The govt will loan NBN Co $20bn to finish rollout

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The govt will loan NBN Co $20bn to finish rollout

Cash will prevent looming shortfall.

The federal government will loan NBN Co the remaining $19.5 billion it needs to finish the national rollout under a commercial arrangement.

The government's May budget papers revealed its funding cap of $29.5 billion for the project would run out in the current financial year, once its last payment of $8.8 billion was made to the network builder.

The budget revealed NBN Co would need to raise between $16.5 billion and $26.5 billion from the private sector to complete the rollout. The government said it would not increase its funding for the project.

NBN Co has said over the last six months that it would go to the private sector to raise debt funding to address the gap, but has kept tight-lipped on its progress.

As recently as last week it declined to comment on its fund-raising activities, revealing only that it had received private credit ratings as a first step.

The government today revealed it would provide a $19.5 billion loan to NBN Co to allow it to finish the build.

The money comes at a crucial time for the network builder, which was facing a looming shortfall of $10 billion for FY18.

"To help ensure that [NBN Co] can fully focus on the remaining rollout as it significantly ramps up, the government has decided to provide the remaining funding required to complete that rollout through a government loan to NBN Co Ltd on commercial terms," NBN joint shareholder ministers Mathias Cormann and Mitch Fifield said in a statement today.

The government said it expected the loan to be re-financed by NBN Co on external markets in 2020-21 following its expected future privatisation.

"A government loan on commercial terms represents the most cost effective way to raise the debt and secure funding to complete the rollout of this important national infrastructure project," the ministers said.

The network builder is expecting the entire rollout to cost at least $49 billion by 2020, but is planning for a maximum of $54 billion.

More to come

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