Port of Melbourne sale to go ahead

After six months of negotiations, the Victorian government has reached a deal with the opposition to push forward legislation enabling the privatisation of Port of Melbourne, Australia's busiest port. 

The legislation is expected to pass through parliament this week, with the government set to launch the sale shortly thereafter.

The state hopes to rake in proceeds totalling at least A$5.3 billion ($4.0 billion; €3.6 billion), the previous government's previous forecast. The transaction is expected to be finalised by 2017. 

After legislation was first presented last May, the port was supposed to hit the market by end of this month, but the government and the opposition have been deadlocked over the lease's terms since November.   

Last month, the Andrews Labour Government proposed to amend the bill to restrict compensation to 15 years from lease commencement, instead of offering compensation until the end of lease term, as was the case in the original proposal. 

Victoria Treasurer Tim Pallas said the amendment will “ensure a level-playing field to allow ports to compete head to head without the distortion of state subsidies and will provide investors with confidence on likely outcomes.” 

He has denied the price would suffer from the delay and argued that “changes around compensation and port licence fees wouldn’t detract from the sale price given interest in the asset was strong”, according to local reports.  

The sale's proceeds will be used to fund a A$5 billion programme aimed at removing 50 railway level crossings. The deal also includes spending up to A$700 million, or 10 percent of the sale proceeds, on improving regional transport infrastructure. 

Opposition leader Matthew Guy confirmed on Wednesday that the proposed amendments had been accepted. 

Pallas also told press sources that there would be no restriction on the participation of foreign bidders. Concerns over foreign ownership had first been aroused by the award of a century-long lease for Port of Darwin to China's Landbridge Group for A$506 million last October.

Australian fund managers including Hastings, Macquarie Infrastructure and Real Assets, IFM Investors and QIC are reportedly in talks with AustralianSuper and Canadian pension funds with a view to taking part in the auction as consortia.