Council proposing to sell up to 49 per cent of Napier Port so it can cope with growth

Wednesday, 3 October 2018

The future ownership of Napier Port is to be consulted on, with a proposal that ratepayers sell 49 per cent of their stake in it.

Napier Port needs more than $320million investment over the next decade and its owner, Hawke's Bay Regional Council, says the answer is to sell up to a 49 per cent stake in the company.

On Wednesday the council proposed four potential options to fund the port's growth requirements, with a preference that up to 49 per cent of the company is listed on the sharemarket.

The council, which owns the port on behalf of ratepayers, said the port needed $320 - $350 million over 10 years for it to support the growing Hawke's Bay economy.

Nearly half of that cost, or $142m, was for the construction of a new wharf, that the company says needs to be ready by 2022, and $86.6m was to enable it to reduce debt.

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The council's preference is for a 45 per cent share sale, raising about $181m in capital.

The port has been wholly-owned by ratepayers through the council since 1989, and makes up about 76 per cent of the council's revenue-generating investment assets. The port contributes about $10m a year in a dividend to the council, resulting in a lower rates bill.

A consultation document released this week said the port was already congested and having to turn away larger freight vessels. It expects to turn away seven cruise ship visits next year.

As part of the preferred option the council would retain governance oversight and the ability to determine the make-up of the Board by voting on director appointments.

A month long public consultation period will start on October 15.

Critics of the proposal say the only fair way to get feedback is through a referendum.

But council chair Rex Graham said a referendum was not an appropriate way 'for decisions of this significance and complexity to be made'.

He said a thorough consultation would take place 'and every local will have an opportunity to be heard on this decision'.

Graham said the council had been considering port funding options for about two years.

He said doing nothing would negatively impact the region's economy and cost jobs, while funding the port's growth via rates would see average rates rise by 53 per cent over the next year.

'Napier Port is at a tipping point. It is constrained and turning away larger ship visits every year. Next year the Port expects to turn away seven cruise ship visits due to a lack of space and at a cost to the local economy of $3.5 million.

'The Port can't borrow more without taking debt to imprudent levels. Council borrowing to fund the Port would see significant rates rises across Hawke's Bay, take debt to high levels and reduce Council's financial flexibility to do its job,' he said.

The consultation document said the proposal would allow the people of Hawke's Bay, port staff and tāngata whenua to invest directly in the port, and said a partial sharemarket listing had been effective at the Port of Tauranga, which had 55 per cent local ownership and a 45 per cent listed stake.

Other options included a minority sale to an investment partner, lease of port operations to a private operator or funding growth through rates.

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