CBH long-term agreements with exporters closer
June 26, 2014
by World Grain Staff
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SYDNEY, AUSTRALIA — The Australian Competition and Consumer Commission (ACCC) on June 25 released its draft decision to accept the CBH’s proposal to replace its existing Port Access Undertaking, which includes the option for CBH to enter into long-term agreements (LTA) with exporters who use its port services.
The undertaking would govern access by third-party exporters to CBH’s port terminal services for bulk wheat export at CBH’s four port terminals in Western Australia, the ACCC said.
CBH currently allocates port terminal capacity to exporters for one year at a time via annual auction and first-come first served processes. The main change to existing arrangements is that CBH proposes to introduce long-term agreements for port terminal capacity. Under the proposal CBH would provide up to 66% of total port terminal capacity to customers who are willing to book a minimum of 600,000 tonnes of capacity per year for three years, the ACCC said. The remaining capacity not allocated by long-term agreements would be available to all exporters through the existing processes.
CBH Operations General Manager David Capper said that the draft decision from the ACCC was pleasing and not unexpected considering the support from its export customers who have been asking for LTA’s for some time.
“Overall the proposed undertaking remains unchanged. The inclusion of LTA’s as an option for exporters to secure port capacity over three years (the term of an agreement) should provide greater certainty in terms of supply, with better planning over the long term,” said Capper. “It also gives CBH further confidence to make investment in the West Australian supply chain with the aim to increase capacity over the four port terminals to better match exporter demand, which is historically high in the first half of the year.”
The proposed undertaking still has the existing provisions for acquiring port capacity including the Port Capacity Auction system. Under the auction system 34% of total capacity each month is reserved for non-LTA allocation. This capacity, including any not taken up under an LTA, will be auctioned through the existing process.
“It is still a regulated process and does not reflect a purely commercial approach but the balance offered is a definite improvement for CBH and its customers. The LTA and auction system combined will provide exporters with greater flexibility to acquire port capacity in a way that meets their needs,” said Capper.
As part of the approval process, the ACCC has called for public submissions and comment in relation to its draft decision to accept CBH’s proposed undertaking.
These views will inform the ACCC’s final decision on the proposed undertaking.
ACCC issues draft decision to approve CBH long term arrangements