Aust'n state hopes to raise 4.5 billion U.S. dollars with Melbourne port sale

An Australian state government has launched the privatization of Australia's busiest container and general shipping dock, putting a 4.5 billion U.S.-dollar price tag on the Port of Melbourne.

The Victorian government will start fielding bids from domestic and international suitors from Monday for the port, after it managed to push the sale through parliament after 18 months of protracted negotiations with the Opposition.

Foreign companies will be allowed to bid for the port -- but will be subject to tighter regulations, as announced by Australia's Treasurer Scott Morrison on Friday last week. From March, the Foreign Investment Review Board (FIRB) will have to approve all state sales of critical infrastructure to international vendors.

"The lease will make our port even better, increasing efficiencies and competitiveness, and will reinforce Victoria's position as the freight and logistics capital of the nation," the state's Treasurer Tim Pallas said in a press release on Monday.

Following the sale of the Port of Darwin to Chinese company Landbridge last year, it is understood that a number of other Chinese-backed groups have already shown interest in acquiring the port. Other media reports suggested two Australian investment-fund corporations, IFM and Hastings, will also tender a bid.

"We're moving to market quickly because of the strong bidder interest in the Port of Melbourne and we're confident the lease will deliver significant, long-term economic benefit to Victorians," Pallas said.

Originally, the 50-year lease was set to guarantee the buyer that a new port would not be built over the life of the contract, without receiving appropriate compensation.

But, earlier in March, the Opposition knocked that figure down to 15 years, a blow that Pallas acknowledged would "undermine" the asset's value for prospective buyers.

However, under the Federal government's new "privatization bonus" scheme, encouraging state governments to fund major projects themselves, it is believed Victoria will recoup almost 760 million U.S. dollars or 15 percent of the total sale.

The Victorian government, led by Premier Daniel Andrews, is attempting to fund many key election promises through the deal, including the removal of 50 of the state's most dangerous level rail crossings.

The Andrews government is expected to announce its preferred bidder by the end of 2016, and finalize the deal by the middle part of 2017. Endit