AGL has thrown down a big challenge to the
fee-gougers chasing infrastructure assets – take a risk instead of just
charging rent and put some cash into the PNG gas pipeline.

There are a number of issues behind AGL
putting PNG gas on hold (somehow you just can’t write that gas has been put on
the back-burner), as summarised by Liz Knight. A bigger-picture matter isn’t covered though as it’s beyond the immediate
commercial horizon: the need for base-load gas-fired electricity generation.

The state premiers yesterday demonstrated
why greenhouse has to be a federal issue as Queensland and WA
baulked at their colleagues carbon trading plan.
John Howard, true to form, tried to cash in on the politics of that.

With “clean coal” remaining more dream than
reality though, the next generation of base-load power stations for Australia
should be gas-fired – and that should provide the base demand the PNG project
needs.

In the meantime, Santos is happy to
stole, the coal-seam gas companies are happy to snipe at the PNG project as it
would lower their prices and the financial engineers rip millions out of
packaging old pipelines. Following yesterday’s Alan Kohler’s column, the AFR’s John
Durie provides another rich example – Bill Ireland’s Mariner Pipeline Income
Fund which is raising $137 million to buy the gas pipeline between the Cooper Basin and Sydney. Writes Chanticleer:

Ireland paid $97 million for the pipeline six months ago.

The funds raised form the
public will pick up that tab plus Mariner’s “transaction initiation fee” of
$21.2 million plus $6.4 million in bridging costs plus a Mariner Guarantee fee
of $5 million plus offer costs of $6.3 million plus Mariner establishment costs
of $9.4 million – space limits prevent more items being added to the list.

Total expenses are $46.7
jillion, according to an Aegis report, or 30.7 per cent of the offer proceeds.

Yep, it’s a rip, but it’s just following in
the footsteps of Macquarie, Babcock and Brown, Alinta et al. Somewhere there might still be a few oddballs not on the gravy train
with funny ideas about national infrastructure, the common wealth of the
commonwealth, the big picture, leadership and the like – but they’re probably
communists.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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