An innovative approach to funding new infrastructure

The Queensland Competition Authority (QCA) issued today a draft decision on Aurizon Network’s proposed Standard User Funding Agreement (SUFA) arrangements.

“SUFA is a ground-breaking approach for the funding of new rail infrastructure in Central Queensland. If successful, the SUFA approach could be adopted in other regulated industries,” said QCA Chairman Malcolm Roberts.

“SUFA is intended to widen the pool of potential investors in infrastructure, creating a new contestable market. Under existing arrangements, investment in infrastructure can be constrained by competing demands on the owner’s funds and the capacity to pay of users. Under the national access regime, access providers have no obligation to fund new infrastructure at their own expense.

“SUFA would allow third parties to provide the capital to fund projects. In return, these investors would be guaranteed a stable, long-term revenue stream.

“As far as we can tell, the SUFA arrangements are unique in Australia and possibly the world. SUFA will provide a suite of standard pro-forma agreements to support alternatives to Aurizon Network funding rail infrastructure expansions.

“Developing SUFA has been a huge co-operative effort by Aurizon Network, the Queensland Resources Council and the QCA over more than two years. The last stage of this work has benefited from specialist advice from Clayton Utz and Grant Samuel. The QCA thanks everyone involved in this complex task.

“Our draft decision proposes changes which would transform Aurizon Network’s proposed SUFA into a more attractive, conventional financial arrangement.

“A successful SUFA will create a competitive alternative for financing rail infrastructure. SUFA will create another financing option for businesses requiring expansions of the existing network or extensions to the network,” said Malcolm Roberts.

We are seeking views from interested parties on the draft decision by 16 January 2015 and will make a final decision in the first half of 2015.

Aurizon Network 2010 Access Undertaking (UT3) governs third-party access to the declared rail transport infrastructure in the central Queensland Coal Network. Aurizon Network’s 2013 SUFA Draft Amending Access Undertaking is being considered as part of UT3.

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