As part of the government’s stated policy to release capital, improve competition and drive efficiencies on the waterfront, the scoping study for the future lease of Port Botany will be extended to include Port Kembla, Treasurer Mike Baird said.

Port Kembla was thought ready to be privatised after a scoping study for the long-term lease of Port Botany revealed strong bidder interest.

Infrastructure NSW will later this year determine where the $100 million will be spent proceeds from the transaction while the remaining funds from the sale will be invested in Restart NSW.

“Advisors have highlighted the significant value that Port Kembla could bring to the transaction, prompting the government to undertake additional scoping work to review its potential inclusion in the Port Botany transaction,” Baird said.

“After a decade and a half of underspend on infrastructure by Labor, we are facing an immense challenge to fund the backlog of critical infrastructure across our state.

“As a regional port, Port Kembla has significant growth potential that we believe can be more appropriately managed and financed by the private sector.”

Last month the Port Kembla stockyard held about 215,000 tonnes of coal, or roughly a third of its total capacity as queues of ships waited outside the port.

It was out of action for five days in May due to maintenance, which reduced its loading and receival capacity but inadequate rail and road connections were also a contributor to replenishing the terminal’s inadequate stockpile.

NSW Minerals Council chief executive Stephen Galilee said: “We recognise that the proposed lease of Port Kembla will deliver up to $100 million for infrastructure in the Illawarra. The Maldon to Dombarton rail link would have a strong claim for funding under these arrangements.”

Ports Minister Duncan Gay said private management allows port businesses to focus on efficiency and service outcomes such as enhancing the operation of the supply chain.

“Given the growth in trade and freight, it is appropriate to consider the mix of long run port facilities that will best service the growing freight demand in NSW in the decades to come,” Gay said.

“Like the proposed Port Botany transaction, additional scoping work will be undertaken which will provide recommendations on the best way forward and ensure key public interest outcomes are protected.”

The government recognises that the Illawarra has a vital role to play in the state’s economy and would ensure the region receives the infrastructure it deserves, Minister for Illawarra Greg Pearce said.

“The Illawarra continues to be one of the fastest growing areas of the state and the NSW government is determined to see that vital services and infrastructure keep pace with this,” he said.