Ports of Auckland’s expected dividend payments to its local government owner have been slashed by $100 million over the next decade.
Auckland Regional Holdings’ recently finalised Long Term Funding Plan 2008-2018 spells out the problems plaguing the port: “[Ports of Auckland] is facing a very tight trading environment with lower economic activity and reduced growth in both container and break bulk volume. This is expected to continue for some time,” the plan says.
ARH is expecting $24.3 million less in dividends from the port in the next three years and $100 million less over the next 10 years.
The port’s dividend policy - to pay out 75 per cent of post-tax profits – hasn’t changed.
Ports of Auckland recently announced a surprise move to buy the container assets of its main rival Port of Tauranga, sparking speculation about whether the play had ARH’s support.
ARH chief operating officer Peter Casey says ARH had previously communicated its view that in principle some form of port rationalisation has strong merit.
“ARH is committed to playing its role in achieving the right outcome for the long-term benefit of New Zealand,” the funding plan says.
But it was ARH that scuttled the proposed merger between the two ports last year, saying at the time that it did not fit with its “long-term strategic investment approach.”
ARH, which is a statutory entity created to manage assets on behalf of Auckland Regional Council, has also reduced the amount of money in its funding plan that it plans to provide to council over the next decade.
ARH chief operating officer Peter Casey says this was to secure the long-term future of the portfolio, which will be used to provide certainty of operating subsidies rather than funding project costs.
“You can have trains, but if you can’t pay the operating subsidies to run them, you might as well not have them,” he says.
The Auckland regional fuel tax will be used to pay for capital expenditure instead.
ARH plans to dish out $155 million to ARC in this current financial year – its highest payout ever – but after that the distributions will reduce dramatically, to around $60 million for the 2010 and 2011 years.
If ARH had continued paying out higher distributions, it would have had to take on debt to do so.
Auckland Regional Holdings’ recently finalised Long Term Funding Plan 2008-2018 spells out the problems plaguing the port: “[Ports of Auckland] is facing a very tight trading environment with lower economic activity and reduced growth in both container and break bulk volume. This is expected to continue for some time,” the plan says.
ARH is expecting $24.3 million less in dividends from the port in the next three years and $100 million less over the next 10 years.
The port’s dividend policy - to pay out 75 per cent of post-tax profits – hasn’t changed.
Ports of Auckland recently announced a surprise move to buy the container assets of its main rival Port of Tauranga, sparking speculation about whether the play had ARH’s support.
ARH chief operating officer Peter Casey says ARH had previously communicated its view that in principle some form of port rationalisation has strong merit.
“ARH is committed to playing its role in achieving the right outcome for the long-term benefit of New Zealand,” the funding plan says.
But it was ARH that scuttled the proposed merger between the two ports last year, saying at the time that it did not fit with its “long-term strategic investment approach.”
ARH, which is a statutory entity created to manage assets on behalf of Auckland Regional Council, has also reduced the amount of money in its funding plan that it plans to provide to council over the next decade.
ARH chief operating officer Peter Casey says this was to secure the long-term future of the portfolio, which will be used to provide certainty of operating subsidies rather than funding project costs.
“You can have trains, but if you can’t pay the operating subsidies to run them, you might as well not have them,” he says.
The Auckland regional fuel tax will be used to pay for capital expenditure instead.
ARH plans to dish out $155 million to ARC in this current financial year – its highest payout ever – but after that the distributions will reduce dramatically, to around $60 million for the 2010 and 2011 years.
If ARH had continued paying out higher distributions, it would have had to take on debt to do so.