Auckland Port lease plans axed with new tripartite agreement
The Port of Auckland has reached a tripartite agreement with the Auckland City Council, its owner, and the Maritime Union of New Zealand, abandoning previous plans to sell the port’s operating business via a long-term lease.
The Mayor of Auckland had proposed two options for the port: the sale of an operating lease or continued Council ownership of the port with a gradual size reduction, with the former being the preferred option.
The proceeds from the lease had been planned to go into a NZ$3-4 billion investment fund as part of the city’s 10-year budget plan.
The Maritime Union of New Zealand opposed the sale, describing potential privatization as a threat to the economic stability of Auckland city and New Zealand. One of the concerns raised was the potential risk of massive price hikes on freight, akin to those experienced in Australia.
The union warned in a study that privatisation would burden New Zealand businesses with at least NZ$70 million in additional annual costs to satisfy investor returns, citing surcharges on standard container terminal fees exceeding AU$100 per container in Australia, with no alternatives available.
In the revised scheme, Auckland’s port land, assets, and operations will remain under council ownership.
The Port of Auckland is set to channel NZ$1.1 billion in profits to Auckland Council over the next decade, surpassing the anticipated net returns from investing the proceeds of a port lease by NZ$172million.
The arrangement is poised to be formalised through Port of Auckland’s annual statement of corporate intent and the council’s Long-term Plan (10-year Budget) 2024-34.
“Port of Auckland has agreed to deliver much improved profits to Auckland Council. And, we have agreed to take the proposed sale of a long-term port lease off the table,” said Mayor Wayne Brown.
“The Port Company welcomes the Mayor’s plan, as it provides a clear direction and certainty for the port staff, our customers, and the community,” added Chair of Port of Auckland, Jan Dawson.
Auckland Council and its asset management company Eke Panuku have developed a Framework Plan for the central wharves to make better use of prime waterfront space. In addition, the Port of Auckland has voiced support for the Mayor’s proposal to return Captain Cook Wharf and Marsden Wharf to Auckland Council, which have no impact on the company’s profitability in the short-term.
The city council added that the process of considering the appropriate commercial model for port ownership in the Upper North Island will continue. This is a reference to North Port near Whangarei, 150km from Auckland. Northport is a 50:50 joint venture between the Port of Tauranga and Marsden Holdings, in which Ports of Auckland holds a 21% stake.
According to Port of Auckland CEO, Roger Gray, the agreement will result in price hikes to align with Australian prices in the upcoming period, from NZ$95 to NZ$200 per container, affecting over 900 businesses that access the port.
The agreement is yet to be endorsed by Auckland Council’s Budget Committee and Governing Body.
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