Super-port plan could relegate Auckland

Auckland's hard-fought public ownership of its port company faces being partially reversed through a merger with its Tauranga competitor.

The two companies yesterday revealed plans for a super-port - tipped to favour Tauranga at the expense of Auckland - to increase efficiency, following moves by some shipping lines to serve fewer ports.

The announcement comes days before the world's largest container shipping line, Maersk, picks which of the two ports will win its exclusive business.

Port of Tauranga chairman John Parker said his company was discussing options with the Auckland company, "including the possibility of a merger of both port operations".

He would not give details of the proposed ownership structure of the merged entity, but said the "obvious vehicle" would be the stock-exchange listed Tauranga port company.

Industry observers said Auckland Regional Council's holding company would probably retain ownership of Ports of Auckland's waterfront and Port of Tauranga would wholly own the super port.

The scheme raises the question of whether it might strengthen the idea being investigated by the Government of siting a stadium on Auckland's downtown waterfront for the rugby World Cup in 2011.

But Auckland regional officials said there was no connection between the port talks and the stadium idea. Rugby World Cup Minister Trevor Mallard had no comment to make.

The regional council holding company last year bought back the 20 per cent of Ports of Auckland the council had privatised on the stock exchange more than a decade earlier.

At the time of the buy-back, council chairman Mike Lee hailed it as historic, saying the company would be a "prized legacy for future generations of Aucklanders", its profits to be used for transport and stormwater developments.

Yesterday he said the ARC saw "considerable merit" in some form of port alliance.

When asked about potential dilution of public ownership of the Auckland port company, he said: "We certainly wouldn't countenance diluting our interest or our control over those assets.

"I don't think that need constrain a merger or alliance.

"There are very rigorous rules in the Local Government Auckland Amendment Act which inhibit the disposal of value in Ports of Auckland.

"[For] any significant change to the structure we would have to consult the people of the Auckland region. It may even necessitate a poll."

"Tauranga may have certain ideas like that; I think Auckland may have a slightly different approach."

Ports of Auckland chief executive Geoff Vazey believed it was somewhat inevitable that more New Zealand ports would consider merging.

"Rather peculiar that a nation of 4 million is served by 14 individual ports," he told Radio NZ.

"It may well eventuate into ... say, three or four groups of ports, and those groups would certainly compete with one another."

Auckland City Mayor Dick Hubbard is overseas and had not been fully briefed on the port companies' moves, but said a re-listing of Auckland's port on the stock-exchange would be an anomaly following the ARC's buy-back.

A ports merger could have implications for the tank farm area at the western end of the port's inner-city operation, he said.

There are plans to rezone the area - owned mainly by the port company - for mixed commercial, residential and marine-industry use and public space.

The Northern Employers and Manufacturers Association said the merger made sense, and would hopefully give the two ports the critical mass to be less dependent on big shipping lines.

"While the issue of competition is important, most port customers realise the dominant shipping companies are currently capturing substantial benefits by playing the two ports off against each other," chief executive Alasdair Thompson said.

The plan could also allow the regional councils, which own the ports, to to rationalise their dominant ownership.

They could retain ownership of operating land and surplus land for redevelopment, but publicly float the combined port company, freeing up ratepayers' capital and creating another listed company for public investment.

- Additional reporting Jenny Keown, NZPA


Merger could start trend

The push to merge the ports at Auckland and Tauranga could be the start of a wave of regional ports getting closer.

Port Lyttelton chief executive Peter Davy said his company hoped the news was the start of greater rationalisation.

Lyttelton, which is owned by the Christchurch City Council, has already sought a merger with its major South Island rival, Port of Otago.

But the Dunedin port has since taken a 15 per cent blocking stake in Lyttelton, scuppering a deal it had sought with global port company Hutchison.

If the port industry did consolidate, smaller local ports might still have a viable future in specialist shipping up and down the coast, Mr Davy said.

One analyst said smaller port companies such as Wellington's Centreport were at risk of drowning in the big players' wakes. It was hard to get port investment when there was a threat of them closing down.

- NZPA