The imminent business case from NBN Co is expected to be delivered to government before an official response to the $25 million NBN Implementation Study from McKinsey & Co and KPMG is released, reversing previous statements from communications minister, Senator Stephen Conroy.
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In what became a series of heated blows between Conroy and opposing senators, a Senates budget estimates hearing into the National Broadband Network (NBN) and the operations of NBN Co revealed that chief executive, Mike Quigley, would shortly deliver the business case to government pending approval from the board. However, Liberal senator, Ian McDonald, questioned the order of process for the company and release of documents. McDonald cited a response from NBN Co to a question put on notice from a previous Senate estimates hearing that stated:
“The government has advised NBN Co to delay the submission of its business case and corporate plan until: the government has considered its response to the NBN Implementation Study and technical and business planning inputs from NBN Co and, the government and NBN Co have fully considered the implications of the financial heads of agreement and the definitive agreements with NBN Co and Telstra.”
The response, first delivered on 27 July but only received by Senator McDonald this week, was valid at time of writing, according to Conroy, but had since become outdated.
Peter Harris, Secretary of the Department of Broadband, Communications and the Digital Economy, told senators at the hearing that the pressures of time on NBN Co meant the government required the business case ahead of the conclusion of the two pre-conditions previously stated.
“Given where we are right now, we’re in October, they’ve got a commitment to obviously start a rollout sometime next year, they have to have a business case approved, we’ve got a bunch of recommendations from McKinsey which need to be further considered by the government,” he said. “We’ll put the business case and implementation study recommendations together and we’ll get an outcome from that process from the government.”
While Quigley repeatedly stated throughout the hearings that NBN Co had not assumed any legislative or other binding matters, the delivery of the business case would require the wholesaler to assume whether or not the $9 billion non-binding Financial Heads of Agreement with Telstra is approved in June next year.
“There is content within that which enables NBN co to proceed to frame a business case on the assumption that the non-binding heads of agreement will become a completed heads of agreement,” Harris said.
Quigley would not rule out whether the business case would be revisited if or when the agreement is finalised.
While the government’s response to the NBN Implementation Study is expected to be released publicly, Conroy has stated NBN Co’s business case will not be entirely released due to potentially commercially sensitive aspects that the wholesaler did not wish were made available. Instead, the government will release certain portions of the document - including costings and the rollout timeline for the NBN - before the end of November.
Quigley also revealed at the hearing that NBN Co is expecting an equity injection of $350 million from the government by the end of 2010 which, in addition to the $662 million received so far, would increase the total equity injection to just over $1 billion to date. The new funding is expected to be utilised to award key supply contracts worth over $2 billion, as well as the purchase of key operating and billing support systems that the NBN Co chief has previously said are being tailored specifically to the company.
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