Loy Yang B coal plant ‘shifted $1 billion offshore’

15 November 2017

According to information revealed by The Paradise Papers and reported by UK newspaper The Guardian, the owner of one of Australia’s most polluting coal-fired power plants quietly moved $1bn offshore within days of receiving $117m from the government in compensation for its carbon tax.
The news has prompted renewed criticism of the ‘chronic failure’ of Australian climate policy and warnings against future cash handouts to multinational polluters.
The power plant in question is Loy Yang B, one of the last remaining brown coal-fired generators in Victoria’s Latrobe valley. It is owned by the UK company International Power, itself a subsidiary of GDF Suez, now known as Engie.
In 2012, to avoid an industry backlash over its carbon tax, the Australian government created a $5.5bn compensation scheme to accompany the tax, which was scrapped in 2014. At the time it was called by the opposition environment minister, Greg Hunt, “the biggest cash handouts in Australian history” made to the companies thought to be the country’s “biggest polluters”.
Loy Yang B’s owner received $116.9m in carbon tax compensation from the government’s energy security fund in June 2012. Within days Loy Yang B’s owner moved $1bn out of its Australian operations as part of “Project Salmon”.
The Australian companies behind Loy Yang B had reportedly used internal loans to give large amounts of money back to their British parent companies in the lead-up to 2012. Project Salmon involved restructuring the debt, so the Australian entities could use the $1bn in dividend payments to cancel the loans.
Engie said at the time that the dividends did not involve the distribution of any cash outside of Australia. It also flatly denied sending any of the carbon tax compensation back to its offshore owners.
“No cash was distributed out of Australia as a consequence of these dividends,” the company said.  “Where dividends were paid in cash they did not include compensation received from the government. Further, carbon tax compensation was not permitted to be distributed overseas under the project finance restrictions and was used to meet the future carbon tax liabilities of Loy Yang B.”
The $1bn dividend payments appear to be at odds with the company’s public statements at the time.



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