The Australian Competition and Consumer Commission has granted authorisation* to Dalrymple Bay Coal Terminal to extend their vessel queue management system for a limited period only, ACCC Chairman, Mr Graeme Samuel, said today.
When authorisation was granted in 2005, the QMS was proposed as a short term measure to manage the vessel queue while investment and capacity expansions took place. It appears that industry has been slow to address the underlying contracting and capacity issues that exist in the Goonyella coal chain.
The ACCC is concerned that the continued operation of the QMS has the potential to impact upon investment in the coal chain, reduce incentives for industry to develop a long-term solution, and reduce the likelihood of competitive entry in above rail haulage services. As such, there are significant doubts as to whether the QMS will deliver a net benefit beyond 2008.
However, in the short term, the ACCC is satisfied that the QMS is likely to result in a net public benefit by reducing deadweight demurrage** costs and improving economic efficiency. The ACCC is also mindful of the benefits associated with reducing environmental risks and providing the opportunity for industry to develop a long term solution.
The ACCC notes that some progress has been made towards implementing the recommendations in the O'Donnell Review, including the appointment of people to coordination roles and a review of current contracting frameworks.
Going forward, the ACCC considers that the contractual framework that underpins the functions of the Goonyella coal chain needs to better reflect the operational realities and provide sufficient certainty to underwrite necessary investment.
The queue management system is designed to address the imbalance between the demand for coal loading services at the terminal and the capacity of the Goonyella coal chain. The imbalance has resulted in a large queue of vessels forming off the coast at Dalrymple Bay.
The QMS essentially rations the amount of coal each producer can export through the terminal on a pro rata basis so that the overall amount handled by the terminal better matches the amount that can be delivered by the coal chain. This is designed to reduce demurrage costs that arise from an excessive queue, while maximising exports.
The determination and applications for authorisation will be available by following the Public Registers and Authorisations Register links on the ACCC's website.