Australia’s competition watchdog has an incorrect perception of pipeline investment, according to a prominent industry association.
In an online post, Australian Pipelines and Gas Association (APGA) CEO Steve Davies said a recent presentation at the APPEA 2019 conference by Australian Competition and Consumer Commission (ACCC) Chair Rod Sims illustrated the organisation misunderstood the risk companies take with pipeline investment.
Mr Davies queried Mr Sims expression of surprise that some pipeline operators had published information suggesting they had not recovered any of their original capital investment.
“I find the ACCC’s surprise very surprising, given that the final report of the 2015 East Coast Gas Inquiry does not say that pipeline operators provided information that investments are normally fully underwritten by shippers through contracts,” he said.
“To be fair to the ACCC, historically, pipeline operators have not tended to build speculative capacity.
“By speculative capacity, we mean capacity for which there is no immediate demand (i.e. no foundation contract).
“The ACCC appears to think that avoiding speculation means pipeline investments have no risk and are fully underwritten.”
Mr Davies said it was critical that ACCC formed its views factually and with an understanding of the regulator’s perspective.
“All resource industries rely heavily on infrastructure investment. It is vital that regulatory frameworks for infrastructure are established and reviewed with a full understanding of the facts,” he said.
“There is a further disconnect between the ACCC’s view of risk and capital recovery and the reality of building pipelines in a competitive market.”
For more information visit the APGA website.
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