The Queensland government says it will not facilitate a loan for Adani’s proposed coal railway. (Pic by Andrya Hart)
Adani’s plans to secure a $1 billion loan through the Northern Australian Infrastructure Facility (NAIF) for a coal-carting rail line to service the Carmichael mine appear to be in tatters following a weekend statement from the Queensland government.
The Queensland government’s statement that ‘any NAIF funding needs to be between the Federal Government and Adani’ would preclude a loan from NAIF under the current legal framework.
The Commonwealth’s legal power to fund projects through NAIF is granted by a Constitutional power for the provision of financial assistance to the states.
We understand states must agree to the conditions of any financial assistance and any NAIF loan will first be made to the relevant state – in this case, Queensland.
We understand NAIF’s Constitutional limitations mean states must receive the loan money and the states legally become the lender to the project proponent.
Arrangements for NAIF funding are governed by a Master Facility Agreement signed by the States and NAIF. That agreement has been described as a ‘pass-through’ agreement, which means Commonwealth money would flow from NAIF to Queensland, then on to the project proponent.
If Queensland is not a part of any agreement for NAIF funding, then in our view, Adani’s railway line cannot receive NAIF concessional loans under the current legal framework.
The Queensland government’s election commitment not to use taxpayer money for Adani’s coal mine means under its current legal framework NAIF cannot lend money to Adani.
The Commonwealth government established NAIF and promoted Adani’s proposed $1 billion subsidy in a way that directly conflicts with the Queensland government’s commitment not to use taxpayer money for the project.
The Queensland government’s position reflects its pre-election commitments.
It appears to prevent a risky $1 billion subsidy for a commercially unviable rail project.