Rex Graham: Striking the best balance for the Port of Napier

Rex Graham says there will be a suite of protections around the port to ensure continuation of local ownership. Photo File

The Hawke's Bay Regional Council and Napier Port have been making good progress on exploring an initial public offer (IPO) of shares in Napier Port. The council expects to make a final decision on whether or not to proceed with an IPO over the coming four to six weeks.

If the decision is made to proceed with an IPO, it is my view that this decision will strike the best balance for the Port, the council and the people of Hawke's Bay.

A minority IPO would see council continue to retain a majority and controlling stake in Napier Port on behalf of all ratepayers. On Wednesday March 27, council voted to put in place additional protections to ensure its majority ownership position in Napier Port was protected on behalf of the people of Hawke's Bay.

While it is technical detail, we've committed to putting in place a new Council Controlled Organisation which will be called Napier Port Holdings Ltd. This would be the listed company and the entity through which an investment in Napier Port would be made.

Through its ownership position, the regional council can already determine the composition of the Port's Board. We've also voted to appoint two majority shareholder-appointed directors to the Napier Port Board to increase the regional council's participation in the Port's governance. We've started a process to determine the right people for these two positions.

We also voted to increase protections around the use of land at the Port's main Ahuriri site and any future sales of that land.

A minority IPO of Napier Port would provide the Port with the funds it needs to invest in its and the region's future, including enabling the Port to build a new wharf which it needs ready for use ideally by the end of 2022. It would protect ratepayers from the costs of investing further in the Port and would see majority ownership and control retained by the regional council.

These are the things that the Hawke's Bay community have told us matters most to it.

Through the decisions taken today, there will be a suite of protections around our Port that ensure continuation of local ownership in our Port.

I want to be very clear that any IPO of Napier Port must be commercially successful on behalf of the whole of Hawke's Bay and all investors; and it must maximise a priority allocation to locals who wish to invest in the Port.

To ensure both of these objectives are achieved an IPO must also deliver a balanced and diverse mix of shareholders, including locals. The council has asked Napier Port and its advisors to begin introducing the Port to a range of investors across New Zealand and offshore to gauge investor interest and inform the council's decision-making. Talking to potential investors does not represent any commitment to selling but it will help us understand how we approach the transaction to get the best deal for Hawke's Bay.

The HBRC is currently discussing priority access to shares for local investors, including iwi, and will likely make announcements around this at the time a decision on whether or not to proceed is made.

It's important to the regional council that the community is kept well-informed on this process. We are acutely aware that there is an emotional connection to our Port as much as there is an acknowledgement that it is a key strategic asset for the future of our region.

In this respect, we must enable the Port to invest in its future without hitting ratepayers in the pocket and without the regional council taking on a great deal of debt which, ultimately, ratepayers pay for. A minority IPO would bring external capital to our Port, protect our majority community ownership of it and enable the HBRC to focus on its core tasks, such as addressing environmental issues in the Hawke's Bay.

The environmental challenges facing our region are serious and require concerted effort and resources to address. From cleaning up our waterways, to protecting our hill country and coastline from the impacts of erosion, to future-proofing our region and infrastructure from the effects of more extreme weather events, our focus and resources are needed across our natural environment right now.

The people of Hawke's Bay value their natural environment, they value their Port and they have a finite capacity to pay via rates. A potential minority IPO strikes the right balance between protecting the many things that are important to us and the generations to come.

* Rex Graham is the chair of Hawke's Bay Regional Council