Varadkar announces plans for radical overhaul of ports sector
Govt to take more hands-on approach to port sector
Plans to radically overhaul Ireland’s commercial ports and give Government a more hands-on role in the maritime ports sector were announced today by Minister for Transport, Tourism & Sport Leo Varadkar.
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.
“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,” Minister Varadkar said.
“I am firmly of the view that Government must be a more active and demanding shareholder. By that I mean 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 they 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.”
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’.
Ends - The Department of Transport, Ireland March 2013
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 on the Department’s website www.dttas.ie
There are currently nine State-owned commercial port companies – Dublin Port Company, the Port of Cork Company, Shannon Foynes Port Company, the Port of Waterford Company, Galway Harbour Company, Drogheda Port Company, New Ross Port Company, Wicklow Port Company and Dún Laoghaire Harbour Company.
In June 2012 the Competition Authority was asked to conduct a study of the ports sector in Ireland. In line with commitments given in the Action Plan for Jobs, the Authority will publish the results of this market study in 2013. Minister Varadkar has welcomed the Competition Authority study and requested all the port companies cooperate with this important and timely study.
The proposals contained within the policy statement are designed to supplement and encourage competitive conditions. The Minister intends to consider closely any recommendations of the study and respond appropriately within six months of its publication.
The Minister has recently commissioned a comprehensive review of the current and future role of Rosslare Europort. The report is due by end April 2013.
The nine companies are established and operate pursuant to the Harbours Acts 1996 – 2009 and are private limited companies whose shareholders are the Minister for Transport, Tourism & Sport and the Minister for Finance. In addition, Rosslare Europort is the operational and financial responsibility of Iarnród Éireann while technically forming part of the Fishguard and Rosslare Railways and Harbours Company.