Napier Port - no need to panic

Thu, Mar 19 2009

The Regional Council is floating an intriguing idea in its forthcoming ten-year plan.

After first achieving 100% ownership of the Napier Port (HBRC now owns about 92%; Horizons Regional Council the balance), the Regional Council would then sell a minority portion of the shares to investors, ideally locals.

The proceeds of this monetisation of the minority equity would then be available to invest in Hawke’s Bay in specific projects and businesses fostering the region’s economic development. Any such project would need to pass scrutiny as providing a reasonable commercial return on investment. In other words, the funds would not be used for studies and grants.

Meanwhile, the Port would continue to go about its business, with the Regional Council maintaining majority ownership, and ratepayers continuing to enjoy the benefit of having their rates partially “subsidised” by the Port’s profits.

This is a creative proposal, well-worth careful examination and consideration by Hawke’s Bay ratepayers. And the Regional Council proposes to do just that — consult extensively with the public and all stakeholders — starting with, but not limited to, the LTCCP consultation process — before any changes are initiated.

Apparently the mere floating of such a vision has caused unfounded panic in some circles, and so the Regional Council has clarified its intentions in a media statement, which I reproduce in full below.

“Recent media coverage may give people the impression that there is a present proposal by the HB Regional Council to sell off its shares in the Port of Napier Ltd.

This is not the case. In fact the only decided action is to actually buy shares to lift the Council's holding up to 100%.

Subject to fair value, this transaction should be completed by the end of June, with the 8.2% minority holding being acquired from Horizons Regional Council.

The possibility of a future sell down arises from a proposal in the Council's Draft Ten Year Plan to amend investment policy to give more flexibility in management of the Council's substantial investment portfolio. The purpose of the policy review is to enable the Council to take up opportunities when appropriate to invest in new infrastructure where significant economic and environmental benefits can be generated for the province.

The new investment policy will provide several options, only one of which could be a sell down of the Port shares (preferably to Hawke's Bay investors). However, that would only be possible if the case was so compelling that it survived a special public consultation process that all Hawke's Bay ratepayers and citizens would participate in. As well, the policy provides that as a vital strategic asset the Council would never hold less than a controlling interest (51%).

The policy review itself is also subject to public consultation as part of the Council's Draft Ten Year Plan which is about to be published and on which people have the opportunity to submit or express opinions on over the next couple of months.

I stress, the only present intention of the Regional Council is to buy Port shares, not sell them.

Alan Dick
Chairman, HB Regional Council

Maybe the proposal will stand the test of full consultation; maybe it won’t. To me, it sounds like an intelligent way to leverage what is now a passive investment for greater benefit to Hawke’s Bay and its ratepayers.

In any event, kudos to the Regional Council for putting a big, promising idea on the table.

Tom Belford

ENDS

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