David Barnden examines why Adani is ineligible for the proposed $1bn loan and the NAIF board must reject the funding.
Adani says it does not need a $1 billion government loan from the Northern Australia Infrastructure Facility for its Carmichael rail project according to media reports. This rules out NAIF’s ability to provide any financial assistance.
To receive support, Adani must demonstrate, to the NAIF’s board’s satisfaction, that financial assistance from the NAIF is necessary to enable the project to proceed.
Adani spokesman Ron Watson said of NAIF funding: ‘It’s not critical. We have obviously applied for it because it’s available… It doesn’t necessarily mean it’s make or break for the project… There’s a certain degree of naivety about the size of this company and the dollars that it has at its disposal’.
Under the NAIF’s Investment Mandate Direction 2016, the NAIF board can only provide support if ‘the proposed project is unlikely to proceed or will only proceed at a much later date, or with a limited scope, without financial assistance’.
We believe that NAIF’s board now has an obligation to reject funding for Adani. It must act independently and in accordance with its mandate. NAIF cannot lend money to politically motivated projects if they would otherwise proceed.
Australia’s most respected financial newspaper, the Australian Financial Review, agrees. Yesterday the newspaper published an editorial arguing against tax-payer support for billionaire Guatam Adani’s projects.
Pic by John Englart