By the end of March, the company responsible for rolling out of the National Broadband Network (NBN) had drawn down AU$10.8 billion of its AU$19.5 billion loan from the federal government.
The incoming government brief prepared by the Department of Communications before the May election, and released under Freedom of Information, shows the company was slated to pull down almost AU$7 billion for the 2018-19 financial year, and AU$5.7 billion this financial year, followed by AU$1.28 billion the year after when the drawing ends.
Across the same period, NBN Co is set to see its 3.96% interest payments increase from AU$351 million in 18-19 to a new standard AU$759 million in 21-22 and beyond.
The brief said that the Department of Finance and the Department of Communications had received advice that NBN Co would be able to fully refinance the loan by the end of June 2024, as was always the intention.
The refinancing process would happen in a “number of tranches”, the documents said, but the date when the company would start was redacted.
In March last year, the loan, first announced in November 2016, was extended for three years to 30 June 2024.
The government’s Mid-Year Economic and Fiscal Outlook (MYEFO) for 2018-19 said NBN Co would have drawn down AU$13.4 billion by the end of June.
“A government loan on commercial terms continues to represent the most cost-effective way to raise necessary debt and secure funding to complete the rollout of this important national infrastructure project,” MYEFO said.
“A government loan assists in ensuring NBN Co can focus on the remaining rollout as it significantly scales up toward completion in 2020.”
Speaking to Senate Estimates in April, NBN CEO Stephen Rue detailed how the refinancing would happen.
“There are two tranches of that, if you will. There’s the $2 billion that we will be going to the market for in, say, the next 12 months, which is what we talked about at the last corporate plan,” he said.
“The intention is to actually repay that back relatively quickly out of funds.”
Rue added the last time NBN had looked “in-depth” at the loan was in 2017.
“Certainly, when we looked at this in 2017 we had confidence from both the rating agencies and from advice we’d had from several investment banks that that funding would be available to the company,” he said.
“So, we will redo that exercise in coming years as it gets closer to 2024.”
The NBN CEO said he was confident NBN would have a “strong business case” when it went to market.
Then-Communications Minister Mitch Fifield said in 2016 the loan would improve the government’s Budget position.
“The government will get a return … there’s gross debt, there’s net debt, but there won’t be an increase in net debt,” Fifield said at the time.
Due to the difference between commercial and government borrowing rates, the government will be able to make money from the loan in the long term, officials from the Department of Communications explained.
Elsewhere in the brief, the Department of Communications said the reduction in the Regional Broadband Scheme from AU$10 to AU$7.10 was due to the government agreeing to amendments from Labor to secure the Bill’s passage. However, the Bill was stranded in Parliament.
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