A more epic fossil NAIF for Efic
The Northern Australia Infrastructure Facility (NAIF) was in the headlines in 2017, when it was closely linked with Federal Government attempts to subsidise the Adani Carmichael mine. Its focus on Adani and other fossil fuel projects led to it being dubbed the “Dirty Energy Finance Corporation”, in contrast to the Clean Energy Finance Corporation that was set up to lend money to renewable energy projects. Others called it a “slush fund for fossil fuels” after issuing its first loan to a WA shipping base for the oil and gas industry.
Huge controversy around governance standards stalled its operations and the Palaszczuk Government eventually put a stop to the Adani loan.
But the NAIF never went away and now it is even bigger, receiving an additional $36.9 million in the current Budget. This will cover its operations over the next four years, with an unusually large amount, $25.2 million, also slated for 2025-26.
Along with additional funding, NAIF’s lending remit and processes will be expanded. The changes will widen the scope of projects eligible for funding, allow more risk-tolerant investment and bypass states/territories to lend directly to project proponents.
Greater flexibility of NAIF investment could increase the likelihood that the fund will be used to support more fossil fuel projects. The NAIF recently approved a loan for a 12 Megawatt gas-fired power plant in Darwin under the pretence of ‘energy security’.
In light of this Government’s track record on fossil fuel investment, needing less oversight seems like a bit of a stretch. The Government is currently attempting to derail renewable investment through remit changes to ARENA and the CEFC – should we add NAIF to the list?
Much of the actual work in administering NAIF funds and assessing projects is contracted out by NAIF to Australia’s export credit agency, Export Australia (formerly Efic). Export Australia has a long track record of funding disastrous mining projects such as Bougainville’s Panguna mine, which caused a long civil war, and PNG LNG, which has materially damaged the finances of the Papua New Guinea Government.
In this Budget Export Australia has scored a massive $500 million in funding, announced earlier as COVID-19 support to exporters. The details in the budget papers are considered “not for publication due to commercial sensitivities”, in keeping with Export Australia’s reputation for secrecy. The organisation has not wasted any time – it is already in negotiations for an Australian taxpayer-subsidised loan to a copper mine in Chile.