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Stand-alone island

01 May 1997

TASMANIA's 780 km narrow-gauge freight railway looks set to be the top seller in next month's sale of the remnants of the Australian National Railways Commission. Freed from the burdens of mainland cost structures, and benefiting from AN's A$1bn debt write-off, the vertically-integrated self-contained operation is seen as a nice little earner.

Following its decision to get out of train operations (RG 1.97 p8), the Commonwealth government has bundled AN's remains into three main units for sale by June 30. Expressions of interest for the Passenger Rail business, Tasrail, and SA Rail's intra-state network in South Australia were to be submitted by April 10, and Deutsche Morgan Grenfell's Sydney office has the task of sifting the replies. Shortlisted bidders will start due diligence this month, with final offers to be lodged in early June.

Although DMG's international offices have been talking up the market, serious bids are thin on the ground. Heading the Tasrail race are Wisconsin Central, which runs neighbouring Tranz Rail in New Zealand, and the consortium of TNT and Toll Holdings which operates open-access interstate freight trains. A Great Southern Railway group, headed by ex-National Rail operations manager Mike Purcell and backed by Macquarie Bank and Goninan, is after the passenger business and AN's workshops - and possibly NRC too.

Excluded from the sale is AN's track access unit, which will form the backbone of the Track Australia authority now expected to come into being on July 1. TA will manage access to the interstate network being retained by the federal government, and 'contribute to the establishment of a viable and competitive rail system', leaving private operators 'to provide efficient, competitive, dynamic and reliable transport service.'

Track access rights will also play a key role in the sale of the federal stake in NRC, now put off to the second half of next year. NRC is close to signing what Managing Director Vince Graham calls 'a landmark and confidential' long-term deal with the New South Wales Rail Access Corp; a draft agreement was cleared by the NSW Independent Pricing & Regulatory Tribunal at the end of March.