UPDATE: Asciano Applies To Have Queensland Coal Rail Track Access Declared

Australia's largest port and rail operator Asciano Group (AIO.AU) said Wednesday it has applied to have access to the rail network in Australia's Queensland state brought under federal control, a move that could delay a A$3 billion-plus initial public offering of the state's coal and freight assets.

Asciano Chief Executive Mark Rowsthorn has been campaigning against the state's model for privatization of Queensland Rail that bundles together train and track ownership, saying it could lead to discrimination against competitors using the system.

Asciano said it has applied to the National Competition Council to have the use of Queensland's rail track assets declared under the Trade Practices Act. If track access is declared, Asciano and other freight companies would acquire a legal right to seek arbitration from the Australian Competition and Consumer Commission in relation to negotiations with the service provider about track access.

"If track access is declared, it will create uncertainty not just for the float, but for access pricing and it could take up to 12 months before a final outcome is known," said Rowsthorn.

"But this is preferable to a situation where we are forced to negotiate access, without the regulatory protections we are seeking, with a competitor who has every incentive to discriminate against us," he said in a statement.

The state has in place its own access arrangements and plans a range of regulatory changes to enhance the regime, for which it intends to seek certification from the National Competition Council.

"We don't expect these actions will have an impact on the timetable for the QR National IPO scheduled for the fourth quarter this year," Queensland Treasurer Andrew Fraser said in a statement.

The state government in March appointed five banks--Credit Suisse, Goldman Sachs JBWere, Merrill Lynch, RBS Morgans and UBS--to lead manage the IPO that is expected to be Australia's largest this year.

It is pushing on with its IPO plan despite coal producers including mining heavyweights BHP Billiton Ltd. (BHP) and Rio Tinto Ltd. (RTP) preparing an alternative bid for the state's coal rail network.

The state government is offering the rail network, along with its rail haulage business, in a vertically integrated package. This has the coal producers concerned that there won't be adequate investment in the rail network.

-By Rebecca Thurlow, Dow Jones Newswires; 61-2-8272-4679; [e-mail]