Treasurer Mike Baird says sale of Eraring and Shoalhaven power plants to save $1.75billion

THE NSW Government has announced a sale of one of its electricity generators to Origin Energy for just $50 million.

Eric Roozendaal

THE NSW Government has announced a sale of one of its electricity generators to Origin Energy for just $50 million.

But under the deal it has saved the state liabilities of $1.75 billion, because it does not now have to proceed with building the Cobbora Coal Mine.

The deal to build Cobbora was a controversial aspect of former Labor Treasurer Eric Roozendaal’s partial sale of electricity assets in 2010, in which he kept going with the sale even though electricity board directors quit.

Treasurer Mike Baird announced this morning that the Government has sold Eraring Energy to Origin Energy and, “in exchange for a payment to Origin, has terminated its obligation to develop and operate a coal mine at Cobbora”.

"The O'Farrell Government has unwound the dud deal of the century that was executed in Labor's dying days in office," Mr Baird said.

"As a result, taxpayers will no longer be exposed to hundreds of millions of dollars in potential damages payments under Labor's so-called GenTrader agreement with Origin Energy.

"Nor will taxpayers be required to develop and operate a coal mine at Cobbora, in central western NSW, which would have cost more than $1.5 billion.

“Overall, at a net cost of around $75 million, taxpayers will avoid liabilities of over $1.75 billion, which were part of Labor’s disastrous legacy.”

The transaction includes the sale of Eraring Energy’s assets, the Eraring power station and Shoalhaven Hydro power station, for $50 million, “which is above their retention value to the State”. The electricity generated by Eraring Energy was sold by the previous Labor Government in 2011.

The government has also announced plans to sell the Macquarie Generation plant and Delta West and hope to raise $3 billion from those sales.

It has yet to make a decision on selling the rest of the electricity networks, or “poles and wires”, which could yield $10-15 billion in net proceeds and pay down $20 billion in debt.