Brookfield and CBH face arbitration on long-running dispute


Two years of negotiation on WA rail access deal sees state limp through with extensions

Brookfield and CBH face arbitration on long-running dispute
CBH has an extension of the interim deal with Brookfield Rail.

 

One of the nation’s more intractable freight contracts remains to be finalised but Brookfield Rail and CBH Group have at least signed an interim access agreement extension.

Two years of sometimes acrimonious negotiations over Western Australian grain rail, between agribusiness CBH and infrastructure operator Brookfield, sees access assured for next calendar year.

It comes as this year’s harvest in the state is already underway and ends amidst haulage of next year’s harvest.

But there are further developments in the offing both in the state and perhaps nationally through the Australian Competition and Consumer Commission (ACCC).

"The next step in finalising the long term access agreement process is the commencement of arbitration under the auspices of the Economic Regulatory Authority, which Brookfield Rail is looking forward to commencing as soon possible," Brookfield Rail CEO Paul Larsen says.

"We recognise and respect the role of the ERA in this process as, in effect, the State's pricing 'umpire' and we look forward to working under its decisions following arbitration.

"The key objective for Brookfield Rail is to provide certainty for CBH, and by extension its farmers, through the provision of a safe and reliable rail network throughout regional WA, and that is what we remain committed to."

Though CBH was able to negotiate access to one line that had earlier been refused, the Tier 3 block of minor lines remain closed.

"The deal increases the cost of access by CPI on the lines offered as CBH and Brookfield Rail go through the process of obtaining a long term access agreement through the ERA," CBH general manager of operations David Capper says.

"The proposal includes a continuation of access to all Tier 1 and Tier 2 rail lines with CPI increase, with the agreement including the Miling Line.

"Brookfield Rail had flagged some time ago that they were not planning to offer access to the Miling Line in the future so this a great outcome for the grain growers of WA.

 "However, no access to Tier 3 lines was offered, which is disappointing for the growers in Tier 3 areas."

CBH has agreed to a fixed cost component which will increase freight rates for sites on the Miling line $0.30- $0.40 per tonne above the estimated freight rates published in October.

"This increase will affect growers who deliver to Miling, Bindi Bindi, Piawaning, Yerecoin, Calingiri and Bolgart; we want growers to have that information as soon as possible so they can factor that into their decision making for harvest deliveries," CBH says.

 "We have an obligation to protect the reputation of the WA grains industry as a secure origin and get growers grain to market on time and this agreement will ensure marketers are serviced throughout the busiest shipping period of the year which falls from January through to April.

"The certainty of having another 12 month contract allows us to continue with harvest planning.

WA rural lobby group WAFarmers prevent disruptions in the supply chain from up-country sites to port, and will ease concerns over potential trucking chaos on country roads.

WAFarmers president Dale Park believes the signing of a new agreement would create much needed certainty of access for grain producers.

"The agreement is a huge relief for farmers on the network, as they can now focus solely on this season’s harvest," Park says.

"When CBH’s locomotive fleet was forced off the rail network for 18 hours in early May this year, it was because an agreement could not be reached.

"It caused much anxiety for producers and traders alike and resulted in a 14 per cent increase in access charges for farmers which, understandably, caused some distress.

"We are pleased that a similar situation has been avoided this time around."

The dispute between Brookfield and CBH, which began in late 2013, had gone on long enough and that it was time for a long-term agreement to be reached.

"As the state’s largest and most influential agricultural advocacy group, we have had a keen interest in the proposed takeover of Asciano Limited by Brookfield, as well as the Economic Regulation Authority review of the Railway (Access) Code 2000," Park says.

"We are pleased that an interim arrangement has been made, especially surrounding the uncertainty in rail regulations.

"WAFarmers now implores Brookfield and CBH to come to a long-term agreement that would continue to provide farmers with a low cost and efficient pathway to port, at the same time as keeping the farmers’ best interests in mind."

WAFarmers awaits the final ACCC announcement, expected on December 17, and says it is hopeful that scrutiny of the proposed takeover remains systematic and transparent.

You can also follow our updates by joining our LinkedIn group or liking us on Facebook