The Australian Competition and Consumer Commission has decided to grant interim authorisation* to Port Waratah Coal Services (PWCS) and Newcastle Coal Infrastructure Group (NCIG) to in effect extend the operation of a capacity balancing system (CBS) until 31 March 2009.
The CBS is designed to address the imbalance between the demand for coal loading services at the Port of Newcastle and the capacity of the Hunter Valley coal chain. This imbalance can result in significant ship queues forming off Newcastle resulting in demurrage** costs to the industry.
The ACCC first authorised the CBS in March 2004. In April 2008, the ACCC expressed doubt as to whether an extension beyond 2008 of the CBS would continue to be in the public interest in the absence of progress towards a long term solution.
The ACCC has always considered that CBS are appropriate as short-term transitional measures only and has encouraged all industry participants to work together on a sustainable outcome. In particular, the ACCC has had concerns that the continued operation of the CBS has the potential to result in insufficient investment in the coal chain and substantial losses in export revenues.
"While the ACCC continues to be concerned about detriments that arise from ongoing queue management systems it recognises the significant progress that has been made, particularly through the NSW Government's announcement on 12 December 2008 of a terminal access framework that is supported by all Hunter Valley coal producers," ACCC Chairman, Mr Graeme Samuel, said today.
"The ACCC considers that to be effective, any long term solution must extend beyond terminal capacity allocation to ensure all coal chain contracts, including track and rolling stock are properly aligned and reflect whole of coal chain capacity, rather than just stand-alone capacity of individual components.
"To this end, the ACCC strongly encourages all the relevant parties including producers, rolling stock and track providers, terminal operators and government, to continue to work together to finalise the details of a long term solution as soon as possible," Mr Samuel said.
"Given ongoing concerns regarding the cost of any unnecessary delays in the development of a long term solution, the ACCC has required monthly reports from the applicants detailing progress. Should at any time the ACCC be concerned that there has been insufficient progress towards a long term solution, it can revoke this interim authorisation."
Urgent interim authorisation was requested on 19 November 2008 due to the pending expiration of the current CBS authorisation on 31 December 2008.
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