The NBN is about to run out of money

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The NBN is about to run out of money

Company already tapping private sector sources.

The federal government's final injection of public money into the national broadband network will run out at the end of the 2016-17 financial year, budget papers reveal.

The government will spend $8.8 billion, its last payment under a $29.5 billion funding cap for the NBN, before the end of the next financial year.

According to the budget, NBN will need to raise between $16.5 billion and $26.5 billion from the private sector to complete the rollout.

But the budget papers indicate the government may still need to provide extra funding while NBN works to secure the extra money.

The federal government last August said it would not increase its $29.5 billion funding cap despite NBN finding that its construction costs would blow out past its $41 billion estimated price tag.

NBN at the time said it would undertake debt raising from 2017 from private sector sources to address the gap.

Tonight's budget papers reveal that work has begun much earlier than originally planned.

"NBN is currently undertaking the necessary preparatory work on the proposed debt raising,” the papers reveal.

“In the event that NBN is initially unable to raise the necessary debt on acceptable terms, interim funding support may be required."

Being forced to step in could impact the government's underlying financial standing, the budget papers warn.

"Were it required, additional government financial support for NBN would have implications for the fiscal position, for example by increasing assets and liabilities on the balance sheet and, depending on the nature of support, could have positive or negative impacts on the underlying cash balance."

The government has pulled together a taskforce of specialists from the Finance and Communications departments to work out, with the help of independent advice, how to address the funding headache.

The budget papers estimate the cost of cancelling the NBN project would be $9.4 billion.

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