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Hydro Tasmania – Involvement in Controversial Projects


Rosalie Woodruff MP

Rosalie Woodruff MP  -  Wednesday, 9 December 2020

Tags: Hydro Tasmania, Human Rights, China

Dr WOODRUFF - The RTI disclosure that we received on Hydro's involvement in the Karuma dam project in Uganda includes a summary of the project against Entura's so called sustainability code. The table shows that the residual mitigated risk on human rights issues and community outrage was high, no difference to the unmitigated risk rating that Hydro gave the project. Clearly a management decision was made that the high risk of human rights issues and community protest and the medium risk of environmental issues were less important than other considerations. Why was Hydro so keen to ignore those clear risks and go ahead with this project in Uganda?

Mr BARNETT - Entura has an important role to play and has made a significant contribution to Hydro Tasmania's success over a period of time. Entura continues to leverage off Hydro Tasmania's excellent brand locally, nationally and internationally. Diversifying their knowledge and experience it adds value in Tasmania. I know that the CEO would like to respond more specifically to your question. I will refer to the CEO.

Mr ALBERTINI - Entura's role in the Uganda project was relatively minor. We were a subcontractor providing desktop design support and advising on compliance with international design standards. The work was undertaken primarily as a desktop exercise from Australia and has been completed. There is no planned extension of that work. Entura was not involved in any construction activity. While the involvement in the Uganda project was minor an appropriate oversight and screening risk assessment process was undertaken prior to entering the contract. Employees were on site in Uganda for a limited time period following that assessment only.

We have taken the opportunity to review our sustainability screening process and updated that process. We have made a number of enhancements to strengthen the procedures, now specifically including a human rights assessment tool and a compliance training module for staff on the application of that tool.

I note Hydro Tasmania and Entura's involvement in the International Hydro Association's development of its sustainability principles and guidelines. I think any project that we have an involvement in is going to be a better project than us not being involved in it. We accept that we didn't get the balance right in that particular case. As I said we've strengthened our human rights considerations in our sustainability screening tool.

Dr WOODRUFF - Minister, we don't know exactly what the human rights issues that were identified by Hydro associated with the Karuma project were, because they were redacted in this RTI that we received, but they are clearly high. We do know that multiple people had already died working on the project and that Hydro subsequently identified the high risk of human rights issues that were subsequent to those documented deaths. If a high risk of human rights issues isn't enough to stop Hydro going ahead with the project, what is the threshold of human rights issues that would need to be identified to not get involved? Is there anything that would stop Hydro going ahead with the project?

Mr BARNETT - I will pass to the CEO. The CEO has already partially answered that question but the CEO might want to add to that.

Mr ALBERTINI - We take a very sober approach to such matters, environmental concerns similarly. Are there circumstances? Of course there are circumstances. These were decisions made some time ago. I'm sure at the time the decision seemed reasonable. We applied the tool. I don't think we'd make the same decision today. I don't have any more to add to that.

Dr WOODRUFF - Minister, our Right To Information disclosure document has a briefing report on the Karuma hydro power project dated on 13 December 2018. It highlights the importance of Hydro's relationship with PowerChina as the reason for Hydro Tasmania going ahead with the contract. Did that decision help the relationship with PowerChina in the way that it was envisaged to do so?

Mr BARNETT - That's an operational question so I will pass to the CEO. I will add before I pass to the CEO the important role Entura plays, not just in Australia and in Tasmania, but internationally, supporting a range of developing countries to gain access to renewable energy and to the expertise we have in Tasmania.

Mr ALBERTINI - Could I get you to repeat the question, please?

Dr WOODRUFF - There was a Right To Information document that we got from Entura and Hydro. It said that on the Uganda project, Entura made a decision to proceed with the project based on a number of reasons. On the list was the importance of Hydro's relationship with PowerChina, the importance of the Karuma project to PowerChina, and Hydro Tasmania's joint venture negotiations with PowerChina. That was a listed reason why Hydro went ahead with Karuma. Did the decision to go ahead help with the relationship with PowerChina in the way it was envisaged to do?

Mr ALBERTINI - I can't comment on the specifics of 'did that' but we enjoy very strong relationships with a number of Chinese businesses, PowerChina included.

Dr WOODRUFF - There isn't anyone else who was there at the time who could answer this question?

Mr ALBERTINI - We can take it on notice. I would say that we enjoy very strong relationships and supporting Chinese partners or Chinese businesses we have associations with but it wouldn't be a material consideration in how we applied some sustainability principle guidelines to project risk assessments today.

 

Dr WOODRUFF - Minister, as you know PowerChina is a very large company and it clearly has a massive portfolio of projects around the globe. Its subsidiaries include HydroChina, Huadong Engineering, Goldwind and Sinohydro. How many projects has Hydro Tasmania been involved in that also involved PowerChina, or one of its related entities, and which of those projects is current?

Mr BARNETT - Chair, we have an answer to an earlier question regarding pumped hydro and the cost of that. I'm happy if we could put that on the record to kick it off and then we'll come back to Dr Woodruff's question if that's okay.

CHAIR - As long as you don't expect Dr Woodruff to repeat her question.

Mr BARNETT - Of course.

Dr WOODRUFF - Could we maybe answer the question first?

CHAIR - How about after you have answered, Dr Woodruff.

Mr BARNETT - I am very happy to assist; we are very cooperative. I will pass to the CEO and then we will come back to that answer because we're trying to assist the committee.

Mr ALBERTINI - With regard to the specific question, I don't have that number off the top of my head. I can tell you that we own a 25 per cent share in Woolnorth Wind Farm Holdings, which is a joint venture with Shenhua Clean Energy Corporation that owns the other 75 per cent and we continue to progress. We have a shareholding in Musselroe, Bluff Point and Studland Bay and we have been working on the Mount Fyans [?] project as well, but I don't have the specific numbers.

Dr WOODRUFF - Could you take that question on notice, please? That was about the number. Is that okay?

Mr ALBERTINI - Yes, we'll take that on notice.

Dr WOODRUFF - We know that Hydro Tasmania and PowerChina are both involved in, you have mentioned some of these - the Cattle Hill Wind Farm, the White Rock Wind Farm and the massive Kilkoy Solar Farm. This relationship with PowerChina is significant, which you mentioned before, Mr Albertini. What other current projects involve both PowerChina and Hydro Tasmania? Why they haven't been outlined in your annual report?

Mr BARNETT - Thanks very much for the question. I will pass to the CEO.

Mr ALBERTINI - I've just been informed that we've got nothing current and no projects are currently under way.

Dr WOODRUFF - With PowerChina? Okay.

How much revenue was earned in 2019-20 through each one of the Cattle Hill Wind Farm, the White Rock Wind Farm and the Kilcoy Solar Farm?

Mr ALBERTINI - Minister, if I could defer to the CFO?

Mr BROOKSBANK - We'll have to take that one on notice. That's a level of detail that we don't have with us at the moment.

Dr WOODRUFF - Can you take that one on notice?

 

Dr WOODRUFF - Minister, in Sarawak, Malaysia, the Murum Dam, the Bakun Dam and the Baram Dam are all projects that Hydro Tasmania or its staff have assisted with in various ways, including by seconding staff. The company, Sarawak Energy Berhad, has highlighted how crucial Hydro Tasmania was in pursuing what has been a publicly very controversial agenda for Sarawak Energy Berhad. Each of these down projects was highly problematic due to factors, including the displacement of indigenous people, rainforest destruction, the destruction of orangutan habitat, and corruption. With the benefit of a little more hindsight, do you think it was wise for Hydro to be involved in these projects?

Mr BARNETT - This is clearly a matter that's operational. I'll pass to the CEO.

Mr ALBERTINI - Thank you for the question. Entura provides a range of professional consulting services for renewable energy projects in the Malaysian state of Sarawak. Our work in Sarawak is long established. We have a longstanding relationship with Sarawak Energy Berhad, as was mentioned, and it's largely about building local capacity in hydro power development to support their progress of clean energy storage and generation. Just as we've benefited from clean energy, the Malaysian state of Sarawak is looking to do the same. The work that is being done by Entura in Sarawak and other countries showcases Tasmania's expertise to the world and reflects Hydro Tasmania's business values and commitment to creating a sustainable future through the auspices of clean energy.

Dr WOODRUFF - That wasn't the question I asked so I'll ask it again in another way. It is about why Hydro Tasmania continues to be involved and whether it wants to reconsider the appropriateness, with hindsight, of being involved with companies that have created appalling environmental outcomes and damage to communities, and there's been human rights abuses documented. I have a letter here to former prime minister Najib documenting some of the problems on the Murum Dam site in 2013 when Hydro was involved. Does Hydro want to reconsider why it continues to involve itself and enable the dam building that is causing the displacement of communities and irreversibly damaging orangutan habitat?

Mr ALBERTINI - I don't have anything further to add other than we have a longstanding relationship with Sarawak Energy Berhad and we've done outstanding work there in building local capacity to pursue clean energy options for Sarawak.

Dr WOODRUFF - It is deeply concerning to hear that Hydro doesn't have any moral scruples at all on the atrocities it is helping to enable by providing support over a continuous period to companies in Malaysia that are doing so much damage.

In the magazine of the international water power and dam construction industry last year Entura's then Director for International Business boasted about Entura's 'successful working relationship with Sarawak Energy Berhad over many years', saying that they had 'worked directly on a number of hydro power projects'. Why do you think it's something to be proud of to have such a longstanding and productive relationship with a company that is responsible for all of those problematic projects and that has been previously nominated for Greenpeace's Public Eye Award for the most despicable corporation?

Mr ALBERTINI - I'm passionate about renewable energy and as far as I'm aware the globe needs to reduce CO2 emissions. The power sector is a large contributor to CO2 emissions and we're happy to support people pursue clean energy options.

Dr WOODRUFF - At any cost.

 

Dr WOODRUFF - In January 2019, Entura was selected to undertake the role of being the independent review panel for the Baleh dam project in Sarawak. When was Hydro first approached about that role? How much has Hydro Tasmania been paid for it?

Mr ALBERTINI - We would have to take that on notice, minister. I do not have that detail on me.

Dr WOODRUFF - I will put that on notice then. Has the same independent review panel had any involvement, assessment or oversight of the diversion tunnels for the Baleh dam project?

Mr ALBERTINI - Again, minister, I would have to take that on notice. I do not have those specific details to hand.

Dr WOODRUFF - I will put that one on notice too. Minister, through you, probably to the CEO, through some of the questions that I have asked so far, we have covered the extensive relationship with PowerChina and its related entities. That is a long and continuing relationship. It is also clear there is an extensive relationship with Sarawak Energy, going back over a decade with Hydro. You must also be aware that PowerChina and Sarawak Energy themselves have an extensive relationship, that goes back over a decade. Sinohydro is a subsidiary of PowerChina and it worked on the same controversial major Sarawak energy dam projects as Hydro Tasmania. These have been Bakun, Baram and the Murum dams. Sinohydro is the same company constructing the Karuma dam in Uganda. They are also the same company which has constructed a significant element of the Baleh dam project, the diversion tunnels. That is the information we have, you can confirm it.

Do you think Hydro Tasmania's role as an independent review panel for the Baleh project is going to be compromised by the long and extensive relationships with both PowerChina and Sarawak Energy?

Mr ALBERTINI - I would not suspect that we would be providing sound engineering advice and environmental services irrespective of any longstanding relationships. Entura is a science- and engineering based business; that would be the basis of any input we had into those panels. Bringing the IHA, the International Hydro Power Association, sustainability principles to bear, that would be the role, there would be no influence brought to bear with relationships.

Dr WOODRUFF - There are long and extensive contractual benefits that Hydro Tasmania has accrued from its relationships with both PowerChina and its entities, and with Sarawak Energy and the dam projects. Hydro Tasmania is proffering itself and being paid to be the independent reviewer of the Baleh project, when it has already been a substantial beneficiary and has contracts with both those other companies ongoing.

How is it possible that Hydro can present itself as an independent chair? The chair of the independent review panel is Mr Richard Herweynen. I believe Mr Richard Herweynen is the only person on the panel who will be undertaking this review. Why is Hydro Tasmania involving itself in what seems to be, from the outside, a conflict of interest in a nefarious way on some controversial projects in another country?

Mr BARNETT - I would like to expand on a short response I provided earlier with respect to Entura, which is the entity which the member is referring to. The fact is that Entura makes a significant contribution to Hydro Tasmania's success, despite the impacts of COVID 19 and other related matters. Entura will continue to be instrumental in providing support for Tasmanian projects, including additional hydro and wind generation, obviously Marinus and other water-related infrastructure.

I emphasise the point the CEO made earlier today, that we support renewable energy in Tasmania. We also support opportunities for further renewable opportunities in other parts of the world, including developing countries. The CEO has made that clear. The insurer wants to strategically leverage the respected Hydro Tasmania brand and experience, the respected Hydro Tasmania knowledge and understanding and add value to that here in Tasmania and further afield overseas. I will see if the CEO would like to add to that.

Mr ALBERTINI - I wouldn't agree with the characterisation that because of a longstanding relationship we would compromise the environmental and engineering services and expertise that we provide.

In terms of the comment about the lucrative nature, more than half of insurance services are delivered in Tasmania, so more than half of their profitability. A further 26 per cent is delivered on mainland Australia and only 23 percent, a relatively small amount, is delivered in a variety of international projects.

To characterise it as though we are somehow reliant on that relationship and revenue for our underlying performance and profitability, I wouldn't accept that as an accurate characterisation.

 

Dr WOODRUFF - Minister, on the Karuma Uganda project, it's clear that the importance of Hydro Tasmania's relationship with PowerChina was seen to be more significant than the identified high-risk human rights issues in that country in relation to that project. When it comes Sarawak, Hydro Tasmania not only has a poor track record in being involved with problematic projects there but last year was spruiking how its strong relationship with Sarawak Energy landed them the current contract. Both PowerChina and Sarawak Energy have massive future plans for hydro-electric projects. Given Hydro has already demonstrated it's happy to put serious concerns aside to chase future contract opportunities, how can people be assured that the risk assessment activities for these future projects will be truly independent and not just a box-ticking exercise?

Mr ALBERTINI - I disagree with the characterisation in the question that we're willing to pursue those activities. We have discussed the assessment criteria and how we've strengthened our assessment criteria around human rights. We would continue to apply those criteria for all consultancy opportunities in the future, irrespective of who the potential partners were.

Dr WOODRUFF - There's no evidence in Hydro Tasmania's record that you have ever turned down a project for any environmental or human rights risks. You've talked about a new assessment tool. To me, and to the average person who is listening, that sounds like a covering exercise for Hydro. It is a joke that Hydro would get high-risk scores and yet continue to go ahead with projects. What is the point of the exercise? Do you accept that that is exactly what it looks like to the person who is watching?

Mr BARNETT - Some of the points you have made are very strong and concerning. I would like the Chair to respond initially and then we will pass to the CEO.

Mr EVERY-BURNS - I am listening to the question and I am troubled by the assertions because we had no chance to answer it. I certainly was not aware beforehand that such points would be made.

When you say there is no evidence that Hydro has rejected any project on the basis of human rights, I have no idea where that came from, where your statement comes from. Statements ought not be made without backing the assertion. It is an assertion and I find it very difficult to understand.

I believe that projects undertaken by Entura are undertaken for the good of the world, to be honest with you. Entura is bringing a decent and sustainable mantra to projects. If we can improve what goes on in countries that are not doing things well then in my view that is a decent thing to have done. The idea that we are compromised, or that Entura is compromised in what it does because of connections or anything else, just flies in the face of the attitudes that I see from people. It flies in the face of everything that I hear. It flies in the face of our strategic plans. We have no benefit whatever in making money that way. We do not make an awful lot of money that way, in any case.

You may be quoting facts that you know about but these are not things that are self evident to me or many other people. To Entura's customer base it is clearly not either because we are getting jobs around the world from people who are respecting the expertise that we bring.

In my view, you are selectively quoting activities that you have a particular interest in. That is fine. You are allowed to do that. But my selective quoting is to pick up the good news stories. We hear about the projects that are carried on in Samoa, the Solomon Islands, and New Guinea. These are projects that will bring hydro power to the world, will bring benefit to people. If there have been mistakes made along the way then it is right and proper to bring them up, but Entura to my knowledge continues to improve its screening processes and continues to do projects for the right reasons.

Mr BARNETT - I would like the CEO to add to that answer.

Mr ALBERTINI - I just echo Grant's sentiments. I have worked at Hydro Tasmania for 18 years. I have worked three of those years in what is now Entura. It was Hydro Consulting at the time. I never recall the conversation that has the characteristic of anything like what has been asserted.

Hydro is an incredibly values-based business. Everything I have seen go on at Hydro, every discussion I have been a part of, has been heavily values-based. Us building capacity for people to advance their countries and their causes, is a good and just thing to do.

You asked a question, you made an assertion that we have never refused a project through a screening assessment -

Dr WOODRUFF - I asked the question. I did not say that you had not. I asked the question whether you had.

Mr ALBERTINI - I can say 'yes' we have declined involvement in projects using our sustainability screening tool.

Dr WOODRUFF - Thank you. Minister, I have a question about the independent review panel again. Hydro Tasmania is involved in many projects around the world, including, I understand, in India, South Africa and the ones that the Chair mentioned. Some of the countries that I have discussed - Malaysia and Uganda - have been controversial. We are seeking to understand the reasons why Hydro went in? Why it didn't take the flags that were clearly available? What are the reasons for Hydro continuing to work in some of these countries on some of these projects? Not on everything that Hydro does overseas.

My question is, given Entura's role in the so-called independent review panel - which we maintain doesn't sound independent - for the Baleh hydro power project, can you assure us you don't have any other contacts or arrangements with Sarawak Energy Berhad at the moment? Would you rule out taking any other contracts with Sarawak Energy Berhad while you're undertaking that role, including the contracts to do with the Baleh Dam which is related?

Mr ALBERTINI - I think all contracts we have the opportunity to bid for would be done on the basis of applying our sustainability mechanisms, the screening mechanisms for those. Again, I don't accept the characterisation that somehow the chair, Richard Herweynen, is compromised because of an association that we've had with a business. I've known Richard for an incredibly long time. He's a 30-year employee of Hydro Tasmania and I doubt very much that he would be persuaded by a commercial relationship to be derived through a longstanding association with a partner or someone we've done work with previously.

Would we take other work? It would entirely be dependent on our sustainability screening processes and whether it was appropriate for us to be involved, given any role that we might have played or might be playing.

 

Dr WOODRUFF - I believe it was the CEO, Mr Albertini, who said earlier that he has never heard of people in Entura making advisory decisions based on a consideration of the benefits that would flow to one of Hydro's partners. We have this information which I showed before, the 13 December 2018 briefing report which makes it clear that the decision to proceed with the Karuma Dam project was based on including the importance of the relationship with PowerChina to Hydro Tasmania's joint venture negotiations and in particular around working relationships on projects. Clearly in the case of the Uganda dam project it was a consideration. It was one of the things listed and that project chose not to look at the high risk of human rights abuses and community outrage and environmental impacts.

This Baleh hydropower project is major in Sarawak. Leaving aside the person involved, I do not know the man, I am sure he is a terrific engineer and technical expert. Can't you accept that any Hydro employee would be influenced to look favourably on the outcomes of the project for two companies that Hydro Tasmania has had long joint relationships with?

Mr ALBERTINI - I don't think characterising the listing of a serendipitous benefit to a partner as a key consideration in whether we accept a project or not is an accurate reflection of how we would assess it, notwithstanding what's written there. As I said I think it's a serendipitous benefit that someone's mentioned, not a key selection criteria.

We would make our assessments based on the criteria we have in our sustainability principles and the relationships we have and pursue in terms of assessing what's appropriate for Hydro Tasmania to do. It's not a material consideration. Does it fit with the sort of business we want to be, the sort of work that we want to do where we can add value? They're the considerations, clearly broader than that in terms of sustainability and now our augmented sustainability principles around human rights.

I have some answers to previous questions and some clarifications.

Mr BARNETT - If that's alright with you, Chair, an update to further questions?

Dr WOODRUFF - Were they the questions that I asked?

Mr ALBERTINI - They were.

Dr WOODRUFF - Were they on notice?

Mr ALBERTINI - Yes.

Dr WOODRUFF - Okay.

Mr ALBERTINI - Is that alright?

CHAIR - Yes, that's fine.

Mr ALBERTINI - In response to the queries on White Rock wind farm, Kilcoy solar farm, Cattle Hill wind farm: White Rock is being developed by a joint venture of which Goldwind are a party, but not PowerChina. Kilcoy was being developed by Sunshine Energy and not Goldwind or PowerChina. Cattle Hill is a joint venture between Goldwind and PowerChina Australia.

The contracts for Entura are in the order of $480 000 for White Rock and that project is closed; Kilcoy, $220 000, and that project is closed; and Cattle Hill, $880 000.

We currently work with PowerChina and Goldwind. So we're still contracted to the JV of Goldwind and PowerChina Australia but that project has been commissioned and our contract is nearly at practical completion. We're working with Goldwind on another renewable project in Australia for grid connection. I wanted to clarify those questions.

Another question on notice was about the total spend on pumped hydro. Hydro Tasmania's total spend was about $20 million a year to date net of the ARENA contribution. With ARENA's contribution of $5 million, $25 million has been spent on pursuing pumped hydro opportunities.

Dr WOODRUFF - Minister, how are members of the Tasmanian parliament supposed to properly scrutinise Hydro and its other agency, Entura, which is engaging in operations around the world, when there is nothing in the annual report that even provides the basics of these activities? Where they are being done, which partners they're doing it with and what the financial implications are, at a bare minimum? Can you tell us how many countries Hydro has had an involvement in over the last five years and list those countries?

Mr BARNETT - I think it's a little unfair on Hydro Tasmania. Every year we have GBE scrutiny.

Dr WOODRUFF - No, every two years. Incorrect.

Mr BARNETT - For the House of Assembly?

Dr WOODRUFF - Every second year.

CHAIR - They're in the Legislative Council on the alternate year.

Mr STREET - They're scrutinised every year.

CHAIR - By the parliament.

Mr BARNETT - By the Parliament of Tasmania.

Dr WOODRUFF - Not by this committee.

Mr BARNETT - I am outlining it very clearly. We have what's called parliament and questions -

Dr WOODRUFF - No, don't misread my question. I asked about the annual report, the written information, it's not in there.

Mr BARNETT - Chair, I am trying to answer the question.

Dr WOODRUFF - We can't scrutinise it to prepare our questions. Can you at least answer the question I asked about the number of countries over the last five years and a list of the countries?

Mr BARNETT - I am trying to answer the question.

CHAIR - Dr Woodruff, the minister is responding to your question.

Mr BARNETT - On the detail I will pass to the CEO very shortly. Regarding scrutiny it is unfair on Hydro Tasmania to say that they are not scrutinised on the annual report or any other matter. Every day in parliament I can be scrutinised as the Minister for Energy. You can ask questions in the Chamber, House of Assembly or in the Legislative Council. Every year Hydro Tasmania is subject to scrutiny hearings, either in the House of Assembly or the Legislative Council. This happens every year.

The CEO has been comprehensive in the responses to the many questions that the member has asked today. Now we have another question. I am sure the CEO is ready to respond in a very positive and cooperative manner.

Mr ALBERTINI - The Hydro annual report complies with the requirements of the GBE act. The specific details that were requested in terms of an annual report would be considered immaterial and commercial in confidence.

In 2017 we conducted a survey with the Tasmanian community about how they wanted to hear from us. We learnt that people wanted to hear more news and see us more often. In response we've created an e-newsletter and an online blog called The Spill and increased our resourcing and our footprint on social media. We put a lot of information on our website. Our online analytics clearly demonstrate much higher levels of engagement with our social media and The Spill than was ever the case with the annual report. We complied with the requirements and we're very transparent on the activities that we do.

 

Dr WOODRUFF - Minister, to correct the record at the start of this question, PowerChina is involved in the Sunshine Energy Australia's Kilcoy solar farm, and PowerChina owns an 80 per cent stake in Goldwind. That was in response to a comment made earlier. Sorry about that.

My question is about gas. Hydro's annual report on page 52 refers to a number of onerous contracts and specifically mentions gas contracts. Is the onerous contract referred to the agreement with the Tasmanian Gas Pipeline and if so, what is the loss recorded against that contract? Even if it is not, what is the loss recorded against that contract?

Mr ALBERTINI - An onerous contract form is when the cost of providing the requirements of the contract exceeds the anticipated benefit. We have a number of contracts that we term onerous. I think there are currently 52 in total. They include gas contracts, LGC, PPAs and leases.