Aurizon fires back at coal industry
AURIZON has fired back at the coal industry and warned of further legal action as the brawl over the Queensland Competition Authority draft ruling on its monopoly central Queensland coal network continues.
The company also fired a shot at the Queensland Competition Authority (QCA), saying the regulatory system was broken and its draft decision on the central Queensland coal network unsustainable.
Aurizon group executive Michael Riches told an investor briefing if the QCA decision on the network was unchanged from its draft decision, a further judicial review was likely.
He also accused the coal sector of being disingenuous and wanting Aurizon to subsidise the industry.
The company also warned its Moody's debt rating could be affected if the draft decision was made final.
The QCA draft decision on the network ruled that Aurizon could earn $3.9 billion compared with Aurizon's submission of $4.8 billion, and to deal with that it has reduced its maintenance schedule on the network which could cut $4 billion worth of exports.
The impact on earnings before interest and tax is expected to be about $100 million a year.
Aurizon has also lodged a Supreme Court judicial review of the draft decision alleging apprehended bias of the then QCA chairman Professor Roy Green, who announced a few days after handing down the draft decision that he would be working for a competitor, the Port of Newcastle.
The coal industry this week announced it would join the legal action in support of the QCA and attacked Aurizon as threatening the reputation of the Queensland coal industry.
Mr Riches said the draft decision on the rate of return on the network was "incomprehensible'' and unsustainable and warned it could lead to a significant reduction in capital and a further potential impact on throughput above the 20 million tonnes that has already been announced.
He said the company's relationship with the customers at an executive level was strained but after the current issue was resolved, the regulatory system in Queensland needed reform.
"It's extraordinary that with a quarter of the regulatory period already gone we still have no final decision (from the QCA),'' Mr Riches said.
"The regulatory approach and process from the QCA is symbolic of a broken system.''
He said Queensland had to "break the shackles'' of a system of confrontation.
"We will continue to impress on the QCA the need to overlay with any theoretical formula with commercial reality,'' Mr Riches said.