The Australian Competition and Consumer Commission has issued a draft decision proposing to grant authorisation to Port Waratah Coal Services (PWCS) and Newcastle Coal Infrastructure Group (NCIG) for a short term capacity balancing system until 30 June 2009.
The scheme, called 'PWCS Stage 1 Allocation', seeks to manage the coal vessel queue while the industry develops and implements a long term solution.
Authorisation provides immunity from court action for conduct that might otherwise raise concerns under the competition provisions of the Trade Practices Act 1974. Broadly, the ACCC may grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment.
The ACCC first authorised a capacity balancing system at the Port of Newcastle in March 2004. Over time, the ACCC has become increasingly concerned that the underlying issues contributing to the capacity imbalance within the coal chain are not being addressed by the industry.
Last year the ACCC expressed doubt as to whether an extension beyond 2008 would continue to be in the public interest in the absence of progress towards a long term solution.
"The industry and NSW Government appears to now be making significant progress towards finalising a long term solution in the Hunter Valley," ACCC Chairman, Mr Graeme Samuel, said today.
Since December 2008, various industry working groups have been focusing on key elements of the long term solution. Significantly, the Newcastle Port Corporation is drafting a detailed Implementation Memorandum which will be finalised by mid-late March. Another group is developing a mechanism to align contracted capacity along the Hunter Valley coal chain.
The ACCC is encouraged by the progress now being made, but the industry still has a significant volume of ongoing work to do to develop a 'whole of coal chain' long term solution. The ACCC maintains its view that any unnecessary delays in finalising a long term solution would generate significant public detriment.
"If at any time the ACCC is not satisfied that sufficient progress continues to be made, it will consider revoking the interim authorisation and not granting authorisation in its final determination," Mr Samuel said.
The ACCC considers the Stage 1 Allocation system likely to generate public benefits, including demurrage savings for Australian coal producers and reducing the environmental and safety risks associated with a vessel queue offshore.
To ensure the Stage 1 Allocation system will continue to deliver a net public benefit, the ACCC proposes to grant authorisation on condition that the parties finalise an Implementation Memorandum, which sets out an agreed framework and details how the long term solution will be implemented on a timely basis, and provide a copy of it to the ACCC by 31 March 2009.
The ACCC notes two key differences from the Dalrymple Bay Coal Terminal application which it recently proposed not to authorise: in the case of Port Waratah it is likely that in the absence of a queue management system, an excessive queue will reform; and there is evidence of significant progress in the development and implementation of a long term solution.
The ACCC's draft determination will be available from the ACCC website (follow the 'Public registers' and Authorisations and notifications registers' links).
The ACCC is seeking submissions from interested parties in relation to the draft determination. Please refer to the website for further information about making a submission to the ACCC.
Media inquiries: Mr Brent Rebecca (02) 6243 1317 or 0408 995 408