Australia: One step closer: the QCA draft decision on the Aurizon Network proposed Standard User Funding Agreement (SUFA)

Last Updated: 22 August 2017
Article by Barry Dunphy and Andrew J Holmes

Most Read Contributor in Australia, October 2017

The QCA stated that it was conscious of the need for the SUFA framework to provide a genuine alternative to facilitate CQCN expansions.

On 10 August 2017, the Queensland Competition Authority (QCA) published its draft decision on Aurizon Network Pty Ltd's proposed form of Standard User Funding Agreement (SUFA) under Aurizon Network's 2016 access undertaking (UT4). The QCA's decision was to reject Aurizon Network's proposed form, with the QCA providing an alternative form (Clayton Utz acted for the QCA).

What is the Queensland Competition Authority considering?

The QCA is an independent statutory authority established under the Queensland Competition Authority Act 1997 (QCA Act) to promote competition as the basis for enhancing efficiency and growth in the Queensland economy. Its primary role is to ensure that monopoly businesses operating in Queensland, particularly in the provision of key infrastructure, do not abuse their market power through unfair pricing or restrictive access arrangements. This includes the regulation of third party access to the central Queensland Coal Network (CQCN).

The SUFA is a suite of pro forma agreements designed to provide a credible alternative for parties, other than Aurizon Network, to finance the costs of railway expansions in the CQCN to meet access seekers' capacity requirements and facilitate increased access to the CQCN. The need for a SUFA arose as industry stakeholders were concerned about Aurizon Network's unwillingness to fund network expansions at the regulated rate of return.

The background to Aurizon Network's proposed SUFA

The form of SUFA framework has been steadily developed since 2011. By 2014, it was clear from stakeholder submissions that Aurizon Network and the other stakeholders could not develop an effective SUFA framework that would be suitable for all access-seekers. Given the importance placed on a SUFA framework by stakeholders in expanding the CQCN's capacity, the QCA reviewed it to determine what changes would produce a workable, bankable and credible SUFA, which in this context means:

  • Workable: the SUFA documents are sufficiently clear and certain, provide an appropriate allocation of risk and can be executed by all parties without negotiation if necessary.
  • Bankable: third party financing (that has recourse only to the SUFA assets and rights) can be obtained to finance the SUFA as otherwise its utility would be limited to those users with the financial capacity to absorb the risk associated with the SUFA.
  • Credible: the SUFA structure does not create such risks and uncertainties for users and potential financiers, or overlay such unnecessarily high transaction, tax or finance costs on an expansion project, that the SUFA can never be a credible alternative to Aurizon Network undertaking the expansion itself.

In 2016, the QCA published its final decision in respect of SUFA under UT3. Key principles reflected in the framework were that it should:

  • ensure roles and responsibilities are clearly defined and that risk, and the consequence thereof, are allocated to the party that controls the risk.
  • simplify the construction process through the expansion process, preapproval process and construction contract, and accepted Aurizon Network was best placed to take responsibility for and control of construction of the SUFA infrastructure.
  • provide security over, and certainty in respect of, cash flows and allow for third party financing.

These principles have been continued into the current draft decision.

QCA's draft decision and the next steps forward

Aurizon Network's proposed form of SUFA accepted a number of the features of a SUFA framework in the QCA's June 2016 final decision in respect of SUFA under Aurizon Network's then current access undertaking (UT3). However, Aurizon Network's proposed form also included positions that differed from the QCA's June 2016 final decision in respect of a range of matters.

In the QCA's view, Aurizon Network's proposed form had the effect of shifting the allocation and management of risk in Aurizon Network's favour and, as a result, was considered not to be appropriate, having regard to the assessment criteria in section 138(2) of the QCA Act.

In its draft decision, the QCA stated that it was conscious of the need for the SUFA framework to provide a genuine alternative to facilitate CQCN expansions when Aurizon Network will not expand the CQCN at the regulated rate of return. The QCA considered that the lack of a genuine alternative may reinforce perceptions regarding Aurizon Network's monopoly power. It further considered that the SUFA framework in its draft decision provided an effective alternative finance and construction package that was appropriate having regard to the assessment criteria, and which provided for access seekers to achieve their capacity requirements.

The QCA's draft decision included that:

  • Aurizon Network should be obliged to achieve the agreed or determined capacity associated with an expansion, and to rectify and/or pay liquidated damages for failing to meet that obligation.
  • Aurizon Network should be provided with security in respect of its financial exposure if there is an early termination of the construction contract under which the expansion is delivered.
  • A dispute over the completion of schedules to the SUFA construction contract is a dispute regarding access, so division 5 of Part 5 of the QCA Act would apply.
  • The SUFA template should be able to be amended through negotiations to give effect to a specific type of finance and financing structure. Any disagreement should be subject to a binding dispute resolution under division 5 of Part 5 of the QCA Act.
  • Aurizon Network should not seek a fee, in the form of an operating and performance risk allowance under a SUFA, which was in excess of its regulated allowances.

The QCA is seeking written submissions to its draft decision by 5 pm, 15 September 2017.


Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.