Barnett’s corrosive thought bubble swatted away by bhp billiton and rio tinto _ afr. com

Colin Barnett has only fuelled the corrosion of Western Australia’s sovereign integrity with a profoundly odd invitation to Rio Tinto and BHP Billiton to bring forward suddenly controversial Pilbara lease payments in return for permanently removing future rental requirements.

The hard-pressed Premier approached the two biggest contributors to the WA exchequer in recent days with what they apparently described as a “conceptual” offer but what others might assess as a stupid thought bubble.

The offer was that an unquantified number of years of forward payments of a lease rental that generates maybe $185 million annually for the state might be lumped up into one big budget-hole-filling payment.


Direct insurance contact And with that done, a current or future Barnett government would move to remove the rent mechanism from the 50-year-old state mining agreements that leave Rio and BHP free to mine the iron ore rich red soils of the state’s north-west.

As we noted on Tuesday, one of Rio’s frontiers is Mongolia. Direct auto insurance careers Late last week it approached the International Monetary Fund for a budget rescue package. Doctors direct insurance A precedent like this in a mature and once stable mining state would justifiably seed other options for a Mongolian government facing a greater weight of problems than WA.

The political fragility exposed by public airing of the Barnett concept serves to identify the risk the miners would expose themselves to should they even contemplate indulging the panicked Premier’s invitation.

So the miners are being asked to commit to undesirable precedent without any level of security that the quid pro quo is possible. Phone number for direct auto insurance From a commercial perspective, that is the worst of both worlds.

Barnett is asking the miners to entertain the potential of delivering unquantified billions of free cash flow in a one-off payment. M direct insurance But there is absolutely no guarantee that he will survive the state election that is due next March. Direct insurance tennessee Indeed, the prospect that news of the Premier’s meetings leaked out of the state public service would suggest that Barnett will be lucky to make it to that election, let alone win it.

The other thing to recall here is why the lease rentals are a matter of public debate in the first place. One quote direct car insurance Presently Rio and BHP pay a state royalty of 7.5 per cent of revenue earned on every tonne of iron ore sold from the Pilbara. Auto direct insurance services On top of that they pay 25¢ a tonne in lease rental because their mines are more than 15 years into their productive life.

The new leader of the WA National Party, Brendon Grylls, reckons that is not enough. Canadian insurance direct He wants to lift that rental charge to $5 a tonne. Direct auto insurance headquarters That would raise $3 billion a year in state revenue based on current exported volumes. Nevada direct insurance company And that would be pretty handy given that WA’s debt stands at $40 billion and rising.

The simple fact that Grylls feels free to alter the revenue components of state agreements talks directly to the risk the miners would embrace by accepting Barnett’s offer. Dial direct online insurance quote These mining agreements are effectively a contract with the state parliament. Direct life insurance company They may have been the bedrock of better than $US50 billion ($65 billion) of investment over the past decade. Direct auto insurance no credit check But they are as vulnerable to the desire of the Parliament as any other piece of legislation.

So even if Barnett survives his March ordeal and even if he was able to deliver on his promise, there is nothing to say that future parliaments would be bound by his intent.

Mick McCormack has emerged from two months in medical room to immediately rejoin the battle to defend the integrity of his largely unregulated national gas pipeline network.

A nasty back injury has seen the APA Group chief executive of very long standing missing in action while a potential new customer, the competition regulator and a competitor have had their say on whether our mature pipelines networks need to be regulated because they are extracting monopoly rents that have constrained the supply-side response to surging gas demand.

Over the coming days McCormack will be briefing media and investors on the pitch APA will take to the Gas Law Reform Review ordered by COAG and led by Michael Vertigan.

McCormack has welcomed the Vertigan review as an opportunity for the industry generally and APA particularly to redress the misunderstandings and myths that he figures shaped the recent East Coast Gas Market review by the Australian Competition and Consumer Commission.

He will arrive at each meeting armed with more than his earthy wit and 11 years of experience leading Australia’s most powerful gas piper. Quinn direct car insurance number He plans as well to talk liberally to a cost-benefit analysis of APA’s uniquely integrated gas network prepared by The Brattle Group.

“We find that integrated ownership has resulted in cost savings of over $110 million as the otherwise wasteful duplication of facilities has been avoided,” the report concludes.

“In addition, operating APA’s pipelines centrally saves around $7 million per annum in operating costs relative to independent operation of APA’s main Eastern Australia pipelines,” the report found.

While identifying the risks of network integration the report finds that APA network has generated efficiencies and improved services for both gas suppliers and end users.

“By combining the ownership of previously separate assets, mergers and acquisitions can give rise to benefits from economies of scale and scope,” Battle said. Direct auto insurance 1800 number “But they also may raise competitive concerns that stem from the potential exercise of market power. Canadian direct insurance alberta If integration combines ownership of network assets offering substitute services, competition may be harmed.”

Instead, by Battle’s assessment, APA’s eastern grid has generated a host of service improvements that have increasingly been reflected in direct savings to gas producers that have been able to take advantage of new form contracts that set single access fees for the use of multiple pipelines.

This, it has to be said, is not a view shared by at least one of APA’s future customers, Central Petroleum, nor the ACCC, for that matter. Auto direct motor insurance But McCormack is having none of that. Insurance direct sale salvage He describes the approach of both driller and regulator as “disappointing”.

“You have Richard Cottee over there at Central talking about wanting to save the east coast gas market,” McCormack says. Auto direct insurance phone number “That is all well and good but that is a bit of a stretch. Canadian direct auto insurance bc He is talking bugger all gas in terms of moving the national dial.

“And, look, the facts are the facts. Open and direct car insurance dungiven For all the yapping on about wanting to regulate APA’s pipelines, Central is in the middle of Australia, let’s call it Alice Springs. Direct auto insurance claims number The pipeline he needs to get the gas north to Tenent Creek is owned by us and it is regulated. Canadian direct travel insurance bc Central says that brings the best results, right. Direct insurance services preston The tariff to get it to the pipeline Jemena is going to build is 60 cents a gigajoule [gj]. First call direct car insurance Let’s say Jemena charges $1.30gj to get the gas to Mt Isa. Direct national insurance From there we will get it anywhere in the east coast. Direct insurance florida All up it will cost Richard no more than $4 to get to market.

“But Central is on the record saying its cost of production is $1-$2gj. Insurance services direct Fantastic. Direct insurance company nashville tn Low cost. Auto direct car insurance reviews But that means his cost to get to market is something like $5-6gj. Direct auto insurance corporate office That is economical today.”

And the ACCC? Well, McCormack is disappointed it has “jumped on a bandwagon” that says gas should be landing into east coast markets at up to 50 per cent less cost than it is. Access direct insurance McCormack rightly assesses that this is because the regulator would have it that a pipeline that may have paid for itself through foundation contracts should be regulated as those deals retire.

“That is a flat nonsense,” he said. First car direct insurance “There is an example outside my window, the gas reticulation in Sydney. Canadian direct insurance AGL put them together 180 years ago. Direct insurance number How many times has that been paid off? The ACCC tried to pull this sort of stuff on us 10 years ago and we took it all the way to the High Court and it got dropkicked out of it.”

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