Aurizon unhappy with regulator decision on Queensland coal haulage

Aurizon says a regulator’s draft ruling on the pricing of access for coal haulage to its rail network offers insufficient returns.

Aurizon laying tracks in central Queensland

Aurizon Holdings said returns offered under a preliminary decision by Queensland state’s competition authority on the pricing of access to its rail network are insufficient, and that the regulator “fundamentally fails” to recognise the risks it faces operating the coal haulage routes.

Under the latest so-called access undertaking, Aurizon (AZJ) would be allowed to collect a maximum revenue from the Queensland coal network of $3.89 billion for fiscal years 2018 through 2021, $1 billion below what Aurizon proposed.

“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 (Central Queensland Coal Network),” Aurizon said in response to the draft decision.

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

The company in February downgraded fiscal-year guidance on coal volumes to 210 million-220 million tonnes, from 215 million-225 million tonnes. This was “the result of Aurizon Network progressively implementing operational and maintenance practices that are aligned with the draft decision,” it said.

Aurizon said the regulator hasn’t yet provided a time frame for its final decision.

Dow Jones Newswires