THE financial woes of the state government’s commercial forestry arm VicForests have deepened, with it forced to go back to Treasury for a bigger loan.
VicForests’ line of credit with Treasury has doubled in three years, from $12.5 million in 2009 to $25 million this year, as the company struggles with cash-flow problems.
The deepening financial problems at VicForests follow the release of a report by forestry consultants URS, commissioned by Treasury, which found the company cannot manage its costs.
In response to a question on notice from Greens upper house MP Greg Barber, Treasurer Kim Wells revealed VicForests had returned to Treasury for more cash.
Mr Wells said VicForests’ line of credit with Treasury was drawn down by $19.9 million on March 3, with four months still to go in the current financial year – slightly more than the total at the end of the previous financial year.
”This short-term working capital facility enables VicForests to smooth the timing of its cash receipts and payments,” he said.
Mr Wells said the increase had been approved by the previous treasurer, John Lenders.
The previous increase in VicForests’ line of credit, from $12.5 million to $22.5 million, was described as an ”emergency” action in URS’s report, which was released in February following a freedom of information application from BusinessDay.
The report also found that VicForests has fallen behind in regenerating forest after logging. VicForests reseeds logged areas and hands them back to the Department of Sustainability and Environment.
URS said the area harvested but not yet given back to the Department of Sustainability and Environment had blown out from about 5100 hectares in 2004-05, VicForests’ first year of operation, to more than 15,900 hectares in 2008-09.
Originally Published at http://www.theage.com.au/business/vicforests-has-credit-extended-20110410-1d9bp.html