Distribution Lessor Corporation (DLC) was established as a subsidiary of the Treasurer in July 1999 pursuant to the Public Corporations (Distribution Lessor Corporation) Regulations 1999.
The functions of DLC include being the lessor under a lease granted in respect of certain prescribed assets transferred to DLC pursuant to the Electricity Corporations (Restructuring and Disposal) Act 1999.
Prescribed electricity distribution assets of $2.1 billion were transferred from ETSA Utilities Pty Ltd (ETSA Utilities).
Prepaid rentals from the lease of the prescribed electricity distribution assets to external parties were $3.0 billion.
A dividend of $633 million was paid to the Treasurer.
In accordance with section 31 of the Public Finance and Audit Act 1987 and subclause 13(3) of the Schedule to the Public Corporations Act 1993 the Auditor-General may at any time, and must in respect of each financial year, audit the accounts and financial statements of the Distribution Lessor Corporation.
The audit program was directed primarily towards obtaining sufficient evidence to enable an audit opinion to be formed with respect to the financial statements and internal control.
During 1999-2000 a specific area of audit attention was the accounting for the transfer and lease of the prescribed electricity distribution assets.
As required by subsection 36(1)(a)(iii) of the Public Finance and Audit Act 1987, the audit of the Distribution Lessor Corporation included an assessment of the controls exercised in relation to the receipt, expenditure and investment of money, the acquisition and disposal of property and the incurring of liabilities.
Audit formed the opinion that the controls exercised by the Distribution Lessor Corporation in relation to the receipt, expenditure and investment of money; the acquisition and disposal of property; and the incurring of liabilities, were sufficient to provide reasonable assurance that the financial transactions of the organisation were conducted properly and in accordance with the law.
On 12 December 1999, the South Australian Treasurer signed an agreement with Cheung Kong Infrastructure Holdings (CKI) and Hong Kong Electric International Limited (HEI) for the disposal of the assets and liabilities of ETSA Utilities. Although settlement of that transaction did not take place until 28 January 2000, the benefits and risks associated with the business were transferred as at the date of the agreement, ie 12 December 1999.
To give effect to this agreement, assets including prescribed electricity distribution assets as defined by the Electricity Corporations (Restructuring and Disposal) Act 1999, were transferred from ETSA Utilities to DLC.
This transfer, which was made through Ministerial Transfer Orders pursuant to the Electricity Corporations (Restructuring and Disposal) Act 1999, transferred the following assets.
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2000 |
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$’000 |
Prescribed electricity distribution network assets |
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2 069 581 |
Prescribed network land |
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26 493 |
Non-prescribed land and buildings (Angle Park) |
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6 330 |
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2 102 404 |
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Under the subsequent lease agreement with CKI and HEI prepaid lease rentals of $2 980.5 million were received by the State, resulting in:
an accounting profit of $634.7 million with respect to the lease of the network assets;
the receipt of lease income of $21 000 and unearned revenue of $276.2 million with respect to the lease of the network land.