buying out the stakes of New South Wales (NSW) and Victoria in the hydroelectric power company in a deal valued more than A$6bn ($4.65bn).
According to the federal government, the transactions will result in production of more reliable power at lowered costs while helping the two states with better jobs and more jobs.
The Australian government currently holds a stake of 13% in Snowy Hydro. From NSW, it will be buy a stake of 58% for A$4.154bn ($3.22bn) and from Victoria, the federal government will acquire a stake of 29% for A$2.077bn ($1.61bn).
Victoria Premier Daniel Andrews said: “This is a historic deal that’s good for Victorian households, and good for our economy, as we continue to build the infrastructure and create the jobs our state needs for the future.”
Headquartered in Cooma in NSW, Snowy Hydro owns and operates 5.5GW of power generation capacity, which includes the Snowy Mountains Scheme.
The federal government said that the agreement consolidates on its substantive energy sector reforms to see that businesses and households in the country get access to reliable and affordable energy.
Further, it said that the agreement will enable the Snowy 2.0 pumped hydro storage project to move ahead to a final investment decision to be taken by the independent Snowy board.
NSW Premier Gladys Berejiklian said: “This will create an investment bonanza in regional NSW with every cent of the proceeds going to rural and regional NSW.
“Not only have we unlocked billions for infrastructure in the regions, but it paves the way for the nation-building Snowy 2.0 project – a Federal Government investment of more than $3 billion that will create 5000 direct jobs in the Snowy Region.”
Snowy 2.0 will be an expansion of the Snowy Mountains Scheme, which has been designed to generate an additional capacity of 2GW to power nearly 500,000 homes at peak times. Currently, the Snowy Mountains Scheme is made up of nine hydroelectric power plants and sixteen large dams.
The Snowy Hydro deal will mean that the infrastructure of Snowy Mountains Scheme will stay with the Australian government while NSW and Victoria will get a fair market value for the energy asset.
The transaction will be subject to the Victorian Parliament’s confirmation of the sale and the Australian parliament’s passing of an appropriation bill.