The Andrews Labor Government in Victoria, Australia is pushing forward with the lease of the Port of Melbourne for up to 50 years.
Namely, the government has introduced legislation to enable the lease of Australia’s largest container port, the Delivering Victorian Infrastructure (Port of Melbourne Lease Transaction) Bill 2015, to the Victorian Parliament this week.
The Prime Minister’s office said that the lease proceeds, to be paid up front, will go into the Victorian Transport Fund (VTF). which will support the removal of 50 worst level crossings and the building of Melbourne Metro.
The sale is expected to range between $5 and 6 billion and the bidding race is expected to include Hastings Funds Management, IFM Investors, QIC Ltd and partners.
As informed, only the port’s commercial operations will be leased. The Victorian and Commonwealth Governments would retain responsibility for regulating the port’s safety, security and environmental functions.
The leaseholder will be responsible for maintaining and improving the port’s operations, delivering efficiencies, boosting competitiveness and ensuring future port development is not compromised.
“Victoria’s independent economic regulator, the Essential Services Commission, will oversee an enhanced pricing structure for port users. Annual tariff increases will be capped at CPI to protect Victorian producers, manufacturers, other exporters and importers, and consumers,” Victoria’s PM office said in a release.
Once legislation has passed, the lease transaction’s Joint Financial Advisers, Morgan Stanley and Flagstaff, will call for expressions of interest on behalf of the state.
“The lease will make our port even better, increasing efficiencies and competitiveness, reinforcing Victoria’s position as the freight and logistics capital of Australia,” said Treasurer of Victoria, Tim Pallas.
The privatization plan has hit several snags on the way so far including opposition from the port’s stevedores DP World over the 750 cent rental hike and potential intervention from Australia’s competition commission in the matter.
The lease plan still needs to be approved by the opposition in the upper house since Greens are against the sale.
However, concerns have been raised as the sale would mean freezing of the Port of Hastings development plan, as proposed by the Labor, because the party believes that there would be no need for a second container port in Melbourne in the following 50 years.
World Maritime News Staff