Fees related to exports could be reduced and fees related to some imports could be increased in Victoria, the Essential Services Commission has indicated, following an application by the Port of Melbourne to change its tariffs.
The tariff re-balancing relates to wharfage fees on certain full containers. All other prescribed services will be adjusted by inflation in 2021-22, in accordance with the Tariff Adjustment Limit.
The Port of Melbourne has said that the purpose of the rebalancing is to align its tariff signals with marginal investment costs for larger vessels and to support improved port utilisation for port users and to keep tariffs constant in real terms for smaller vessels.
The port has submitted a fee-rebalancing application to the Essential Services Commission of Victoria, which is holding a public consultation until 01 February 2020. Following that consultation there will be an interim decision, a further consultation, followed by a final decision in May this year. Should the Port be successful, the new fees would be in effect from early July 2021.
Commission Executive Director Price Monitoring and Regulation, Marcus Crudden says the commission will assess this application in line with the Port Management Act 1995.
“We are conducting extensive engagement with port users and other stakeholders in assessing the application,” he said.
SAL has recently made a submission to the Port of Melbourne highlighting both matters of principle and our analysis of the financial outcomes of the proposed rebalancing.
The submission firstly stressed the fundamental point that the requirement for the port to support larger ship sizes should not have come as a surprise as it was completely predictable. The necessary investment costs should have been factored into its purchase bid.
“The facilitation of big ship visits to the Port of Melbourne is not a choice for the port, it is an essential investment to ensure the future of the port and one that was clearly apparent before the port was privatised. It seems incongruous to now ask the port users to fund the investment now in order to increase the port’s future revenue stream and to rectify the fact that the successful bidder for the port did not allow for this investment in their purchase and bid too high for the purchase,” Shipping Australia said in its submission.
Secondly, the submission noted that the projection of financial outcomes depend on the accuracy of modelled input variables such as the rate of increase in percentage of TEU carried in big ships, the growth rate of TEUs through the port, and the inflation rate.
Shipping Australia is also seeking clarification on how any price controls or monitoring will apply after the completion of the Tariff Adjustment Limit between 2032 and 2037.
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