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Regional Ports Move to Local Authorities in 'Radical Overhaul' of Port Sector

26th March 2013

#ports – None of the nine state owned Irish ports are to be privatised but local authorities are to become shareholders in regional ports and private investment will be welcome too, according to the National Ports plan launched this afternoon.

Plans to radically overhaul Ireland’s commercial ports and give Government a more hands-on role in the maritime ports sector were unveiled by Minister for Transport, Tourism & Sport Leo Varadkar.

The policy sees four major areas of reform and a warning that much more is expected of every port in terms of its commercial return to the state.

Up until recently a dividend has only been paid by Dublin Port but recently other Ports have begun to pay dividends too, Varadkar told reporters this afternoon.

The new National Ports Policy aims to harness the potential of every port in Ireland. Shareholders will be encouraged to take an activist approach to managing their ports to ensure the State gets best value from these crucial facilities, whether that shareholder is the Government or the local authority.

Previous policies have not recognised the huge diversity among the 19 ports that handle commercial freight. The core objective of the new National Ports Policy is to facilitate a competitive and effective market for maritime transport services.

Although ports will be key players in Ireland's future economic recovery the significance of the ports sector as part of national infrastructure is not well appreciated but this policy says Varadkar is 'a championing document for all ports'.

Ports are to be designated in different tiers. Dublin Port, Port of Cork and Shannon Foynes are Tier 1 and ports of national significance. There is also a second tier of nationally significant ports namely; Waterford and Rosslare. With 95% of everything coming into this country arriving by ship, these five ports are the life blood of trade and play a significant role in the well being of the State.

“Our commercial ports are vital to our economic recovery and to future economic growth. They are the gateways for most of our merchandise trade, and for significant numbers of tourists and passengers. This new ports policy encourages each port, large or small, to develop its full potential to ensure that each one can contribute to further growth in the ports sector,” the Minister said.

These ports are charged with leading the response to national capacity requirements, something that is long overdue because port capacity has not been matching growth in traffic for either unitised and non–unitised cargo.

The policy follows the launch of a 30–year masterplan for Dublin Port Company a year ago and the launch of the Shannon Estuary master plan last month.

Already there has been evidence of recovery in port volumes, a key indicator of economic activity. Total exports in the Irish economy last year hit their highest level ever at 16 per cent above the pre-crisis high. The Port of Cork bucked a trend last August when it announced a 5% upwards trend in traffic.

All other ports are classed as having 'regional significance' and must develop in line with local requirements. In Dun Laoghaire for example where the harbour is in the middle of the town the port expected to focus on tourism, cruise liners and marine leisure activity.

The plan to move ports into the control of the local authorities will require legislation and this may take a year and a half to complete.

Ports will have to develop dividend policies for the second quarter of this year and they must develop a port performance management system by 2015.

Changes are to be made to the board appointment process and management too.

The ports policy has been shaped with the Department of the Marine's Oceanwealth initiative and it also takes into account a new foreshore regime being developed by the Department of the Environment.

The main features of the new policy are:

·         Instead of adopting a ‘laissez faire’ approach, the Government will become a more active or activist shareholder;

·         Private investment in the ports will be encouraged;

·         Move from a ‘one size fits all’ policy to one that recognises that different ports have different roles to play, now and in the future. In recognising the different roles of each port, this policy determines which are of National Significance and have a national function, and which are of Regional Significance with a specialist significance at national level:

o   Ports of National Significance (Tier 1) are designated as: Dublin Port Company, the Port of Cork Company and Shannon Foynes Port;

o   Ports of National Significance (Tier 2) are designated as Rosslare Europort and the Port of Waterford Company;

o   Ports of Regional Significance: The remaining 14 ports account for 8% of national trade, but many have national significance in terms of specialist services or products. These include the five State companies at Drogheda, Dún Laoghaire, Galway, New Ross and Wicklow. These Ports of Regional Significance will be placed within a local authority-led governance structure with local authorities taking shareholdings in the ports.

·         Future investment in deepwater capacity, when needed, will not occur until it has been subjected to stringent analysis commissioned by the Department, and will be led by the national ports;

·         The commercial mandate of ports will remain. They will be expected to turn a profit, pay a dividend and will not receive Exchequer grants.

The new policy will allow for appropriate private-sector investment in ports. A new performance oversight system, and a new approach to capacity planning, will be developed to make sure that all ports are fulfilling their potential.

Welcoming the publication of the National Ports Policy, the Director of the Irish Maritime Development Office Glenn Murphy said: ‘The Policy provides clarity to our port companies in terms of their future direction, but importantly for the thousands of Irish and International companies that depend everyday on effective and efficient ports to connect their business with the global economy’.

Minister Varadkar added: ‘Too many governments have taken a one-size-fits-all approach to our ports sector. We want to end this laissez-faire approach, and encourage shareholders to take a much more hands-on attitude to maritime ports. This new National Ports Policy represents an important change in approach towards the Government’s management of these important assets and provides an overarching vision for the future development of the sector’.

Detailed information from Minister's Dept:

The core objective of national ports policy is to facilitate a competitive and effective market for maritime transport services. The Policy categorises the ports sector into –

· Ports of National Significance (Tier 1): Dublin Port Company, the Port of Cork Company and Shannon Foynes Port Company, each of which accounts for more than 15% of national trade;

· Ports of National Significance (Tier 2): The Port of Waterford Company and Rosslare Europort; either of which accounts for between 2% and 15% of national trade;

· Ports of Regional Significance for development principally in regional freight, leisure, aquaculture facilities, urban regeneration or cultural and recreation amenities.

The Government expects the Ports of National Significance (Tier 1) to lead the response of the State commercial ports sector to any future national port capacity requirements. There is also a role in this regard for the two Ports of National Significance (Tier 2) to develop additional capacity to aid competitive conditions within the unitised sectors (Lift On/Lift Off and Roll On/Roll Off) in particular. These five ports collectively handle approximately 92% of all tonnage handled at Irish ports in any given year.

The importance of the five other State commercial port companies is recognised by their designation as Ports of Regional Significance. These ports: Galway, Drogheda, New Ross, Wicklow and Dún Laoghaire – retain important regional roles as regional freight distribution hubs, but also increasingly important roles in areas such as marine leisure and tourism.

The policy envisages the Government as a more 'active shareholder' in those State commercial port companies designated as Ports of National Significance. This will be facilitated through:

· A realignment of central Government shareholding in those Ports of National Significance and a transfer of control of the smaller Ports of Regional Significance to local authority control;

· A requirement that relevant Ports of National Significance submit clearly stated dividend policies to the Department by the end of Q2 2013;

· The integration of existing Irish Maritime Development Office financial analysis with emerging operational benchmarking systems at a European level to allow for the development of a port performance management system by 2016;

· The introduction of on-going origin and destination surveys by 2016 to independently establish freight flows to/from the ports;

· Commissioning independent capacity forecasting analyses at regular intervals from 2018 onwards;

· Changes to the Ministerial / board level relationship to ensure that Government policy is embedded within all levels of corporate and commercial development.

This more active approach toward the management of our key international maritime gateways represents a sea change in attitude and will allow Government to benchmark the performance of our ports and the return on our investment. The future development of the Ports of Regional Significance is best placed within the framework of their regional and local communities and it is therefore proposed to allow for their transfer to relevant local authority ownership.

The National Ports Policy commits to working with the ports sector and the relevant Departments (Arts, Heritage and the Gaeltacht and Environment, Community and Local Government) to ensure that port development and environmental protection are mutually respected.

The National Ports Policy document is available to download below.

Speech by Minister for Transport, Tourism & Sport Leo Varadkar at the launch of the National Ports Policy

I am delighted to launch today a new National Ports Policy which described the Government's vision for our commercial ports sector.

Our ports are important to our economic recovery and our future economic prosperity. However, their contribution to our economy is frequently overlooked.

The Competition Authority recently estimated that approximately 84% by volume and 62% by value of all goods moved into or out of the State comes through our ports. We rely on our ports to provide us with imported oil and coal, vehicles and many consumer goods.

Many of our major export sectors, for example pharmaceuticals, chemicals and agri-food, are heavily reliant on our commercial ports. Also, ports can be important for tourism both in terms of passenger ferries, car ferries and cruise ships.

As an island nation we depend on our ports to an even greater degree than many of our trading partners. Hence the need to get the policy right.

But ports are much more than trading gateways to the world. They often have deep-rooted links into their community, are steeped in history and are centres for leisure and amenity. They are also frequently located in or beside areas of great natural beauty and importance for wildlife.

There is also a great diversity among the 14 ports that handle commercial freight each year – in terms of the size and scale of their business, the sort of ships and goods handled and the type of financial and organisational resources available to ports and governance.

Policy to date has not recognised this diversity in the role and function of our ports.

I am determined that the importance of all our ports is recognised at the highest levels of Government policy, but am also aware that the current policy is no longer appropriate.

This new policy is different in a number of ways:

· We will move from a 'one size fits all' policy to one that recognises that different ports have different roles to play, now and in the future

· Instead of adopting a 'laissez faire' approach, the government will become a more active or activist shareholder

· Future investment in deepwater capacity, when needed, will not occur until is has been subject of proven analysis led by the Department

· Local authorities will be given a greater role as shareholders in smaller ports

· Private investment in the ports will be encouraged

· The commercial mandate of ports will remain. They will be expected to turn a profit, pay a dividend and will not receive exchequer grants

Core Objective

The core objective of National Ports Policy is to facilitate a competitive and effective market for maritime transport services. In my view there are a number of different aspects to achieving this objective.

Firstly, we must be clear about which Ports are of National Significance. As detailed in the new Policy, the Government recognises Dublin Port Company, the Port of Cork Company and Shannon Foynes Port Company as our Ports of National Significance (Tier 1).

Additionally the Government also recognises the Port of Waterford Company and Rosslare Europort to be Ports of National Significance (Tier 2). National Ports Policy must be focussed on those ports which fulfil a national function.

Secondly, in relation to those ports which serve a regional or local function, we must provide an appropriate governance framework that allows for their continued future development in a manner that best suits their individual circumstances. It is also recognised that while none of these ports account for more than 8% of national trade, they can have national significance in a niche service or product area.

This new category of ports includes the five smaller State port companies in Drogheda, Dún Laoghaire, Galway, New Ross and Wicklow. These Ports of Regional Significance will be placed within a local authority led governance structure with local authorities taking shareholdings in the ports. This will require legislation, further consultation and time.

As regards Government's role as shareholder, I am firmly of the view that Government must be a more active and demanding shareholder. By that I do not mean an 'interfering' shareholder, but a shareholder that clearly outlines its vision and demands of the sector as a whole, as well as its expectation for individual ports. This will include a re-emphasis on the ports' commercial remit with a requirement that to adhere to a dividend policy and invest and develop on a sound commercial basis.

While no ports are earmarked for privatisation, private sector investment and involvement will be encouraged.

Finally, our ports enjoy a unique location and are frequently sited in - or beside - designated special protection areas for birds and habitats. This has obvious consequences in terms of the complexities involved in ensuring the appropriate balance between economic development and environmental protection. These complexities can be best resolved through early and meaningful engagement between all stakeholders in understanding the differing roles and responsibilities in these important areas.

This new National Ports Policy seeks to address each of these aspects in turn and will provide the entire sector with an appropriate policy framework to allow all our ports to develop in a sustainable manner and ensure that the State is served by the type of port infrastructure and services it requires.

Published in Ports & Shipping Team

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