SPC ready for upcoming levels of debt

Sydney Ports Corporation would borrow heavily to fund expansion projects in the coming years, chief executive Greg Martin told Lloyd’s List DCN . The corporation is planning to build a 60-ha third terminal at Port Botany &#8211 a project expected to cost $1,000m-plus project, including development costs by the private sector terminal operator &#8211 while progressing its plans for an intermodal hub at Enfield. &#8220Some of the money is going to come from capital we’ve got in reserve, but the majority will come from borrowings,&#8221 Mr Martin said. &#8220And to repay those borrowings, we need extra income &#8211 even with trade growth.&#8221 SPC announced an increase in wharfage charges at Port Botany in June. From September 1, wharfage charges on overseas full imports will increase by $20 to $81.50 per teu. A charge of $10 per teu has been reinstated on empty containers. Charges on full export containers will remain at $46.50 per teu. &#8220I think those charges are very modest increases. They’re done with a fair degree of thought,&#8221 Mr Martin said. &#8220There is no increase to export charges &#8211 it’s export cargo we need to help the country with, really. It would be a pity to penalise exports.&#8221 Labelling the change to wharfage &#8220rate restoration&#8221, Mr Martin said charges of $100&#47teu were a reality in 1991. &#8220They came down to $60 for imports in 1995," he said. "Exports came down to $45. They’ve been the same since 1995. &#8220There’s been substantial reduction in real terms. To put $20 back on an import box, and $10 back on empties (restoring a charge SPC had in place in 1999) is really very modest indeed &#8211 particularly when some of the shipping companies have announced rate restoration charges in the order of $300 US, with more to come.&#8221 Mr Martin said without the expansion work, the port would expect shipping companies to impose congestion charges of $75-$100 by 2015. On the need to borrow to fund capital works, Mr Martin said SPC had reduced its debts down to a &#8220very manageable level&#8221 in preparation. &#8220We’ve got ourselves into a very healthy position over a number of years,&#8221 he said. &#8220We’ve worked closely with the government &#8211 which, contrary to some comment, hasn’t over-indulged in taking unrealistic dividends from us. &#8220We’ve been paying a reasonable commercial dividend all these years so we’ve got a very strong balance sheet. &#8220The government was very aware where we were going with this Botany project so that allowed us to get to a strong balance sheet so now we can borrow a large amount of money so we can pay for it.&#8221 According to Shipping Australia Limited, operators at Port Botany have incurred pilotage increases of 7%, and an increase in towage costs of 11.3% in March 2006, and a further increase of 4.2% in February 2007. Read more on SPC’s plans for Port Botany, Enfield, and road and rail governance in the July 19 edition of Lloyd’s List DCN.

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