A $9.7 billion, 50-year lease of the Port of Melbourne will help the Victorian Government fund the removal of 50 of the state’s worst level crossings, Premier Daniel Andrews has said.
Andrews on Monday announced the container port – Australia’s busiest – had been leased to the Lonsdale Consortium, comprising of the Future Fund, QIC, GIP and OMERS.
“This is a $9.7 billion vote of confidence in the Victorian economy,” the premier said.
“We promised to lease the port, get rid of Victoria’s most deadly and congested level crossings and create thousands of jobs, and that’s exactly what we’re doing.”
Russell Smith, former Port of Brisbane chief executive and current Australian partner with GIP, said rail would be a key factor in the consortium’s push to make the port more competitive and efficient.
“GIP looks forward to bringing to bear our strong port and rail industry expertise to drive forward the efficiency and capacity of the Port of Melbourne and focus on the necessary transformational change in the road/rail mix servicing the freight task moving through the port to the benefit of all stakeholders,” Smith said.
GIP was recently part of the breakup of Australian port and rail group Asciano – through which it acquired a 5.5% stake in the Patrick port terminals business, an 11% stake in Asciano’s bulk and automotive arm, and a 12% stake in the Pacific National rail business.
Under the Port of Melbourne deal, the Lonsdale Consortium will lease the commercial operations of the port for the next 50 years.
The state will retain responsibility for the Harbour Master, Station Pier, relevant safety and environmental regulation, waterside emergency management and marine pollution response, the premier’s office said.
Former federal treasurer Peter Costello is chair of the Board of Guardians for the Future Fund, the Australian Government’s sovereign wealth fund, and another key member of the Lonsdale Consortium.
“The Port of Melbourne is a high quality asset and an important link between Australia and its trading partners,” Costello said.
“We’re delighted to invest in it and to add it to our portfolio of Australian and global infrastructure assets. It will be an important contributor to our long-term investment objectives as Australia’s sovereign wealth fund.”
“The Port of Melbourne … is a critical and strategic piece of the Victorian and Australian logistics supply chain,” added Ross Israel, global infrastructure head for the leading bidder in the Lonsdale consortium, QIC.
QIC will add its share of the Port of Melbourne to a portfolio which already includes a 26.7% stake in the Port of Brisbane, a 25% share in Brisbane Airport, 25% of motorway owner Northwestern Roads Group, and various other Australian and international investments.
“We look forward to working with the Victorian Government, port stakeholders and neighbouring communities to maintain, invest and grow Port of Melbourne into the future,” Israel said.
The Port of Melbourne transaction is expected to close on October 31.
As well as funding the Andrews Government’s Level Crossing Removal program, the port privatisation will provide more than $970 million to projects in regional and rural Victoria, treasurer Tim Pallas said.
“Regional Victoria will be big winners from the lease, with significant funding to support projects they need, like better roads, and irrigation and energy projects,” Pallas said.
“Leasing the port reinforces Victoria’s position as the freight and logistics capital of Australia and will make a great port even better.”