Department of Infrastructure, Transport,

Regional Development and Local

Government
WA Grain Freight Review

ABCD

Department of Infrastructure,
Transport, Regional Development and
Local Government

Independent Review of the

Grain Infrastructure Groups
Freight Network Review

This report contains 108 pages

DITRDLG09-GIG Final Report
2009 KPMG, an Australian partnership and a member firm of the KPMG network of independent
member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
The KPMG logo and name are trademarks of KPMG.
Liability limited by a scheme approved under Professional Standards Legislation.

ABCD
Department of Infrastructure, Transport, Regional
Development and Local Government
Independent Review of the Grain Infrastructure
Groups Freight Network Review

Contents
1

Executive summary

1.1
1.2
1.3
1.4

Introduction
Key findings
Way forward
Investment options

2
4
7
7

Introduction

11

2.1
2.2
2.3

Purpose of the review

Approach
Structure of this report

11
12
14

WA grain industry and supply chain overview

15

3.1
3.2
3.3

Grain production
Grain freight supply chain
Recent industry developments

15
17
22

Grain Infrastructure Group (GIG) Freight Network Review

25

4.1
4.2
4.3
4.4
4.5
4.6

The Grain Infrastructure Group

Background to the GIG review
Approach
Key assumptions
Key findings
Key recommendations

25
26
28
29
30
31

Assessment of the GIG investment proposal

33

5.1
5.2
5.3

Our approach to reviewing the GIG proposal

Summary of results
Testing the GIG market share assumption

33
43
47

Investment options and risk analysis

54

6.1
6.2

Investment options
Investment option assessment and risk analysis

54
56

Proposed Implementation plan

65

7.1

Key steps

66

Stakeholders consulted during this review

71

GIG costs and benefits

73

Factors influencing our approach

74
i

file 1.doc
2009 KPMG, an Australian partnership and a member firm of the KPMG network of independent
member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
The KPMG logo and name are trademarks of KPMG.
Liability limited by a scheme approved under Professional Standards Legislation.

ABCD
Department of Infrastructure, Transport, Regional
Development and Local Government
Independent Review of the Grain Infrastructure
Groups Freight Network Review

GIG cost benefit analysis

77

D.1
D.2
D.3
D.4

Costs
Benefits
Key issues
Line by Line assessment

78
78
79
80

GIG cost benefit analysis using updated data

81

E.1

Line by Line assessment

81

GIG cost and benefit analysis including all costs and benefits

82

F.1
F.2
F.3
F.4
F.5

Costs
Benefits
Using alternative discount rates
Including externality costs
Testing of outcomes under likely energy price scenarios

83
83
84
85
86

Testing the GIG cost estimates and assumptions

87

G.1
G.2

Costs
Benefits

87
88

The principles of bypass

89

Cooperative Bulk Handling

92

Additional information

97

J.1
J.2

Alternative discount rates

Electricity industry case study

97
100

Technical, cost and market analysis SAHA International

105

ii

file 1.doc
2009 KPMG, an Australian partnership and a member firm of the KPMG network of independent
member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
The KPMG logo and name are trademarks of KPMG.
Liability limited by a scheme approved under Professional Standards Legislation.