Canberra continues to fork out for OPEL

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Canberra continues to fork out for OPEL

Reaches out of court settlement with telcos eight years on.

Canberra continues to fork out for dumped NBN precursor OPEL - more than eight years after it was cancelled - through an out of court settlement with the consortium stood up to build the network.

OPEL was a Coalition government policy initiative that would have seen a mix of wireless and ADSL2+ broadband rolled out to regional and rural Australia, under a 50:50 joint venture between Optus and Elders Telecommunications.

The $1.9 billion project was to be subsidised by a $958 million contribution from the Howard government.

But when Kevin Rudd’s Labor won government back in 2007, it pulled the pin on the funding, claiming the OPEL contracts weren’t up to scratch.

Labor went on to dream up its national broadband network in OPEL’s place.

But Optus lawyers have been fighting for compensation over the OPEL dumping in the NSW Supreme Court since 2013, and appear to have finally secured a pay day.

The government’s mid year economic and fiscal outlook (MYEFO) reveals the Department of Communications and the Arts has now reached an out of court settlement with the telco and the OPEL liquidators, which has forced it to cover the liability in a 2016-17 budget allocation.

However it won’t reveal the value of the settlement “due to legal sensitivities”.

The perfunctory line-item only states that “the legal action relates to termination of the funding agreement with Opel Network Pty Ltd under the Broadband Connect Infrastructure program”.

The Australian Financial Review reported in May 2014 that Optus and OPEL liquidators wanted $28 million from the government to cover their losses.

The government had previously offered $2.5 million to settle the dispute.

The settlement has officially removed the liability from the Treasury's budget risk register.

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