The NAIF is reevaluating $3.8 billion in loans for possible taxpayer risk. 

The Northern Australia Infrastructure Facility (NAIF), originally established as a $5 billion fund by the former Coalition government with an additional $2 billion from Labor, is now in a frantic scramble to assess $3.84 billion in loans. 

The urgency stems from growing concerns about the escalating risks to taxpayers due to cost overruns and surging interest rates.

CEO Craig Doyle has issued a stern warning, indicating that NAIF may withdraw support for up to $840 million in approved loans (pending final approval) should projects be deemed too perilous. 

This comes as costs have soared by a 40 to 60 per cent over the past two years.

The collapse of the Kalium Lakes potash project in Western Australia in August sent shockwaves through NAIF. It prompted the board to contemplate scrapping a $490 million loan for another salt and potash endeavour in WA, backed by billionaire Kerry Stokes. 

The Kalium Lakes project had already syphoned $83 million in taxpayer funds before its downfall.

“If things are changing we might have a closer look. We might just drop off and choose not to fund because it is too high a risk,” Mr Doyle has told reporters.

The NAIF, set up to stimulate economic development in northern Australia, is now scrutinising its previously approved projects to ensure compliance with specified conditions before drawing down taxpayer-funded loans.

In addition to the Kalium Lakes potash project, which recently entered receivership, several other NAIF projects have encountered cost overruns. 

These include Metro Mining's bauxite mine expansion in North Queensland, backed by a $47 million loan. Metro Mining is currently navigating its final investment decision.

Doyle, who has led the NAIF for the past 15 months, expressed surprise at the relatively low number of impaired loans from the taxpayer-funded institution. 

The NAIF was established in 2016 to support riskier projects that struggle to secure private financing. 

The NAIF has allocated $3.84 billion to 29 projects, with 25 reaching financial closure and being eligible to draw down on loans. However, only $1.6 billion in loans has been disbursed to date. 

The largest NAIF loan, amounting to $610 million, was granted to Genex Power's Kidston pumped hydro project in North Queensland, while the smallest loan of $7 million went to the Humpty Doo Barramundi farm in the Northern Territory.

Despite early criticism of NAIF for slow disbursements, Doyle asserted that this concern was no longer relevant. 

In the first six years of operation, around $600 million in loans were disbursed. Last fiscal year saw another $600 million, with a similar amount expected this year.