Aurizon says competition body made 'fundamental errors' in reducing its haulage charges

Written on the 13 March 2018 by Ben Hall

Aurizon says competition body made 'fundamental errors' in reducing its haulage charges

Rail freight operator Aurizon has hit back at a Queensland Competition Authority (QCA) draft ruling which reduced the amount that it can charge to users of the Central Queensland Coal Network (CQCN).

The Brisbane-based company says that under the proposed changes to the network it would earn the lowest regulated return for any major infrastructure asset in Australia.

In its response to the QCA's draft ruling which was issued in December, Aurizon says the regulator made "fundamental errors" to fully understand the risks it takes when operating coal haulage operations.

"Aurizon maintains the very strong view that the proposed rate of return of 5.41 per cent does not promote the economically efficient operation of, use of and investment in, the CQCN," Aurizon says in an ASX statement.

"Nor does it appropriately recognise the operational and other risks associated with the CQCN, in particular, exposure to international demand and coal prices," says Aurizon.

"Aurizon Network's response also identifies fundamental errors and miscalculations made by the QCA and its consultants that ultimately underpin the significantly reduce maintenance allowance of the draft decision.

"(We) continue to stress that the draft decision's position on maintenance, focusing on the lowest cost rather than maximising supply chain throughput by using flexible, commercially appropriate practices, does not represent 'efficient' practice and does not reflect what customers and the broader supply chain are demanding."    

Last month, Aurizon released its half year results which showed it lifted first-half profit by 52 per to $281.5 million from the previous corresponding period but downgraded its full year guidance on coal volumes to 210 million to 220 million tonnes, from 215 to 225 million tonnes because of the QCA draft decision.

The company said the cut in coal volumes could cost the company up to $4 billion.

AZJ shares were trading down by around one per cent to $4.43 at around 11.30am AEDT.
 

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Author: Ben Hall

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