Friday 22nd Nov, 2019

Aurizon still working with stakeholders on CQCN agreement


Operator Aurizon says it’s still working with its coal mining customers towards an acceptable agreement for access to its Central Queensland Coal Network (CQCN), after successfully lodging for an extension from the state’s competition regulator.

Aurizon has been locked in a lengthy battle with the Queensland Competition Authority (QCA), over how much it is allowed to earn from its operation of the CQCN – with the sides’ initial proposals roughly $1 billion apart in terms of revenue allowed over the contract period.

The AFR last week exclusively reported Aurizon had given up its fight for a better deal, amid pressure from coal miners who are angry at Aurizon’s claims the QCA’s terms will demand it cut capacity on the network by as much as 20 million tonnes each year, to meet new maintenance costs.

But the company responded to the report on February 1, saying it was in fact still working to secure a conforming access undertaking, which it would negotiate with its customers.

“Aurizon notes the QCA decision yesterday to provide an extension until the 18th of February 2019 for Aurizon to lodge a conforming access undertaking,” the company said in a short statement. “Aurizon continues to engage with stakeholders and the QCA on the regulatory process.”

Aurizon said in December 2018 it would work towards an agreement with its customers, after the QCA handed down a final decision that – while improved from the original draft – was still far from Aurizon’s desired terms.

Aurizon was initially given 60 days to respond to that final decision, and the media report from last week suggested it would eventually accept the terms.

However the new extension to February 18 would suggest Aurizon still believes it has a chance to secure a better deal through its negotiations with customers.

The QCA’s final decision from December allows Aurizon a maximum allowable revenue over the four-year term of $4.123 billion, almost a quarter of a billion dollars more than what was allowed under the QCA’s draft decision, but still $728 million lower than the revenue Aurizon originally argued it should be allowed to earn, and $588 million below the revised figure Aurizon suggested in its first response to the draft decision in March 2018.

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