01/05/2015 - 15:19

UPDATED: CBH, Brookfield reach interim agreement

01/05/2015 - 15:19

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CBH Group signed an interim access agreement with Brookfield Rail "under protest" late on Friday, allowing CBH to start running its rolling stock on Brookfield's rail network, but the two companies remain divided on a long-term outcome.

CBH chief executive Andy Crane said the grain handler had no choice but to sign the agreement after all previous counter offers had been rejected by Brookfield Rail.

“CBH is extremely disappointed that the situation escalated to the point where trains were stopped," Dr Crane aid.

"We were backed into a corner by multinational Brookfield Rail."

Dr Crane said that “given the peak shipping demand over the next few months, we had no option but to sign this agreement, to protect the international reputation of Western Australia’s grains industry".

“The agreement will see an increase in current rail access costs across the network, expiring on 31 December 2015.

“This is far from an ideal situation for growers and for the state, but if growers can’t get their grain to port it would be irreversibly damaging for the WA grain industry.”

The terms of the interim deal were not disclosed; it came one day after CBH was forced to take the unprecedented step of removing its rolling stock from the rail network.

Brookfield Rail instructed CBH to remove the rolling stock, after their previous access agreement expired at 11.59pm on Thursday night.

Brookfield Rail put a different slant on yesterday's deal, with chief executive Paul Larsen saying he was pleased the parties had reached an interim agreement.

“We remain hopeful that both parties will negotiate in good faith to agree a long term deal by the end of June deadline,” he said.

The impasse came at a time when up to 4 million tonnes of grain remained in up-country storage.

Dr Crane said the forced removal of rolling stock had been a devastating blow for the state’s grain growers and the international reputation of Western Australia as a reliable supplier of grain.

“Brookfield Rail is effectively holding a State-owned asset to ransom. This is unacceptable,” he said before the interim deal was signed.

The companies have been attempting to negotiate a new access agreement for two years.

They are currently working through the Economic Regulation Authority on a new long-term agreement, but in the meantime agreed to negotiate an interim agreement.

Dr Crane said an extension on ‘like’ terms would have been appropriate. He also believed the trains should have been allowed to run while the negotiations continued.

Brookfield had initially asked for a 25 per cent price increase for the interim period, along with various clauses the grain handler considered unacceptable.

A Brookfield Rail spokesperson said its latest offer was for an increase averaging less than $1 per tonne, which equated to an 11 per cent increase.

Brookfield Rail said it has not received sufficient revenue from CBH to cover the costs of operating the grain freight rail network, or to fund the capital expenditure required to maintain the lines.

 

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