DP World seeks to challenge 750% rent hike at Port of Melbourne

DP World seeks to challenge 750% rent hike at Port of Melbourne
An independent valuer will handle the rent dispute at the Port of Melbourne

DP World plans to apply to Australia’s National Competition Commission (NCC), hoping to tackle the proposed rent increase of more than 750% at the container terminal it operates in Melbourne.

Paul Scurrah, the CEO of the Dubai-based company’s Australian business, confirmed that the firm aims to introduce the Australian Competition and Consumer Commission (ACCC) as the arbitrator of future fee disputes at the port.

DP World Australia has also filed two freedom of information (FOI) requests to the Victorian government and the Port of Melbourne Corporation respectively.

“We have lodged an online application to the Victorian Department of Treasury and Finance for access to documents relating to rent for West Swanson dock,” Scurrah told ATN.

“We have also written to the Port of Melbourne Corporation for more information on the proposed rental increase determination,” he added.

Meanwhile, the Port of Melbourne Corporation (PoMC) issued a statement, detailing that the rent review followed a “routine” procedure.

The PoMC has now formally requested the President of the Australian Property Institute to appoint an independent valuer to exercise the lease provisions.

This process comes into effect when the rent adjustment between landlord (PoMC) and tenant (DP World) is not agreed.

The statement said that the “PoMC can’t and won’t dictate a final rent review outcome,” adding: “This process does not allow for the PoMC to unilaterally decide what the quantum of any rent adjustment should be.”

The PoMC further explained that last year’s tender process for a new third Melbourne container terminal had provided it with “new information on the rental value of a container stevedoring operation in Melbourne.”

“We believe this market information is relevant and applicable to this rent review process,” the PoMC added, implying that a consortium backed by International Container Terminal Services, Inc (ICTSI), which won the redeveloped Webb Dock precinct lease, has agreed to pay significantly higher rent than DP World currently does.

According to DP World, the infrastructure charge for its Melbourne terminal could rise from about AUS$3.50 per container to around AUS$82 per container, making it three times more costly to transport freight through Melbourne’s port than via Sydney’s recently privatised Port Botany.