Page 15 - Week 01 - Tuesday, 9 February 2010
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viable. It was quite stunning to find out during the discussion that AGL had not done their numbers before the project was submitted.
Going to the additional comments that I have placed at the rear of the report, I would like to read a couple of exchanges. I think it is quite amazing to be told that all of the angst, all of the pain and suffering that it caused and all of the cost to government and the community were over a project that did not make commercial sense. You have to ask the question: why was the Chief Minister an advocate of such a proposal? We spoke to Mr Costello and he said:
As I said, AGL felt that it was too small, that if it was going to build a gas-fired power station in the ACT it had to be much bigger to be an economic proposition, to fit into their plans.
I said:
So was 110 megawatts financially viable?
Mr Costello replied:
It was financially viable but it did not make commercial sense …
It was financially viable. That means, as he later explained, that they could pay for it—so financially it was viable—but it did not make commercial sense to build it. The discussion continued and we steered away from it. I brought it back and said:
Can we go back to your statement that you could afford to pay for it but it was not commercially viable. Why wasn’t that known before the DA was put in, the original DA?
Mr Costello replied:
We wanted to put the DA in to get the thing going. I must say, to be fair, AGL seemed to be more interested and later on they came to the view that it was a commercial thing: “We’ve looked at this again and we’ve finally come to the conclusion we don’t think it’ll work.”
What sort of process led to the Chief Minister of the ACT throwing his weight behind a process that the proponent did not think would work and that the proponent did not think made commercial sense? Why did the community go through the angst that it went through when this occurred? It is not like the Chief Minister did not know. The Auditor-General points out in her report, at the beginning of paragraph 2.35:
ActewAGL prepared an economic impact statement for the initial CTC proposal.
Treasury indicated its view that that this document was unreliable …
So not only did we have a proposal that did not make commercial sense and that the proponent had not done the work on but also Treasury’s own analysis was that the data presented was unreliable. In the next paragraph, 2.36, the Auditor-General says:
ActewAGL stated the value of the original CTC project to be around $2 billion.
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