Posted on August 16, 2016
Australia’s competition regulator cleared the two domestic investors bidding for the country’s biggest general cargo terminal, Port of Melbourne, paving the way for a privatization the government hopes will raise A$5.3 billion ($4 billion).
Australian Competition and Consumer Commission (ACCC) Chairman Rod Sims said on Thursday that after inquiries with stakeholders he “formed the view that neither acquisition would result in a substantial lessening of competition”.
The decision clears a significant hurdle for the state of Victoria to sell the port to either a consortium led by IFM Investors, the country’s biggest pension fund investor, or a consortium led by QIC Private Capital, the investment arm of the Queensland state government.
IFM is bidding with Macquarie Group’s Macquarie Infrastructure and Real Assets and Dutch pension fund manager APG Asset Management NV, while QIC is bidding with New York-based Global Infrastructure Partners and Canada’s Ontario Municipal Employees’ Retirement System.
Both lead investors needed antitrust clearance since they own port assets elsewhere in the country: IFM has major stakes in Sydney’s two ports plus Port of Brisbane city, while QIC also has a stake in Port of Brisbane.
Letting both bid for Port of Melbourne counts as a rare win in Australia’s more than A$100 billion privatization program, where state and federal governments are trying to cut debt and bankroll capital works by selling “mature” infrastructure.
The sell-off has been under political pressure since the 2015 sale of Port of Darwin to Chinese government-affiliated interests sparked a backlash over the security implications and even a rebuke from U.S. government officials.
The Port of Melbourne sale has meanwhile faced delays over concerns that putting the asset in private hands will result in higher prices for the freight companies which rely on the monopoly operator.
“The ACCC did note that the proposed regulatory regime at the Port of Melbourne provides for stronger pricing oversight than applies at most other ports following privatization,” the ACCC’s Sims said in the statement.
Trade through the Port of Melbourne has recorded its strongest growth in four years. For the financial year to 30 June, all cargo types showed positive growth with the exception of dry bulk as total trade increased 2.6 percent to a record 89.3 million revenue tons.
The Port’s core container trade increased 2.3 percent to 2.64 million TEUs as full container imports grew by 3.5 percent. The new motor vehicle trade grew by 6.6 percent to record its highest total volume since 2009-10 handling 372,539 units as total overseas imports grew by 10.4 percent. Breakbulk trade finished the year to record growth of 6.7 percent while the liquid bulk trade grew by 2.5 percent.
Growth in the Port’s two largest trade types, containers and new motor vehicles, means that Melbourne now handles over 7,200 TEU and over 1,000 new motor vehicles on average every day.
Source: The Maritime Executive
