State Cabinet met yesterday morning to discuss the crisis and despite a $4.5 million payment to NRG to purchase gas to keep its Osborne power station running, the Government said it would have to assume liability for a loss-making power deal.
Treasurer and Acting Premier Kevin Foley said South Australia lost $120 million when Osborne was privatised, under discounts and guarantees offered by the former Olsen Liberal Government, and there was potential for $140 million in losses if the company collapsed.
"As a condition of the sale the former Liberal Government provided a guarantee of the obligations of Flinders Osborne Trading (an NRG offshoot) to the operators of the Osborne power station, supported by a counter-guarantee… from NRG Energy Inc," Mr Foley said.
"By taking on this liability, NRG discounted the price it paid for the Port Augusta power station by the value of the expected losses - approximately $120 million.
Mr Foley said NRG Inc has since run into money troubles and is on the verge of bankruptcy with South Australian taxpayers facing the "worst nightmare".
"If Flinders Osborne Trading goes into voluntary administration, under the guarantee of the former Liberal Government, this Government becomes liable to pay. I have been advised the value of this liability could be at least $140 million," Mr Folly said.
