SFG Share price jump. Massive potential, page-82

And we've discussed at length on these forums, I'm reasonably certain that view is wrong

So let's be clear by what we mean "the project" means PSD, which is "the stuff that results in prawns growing to be sold to make us money", and that project will rely on stuff that I will call "ancillaries", this is roads, ports, comms networks, electrical stuff and the like.

So, ok, sure, SFG might apply for money to support the project, but they're likely to get knocked back on account of mandatory criterion 1 or mandatory criterion 2.

Mandatory Eligibility Criteria:

1. The proposed Project involves construction or enhancement of Northern Australia economic infrastructure
2. The proposed Project will be of public benefit
3. The Project is located in, or will have a significant benefit for northern Australia
4. The loan will be able to be repaid, or refinanced
5. Indigenous engagement strategy

The reason I say they're likely to get knocked back for direct finance for the project, (PSD) is because we need to consider these criteria in the context of what "economic infrastructure" means. Each agency has it's own specific definition that fits it's purposes. For instance, DFAT and AUSAID say economic infrastructure means "...transport, energy, large–scale water and sanitation, and ICT infrastructure investments". Infrastructure Australia defines "economic infrastructure" as "infrastructure that will materially improve national productivity. This definition includes roads, bridges, railways, harbours, water and sewerage and telecommunications." and the Reserve Bank holds that "Economic infrastructure (such as utilities, transport and communications networks) provides essential services to individuals, households and businesses, and influences the efficiency of an economy."

So while none of these is exactly identical, we see the themes emerging: transport stuff, energy, water and sanitation, and communications networks. This fits what I've defined above as the ancillaries - it does not include privately-owned prawn farms. The "privately-owned" nature of PSD, scotches mandatory eligibility criteria 2 (please note, privately owned obviously includes a private asset owned by a listed company).

Where PSD might stand a chance for NAIF funding would be for the ancillary works that could be shared by other projects - in terms of power, transport, energy, water (although Legune was specifically picked because it already had all the necessary water infrastructure), maybe some additional mobile phone towers might be permissible under "other considerations" - specifically the "effect of project on other infrastructure"

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Other Considerations:​

The Board must be satisfied that NAIF’s return on the facilities it advances will cover at least the Commonwealth’s cost of funding and NAIF’s administrative costs.​

The Board will also have regard to the potential effect of the project on other infrastructure and of the NAIF’s financing on the Australian infrastructure financing market and on the potential of the NAIF investment to encourage private sector participation in financing the project.​

But there is a catch when we consider the act that established the NAIF (available at https://www.legislation.gov.au/Details/C2016A00041), things get even worse, because the NAIF can only fund projects run by the states and territories - not private investments.
Part 2, section 7 of the NAIF act says:

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mce-anchor7 Functions of Facility​

(1) The functions of the Facility are:​

(a) to grant financial assistance to States and Territories for the construction of Northern Australia economic infrastructure; and​

(b) to determine terms and conditions for the grants of financial assistance; and​

(c) as agreed between the Facility and the States and Territories, to provide incidental assistance to the States and Territories in relation to financial arrangements and agreements related to the terms and conditions of the grants of financial assistance.​

That means the NT Government has to get the financial assistance from the NAIF to build stuff that might be useful to the project - and can be shared with other users in the area.

And, if that's not enough for you, the Minister's direction to the NAIF (which has the power of law) published this year (available at https://www.legislation.gov.au/Details/F2018L00567) makes those eligibility criteria even more strict in schedule 1...

There may be a crack of light in 1b -

	Column 1	Column 2
0	1. The proposed Project involves construction or enhancement of Northern Australia economic infrastructure.	The Board must be satisfied that the Project incorporates (in whole or in part) construction or enhancement of physical structures, assets (including moveable assets) or facilities which underpin, facilitate or are associated with: (a) the transport or flow of people, goods, services or information; or (b) the establishment or enhancement of business activity in a region; or (c) an increase in economic activity in a region, including efficiency in developing or connecting markets; or (d) an increase in population. The Project must bring new capacity online either through the construction of new infrastructure or by materially enhancing existing infrastructure. The refinancing of existing debt that does not involve the creation of new capacity is ineligible.

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But I'm not convinced. When you consider 1b in the context of the rest of MC1 and the meaning of "economic infrastructure" a prawn farm wouldn't be a good fit - establishing a community-owned ISP might be a good fit, or a toll-road maybe, NAIF has already been involved in some rail lines between some mining areas (where multiple mining companies share a line rather than building their own). But even if you could squeeze a prawn-farm through 1b, things would fall apart when you got snookered by MC2:

	Column 1	Column 2
0	2. The proposed Project will be of public benefit.	The Board must be satisfied that the Project will produce benefits to the broader economy and community beyond those able to be captured by Project Proponent. In assessing public benefit, the Board may, without limitation, consider whether the Project will have the capacity to serve multiple users (either immediately or during the expected life of the Project).

So, PSD might be able to use NAIF for something like port-works, road, rail, or as I believe they'll try - for the electrical infrastructure, the farm itself would not fit this definition of "public benefit".

As I say, participants in this forum have discussed the NAIF at length, and a lot of people here disagree with me - but they're yet to provide a rationale that could get through Senate Estimates.

If I'm completely honest, I suspect most of the objections of my interpretation of the NAIF rules is based more in hope that I'm wrong than any deep understanding public administration and pork-barrelling jargon.