Federal government over-ruled on Port of Newcastle charges

CHARGES to ships visiting Newcastle may be set by federal regulators after the Australian Competition Tribunal over-ruled a decision by Mathias Cormann that allowed the privatised Port of Newcastle to set its own charges.

The eventual outcome will swing on whether the private operator of the port – Port of Newcastle (PoN) lodges an appeal against the decision,  which it said on Tuesday afternoon was being considered.

Mr Cormann was acting treasurer at the time the decision was taken, and he was following a decision by a lower tribunal, the National Competition Council, to reject an application from coal company Glencore.

Glencore had gone to the council, seeking to have the port declared as monopoly infrastructure under a federal policy known as the National Access Regime. It complained the company in charge of the privatised Port of Newcastle had lifted its charges to shippers by an average of 40 per cent soon after taking over. 

It argued that PoN was exerting “monopoly power” over the harbour’s shipping channels, and had an “unconstrained price and terms-setting ability” for its services. Higher prices would “materially impact on the profit margins of coal producers operating in the Hunter Valley, particularly in the current operating environment given many mines are cash flow negative”.

PoN told the tribunal it did not have an “unfettered incentive and ability to extract as much revenue from coal producers as possible” because the port had had substantial excess capacity and the operator’s pricing policy had to “balance volumes and revenues”.

It pointed out that the National Competition Council had accepted its arguments that it would have “an incentive to maximise the flow of coal through the port so as to capture as many benefits from this as possible”.

Responding to the decision, Stephen Galilee of the Minerals Council of NSW said it “sends a strong message that monopoly owners of infrastructure should not use their monopoly position to impose excessive and unreasonable fee increases on their customers”.

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