NEWS: Newcastle can pay a mere AUD$13 million to rid itself of container restrictions

The NSW government's regulatory body, IPART, has decided that the Port of Newcastle can settle its container trade restrictions by making a single payment of $13 million. This payment would absolve the port of future obligations to reimburse NSW Ports, the owner of Botany and Kembla ports, for exceeding a specified container trade volume.

IPART Chair Carmel Donnelly explained that the payment amount was determined in compliance with the Port of Newcastle (Extinguishment of Liability) Act 2022.

The assessment considered how the inclusion of the reimbursement provision would impact the financial value of the port's operating rights and asset lease for 98 years. The privatization of the Port of Newcastle in 2013 and subsequent leasing for 98 years at A$1.75 billion, alongside the sale of Botany and Kembla ports for A$5.07 billion on a 99-year lease, was initially clouded in secrecy but later revealed by an anonymous source.

The agreement entailed compensating NSW Ports for container movements exceeding a set threshold in Newcastle, with the new lease owners required to reimburse the NSW government.

The NSW government, before the 2023 election, enacted legislation to enable Newcastle to eliminate its liabilities by paying a premium. IPART has now set this premium at A$13 million, though the NSW government's liability to NSW Ports remains. Recent projections suggest that the NSW taxpayer may face substantial compensation costs to NSW Ports if Newcastle establishes a competitive terminal, ranging from A$600 million to $4.3 billion.