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Ad Hoc Committee(Port of Belfast)
Ordered by the Ad Hoc Committee to be printed 21 July 1999
1. During a plenary session of the New Northern Ireland Assembly on 1 February 1999 it was resolved that:
"This Assembly, viewing with concern the Belfast Harbour Commissioners' proposals regarding the Port of Belfast and their effect on other ports in Northern Ireland, appoints an Ad Hoc Committee to consider the serious implications of such proposals and to hold public hearings before submitting a report to the Assembly.
2. The Membership of the Ad Hoc Committee.
Mr R Beggs
Mr P J Bradley2
Mr J Byrne3
Mr G Campbell
Mr F Cobain
Mr P Doherty1
Mr B Hutchinson
Mr D McClarty
Mr M McGimpsey
Mr E McGrady MP2
Mr A Maginness
Mr A Maskey
Ms J Morrice
Mr M Morrow
Mr M Murphy1
Mr S Neeson
Mr D O'Connor3
Dr D O'Hagan
Mr P Roche
Mr J Tierney
Mr D Watson
Mr S Wilson
1 Mr M Murphy replaced Mr P Doherty with effect from 26 April 1999.
2 Mr P J Bradley replaced Mr E McGrady with effect from 19 May 1999.
3 Mr J Byrne replaced Mr D O'Connor with effect from 19 May 1999.
3. The Ad Hoc Committee first met on 18 February 1999 when it was agreed that Mr A Maginness and Mr S Wilson would act as Joint Chairpersons. It was also agreed that each would take the Chair in rotation. Mr G Martin was appointed as Clerk to the Committee.
4. The Committee met on 23 occasions. The minutes of all of the meetings are contained in Annexe A.
PORT OF BELFAST- PRESENT POSITION
5. Trust Ports are autonomous bodies that are not accountable to Government; in effect, they own themselves. The Port of Belfast is a trust port. It is not owned by anyone, nor is it answerable to anyone. It does not have shareholders and all profits are reinvested in the business. It is an independent body run by a board of trustees, the Belfast Harbour Commissioners, who are appointed by the Government.
6. The Port is a well-run and profitable business. Its operating income has risen from £15.6m in 1994 to £18.8m in 1997 (latest available figures). Profits after tax over the same period have risen from £4.9m to £6.5m. The income derives from both Port charges and rent from companies that occupy the land surrounding the Port.
7. Although the Port has never received Government funding in its history, it has received substantial EU grant aid for capital expenditure. Between 1985 and 1997 it received an average of 50% EU grant aid for a total capital expenditure of £150m.
8. The total amount of land under the control of the Belfast Harbour Commissioners is 1,950 acres, 855 acres of which are used for operations directly related to the Port. Ninety acres are reserved for nature conservation, and the remainder of the land is either leased or is in the process of being leased. The largest tenants are Bombardier Shorts, with 460 acres, including the Belfast City Airport, and Harland and Wolff, with 300 acres. Both companies have 115 years still to run on their leases for the majority of the land.
9. The Belfast Harbour Commissioners consider that the future direction of the Port should be towards creating an integrated transport business. To do this, they consider that both vertical and horizontal integration is necessary. This would mean that the Commissioners, or their successors, should be able to undertake additional ventures which they are not allowed to do under the current legislation. These could include a wide range of freight transport, logistics and distribution activities, as well as property development within the Harbour Estate. They also want to be able, given sufficient funding, to acquire other ports and shipping lines, and to undertake joint business ventures with other companies to develop their range of business activities.
10. The Committee held 13 oral evidence sessions, two of which were in private, and took evidence from nine different organisations. These organisations are listed in Annexe B, and the official transcripts of the public oral sessions in Annexe D. The Committee also invited organisations and individuals to provide written evidence, and the respondents are listed in Annexe C.
11. The Committee also sought independent and impartial advice from transport and economic experts from the University of Ulster at Jordanstown. It is grateful to Terry Bunce, Felix Schmidt and Mike Smyth of the University for their advice and assistance.
12. During the collection of both the oral and written evidence many witnesses expressed concerns about the effect any changes to the status of the Port of Belfast would have on the other ports in Northern Ireland, both trust and private. The Committee was concerned that any unfair competition could have significant social and economic effects on the ports and their hinterland.
13. One main source of concern centres on the risk of income from non-Port land subsidising Port operations. Belfast Port has 1095 acres that are not used for Port operations. Although there is no evidence of this happening at present in the Belfast Port, there is the risk that such subsidies could in the future be used to undercut the port charges in the other ports.
14. There is also the risk that a privatised Belfast Port could acquire shipping lines or private ports on the other side of the Irish Sea and create a monopoly position that would have a detrimental effect on other ports in Northern Ireland.
15. The Committee was reassured by the comments of the Minister with responsibility for ports in Northern Ireland, Lord Dubs, during an oral evidence session on 5 May 1999 when he said "We have been consulting particularly with Lisahally and Warrenpoint about their plans to change their trust status. I want to ensure that any change in Belfast does not damage the economic prospects of those ports."
REVIEW OF TRUST PORTS
16. A review of all trust ports in Northern Ireland, including the Port of Belfast, which mirrored a similar review in Great Britain, was completed by the Department of the Environment in May 1998. This review was completely separate from the work undertaken by the Belfast Harbour Commissioners regarding the future of the Port of Belfast. The Committee was disappointed that although it had sought a copy of the review on several occasions, the Minister, Lord Dubs, declined the request on the grounds of commercial confidence.
17. The Minister did, however, inform the Committee, in his written submission, of some of the review recommendations, including the easing of financial controls and the increasing of district council representation on the boards. However, the Minister did not inform the Committee of the main recommendation, which, the Committee understands, was to extend the trust powers of Belfast (if privatisation were not pursued), Londonderry and Warrenpoint Harbour authorities.
18. Since 1985 the Port of Belfast has received approximately £75 million in grant aid from the EU. Although the Belfast Harbour Commissioners have stated that it is unlikely that any further money will be forthcoming, the Committee understands that some may be available from the next round of EU structural funds for the Port and the surrounding land under the framework for sustainable urban development. All proposals will, of course, be considered on their merits, and it will be for the Department of Regional Development to make a good case for future funding for the Port and for the roads infrastructure servicing it.
VALUATION OF THE PORT OF BELFAST
19. The Committee is most concerned that the Government states that it has accepted, in principle, the proposals of the Belfast Harbour Commissioners for a public-private partnership without adequate consultation, an accurate valuation of the Port and its land bank, or a full economic appraisal having been undertaken. It is also concerned that the Belfast Harbour Commissioners have not yet produced detailed proposals for their favoured option, despite being asked to do so by the Government in May 1998.
20. Neither the Government nor the Belfast Harbour Commissioners have provided the Committee with a valuation. The Committee understands that the value of the assets, excluding the value of the land, is far in excess of the various figures that have so far been suggested for the whole harbour estate, including the land.
21. The purpose of the golden share is to allow for the retention of some control over the company following privatisation. The golden share would normally only come into play where the board of the privatised company received a takeover offer, proposed to amend key articles of association, wanted to issue new shares or proposed to sell off the company's assets. The golden share would not entitle the holder to interfere with the normal day-to-day running of the company.
22. The Government included the golden share option in the privatisation of many public utilities during the 1980s and 1990s. Many of these options have, however, been repurchased and some of the former utilities are now completely private companies, with no Government control.
23. Concern has been expressed, particularly by the trade unions, regarding the legality of the golden share under EU legislation. During his oral evidence on 5 May 1999 the Minister claimed that the golden share was a permanent safeguard. The Committee is aware, however, that the European Commission has disputed the right for similar privatisations in other countries to include provisions to veto dissolution, mergers or a change in the status of privatised public utilities.
24. The advice from the legal advisers to the Belfast Harbour Commissioners is far from conclusive. They state "provided that the terms of the golden share can be seen to be non-discriminatory and fall within the various communications released by the European Commission, the issue of the golden share in this case should not be objectionable under EU law".
25. The advice from the Committee's own economic advisers is that the Belfast Harbour Commissioners' golden share proposals would not contravene EU law.
26 The Committee's view is that the legal position is uncertain and that, once the detailed proposals from the Belfast Harbour Commissioners are received, the golden share element should be cleared with the European Commission.
27. The Committee is not convinced of the effectiveness of the golden share and notes that the history of golden shares is that United Kingdom Governments have tended to abandon them.
28. Although there were many diverging views from all of those organisations that provided both oral and written evidence, some common themes emerged. The Committee took these on board when deciding upon the following essential criteria that it believes must be met when considering the options:
(i) the Port must be given more commercial freedom to compete;
(ii) there must be strong and effective safeguards to prevent individuals or organisations profiteering from any decisions that are taken now or in the future;
(iii) any benefits that are achieved from changes in the status of the Port must be for the good of all citizens in Northern Ireland;
(iv) any changes must not have an unfair effect on the operation and continuing viability of the other ports in Northern Ireland;
(v) the Port must be publicly accountable;
(vi) the management and organisational structure must be appropriate;
(vii) there must be a regulatory body to ensure Port safety; and
(viii) environmental protection must be properly managed.
29. The Committee considered a number of options for the future of the Port, including those put forward by the Belfast Harbour Commissioners.
29.1 The Status Quo
29.1.1 As a Trust Port, Belfast is operated by the Belfast Harbour Commissioners, who are responsible for the operation and maintenance of the Port and its infrastructure and aquastructure. The Commissioners and the Port Users are both engaged in the ownership, development, maintenance and operation of the superstructure and the cargo handling equipment. This system has normally worked well for the public good and for the commercial interests in the Port.
29.1.2 The ownership of all land, both Port and non-Port related, rests with the Commissioners. Some of those who gave evidence felt that the degree of control exercised by the Belfast Harbour Commissioners over such a strategically placed land bank was not in the public interest. The Port related land is under the direct control of the Commissioners. The non-Port related land is leased from the Commissioners for industrial and commercial use.
29.1.3 Under this option the Port acts as a landlord port by providing facilities for Port users to conduct their business. Concessions are given to private industry to engage in port activities. While Port users own some of the facilities, the Port is able to lease other necessary facilities to operators to enable them to conduct their businesses. All profits received by the Commissioners from the operation of the Port and its land bank are for re-investing in the Port.
29.1.4 Belfast, as a Trust Port, does not enjoy commercial freedom to respond to opportunities such as engaging in joint ventures or by making acquisitions. It does not have access to the necessary finance in the form of debt and equity.
29.1.5 The regulatory duties of the Port are well taken care of and conform to the necessary high standards required to prevent pollution and to protect the waterways and the environment.
29.1.6 Under the status quo there was no evidence of unfair competition with the other ports in Northern Ireland.
29.1.7 It is strongly felt that the current membership of the Belfast Harbour Commissioners does not adequately reflect the needs of the Port users, the industrial and commercial tenants, public representatives and the community in general.
29.1.8 Belfast operates effectively as a Trust Port. Unfortunately, the commercial activities are seriously restricted and will have a detrimental effect on the competition of the Port in the future. Although the status quo meets most of the criteria set out in paragraph 28, it falls down most significantly on the lack of commercial freedom.
29.2 Trust Port with Extended Powers
29.2.1 The points made with regards to the status quo are all still valid under this option, with the exception that the Port of Belfast would have more commercial freedom. It would be able to develop property on Port land and to integrate vertically and horizontally by means of joint ventures.
29.2.2 It would not, however, be able to make substantial acquisitions, due to borrowing restrictions that would still apply, and the Port would be prevented from using its public assets, such as its land, as a guarantee against loans. To do so would, in the case of default, endanger a public asset and would not be in the public interest. Also, the possibility of investing income in the form of retained earnings would still be restricted by statute to developments within the Port of Belfast.
29.2.3 Under this option the Port would be subject to a public expenditure regime appropriate to a trading body within the public sector. This would take the form of an external financing limit that would score as public expenditure. Any grant paid by the Department of Regional Development to the body, and any net market or overseas borrowing, would score against the external financing limit.
29.2.4 Most of the criteria as set out in paragraph 28 are met under this option, but, although there would be an easing of the commercial restrictions, it would not be sufficient for the Port to develop and move forward at a pace that would ensure its competitiveness.
29.3 Semi-State Body
29.3.1 Under this option there would be a Port Authority of Belfast together with a Port Development Corporation.
29.3.2 The Port Authority of Belfast would be a public body. The Minister for Regional Development would appoint its members. The Authority would act on behalf of the Department of Regional Development as the owner of the Port and its land bank. The Authority would be directly responsible for the development and maintenance of the aquastructure of the Port, that is, its approaches, fairway, channel, manoeuvring and harbour basins. It would also have the responsibility for pollution prevention and environmental protection.
29.3.3 The Port Development Corporation would operate under the principles of private enterprise. As such, it would be able to grant concessions and sell leaseholds of operational facilities and areas ready for further development into fully-fledged facilities. This would be done by the Port user leasing the land, buying, owning, operating the facilities and transferring these back to the Port Development Corporation against consideration at the end of the lease.
29.3.4 The Corporation could raise debt finance but not equity, as there would be no issue of shares.
29.3.5 Although the Port Authority would be responsible for the ownership of the land, the Port Development Corporation would be responsible for the development and maintenance of land for Port operations, as well as industrial and commercial uses.
29.3.6 The Port Development Corporation would have full commercial freedom, enabling it to respond rapidly to opportunities to engage in joint ventures and to make acquisitions. The only limitation would be the amount of debt that could be raised. Impediments to private finance would be the Corporation's ability to service debts, the value of its fixed assets and the gearing required by the finance industry.
29.3.7 The public expenditure restrictions detailed in paragraph 29.2.3 would equally apply to this option.
29.3.8 The directors and executives of the Port Development Corporation would be subject to commercial practices with regards to annual reports and accounts. The Department of Regional Development, as the owner, would have a direct influence over all major decisions.
29.3.9 There would be an annual income stream to the Department of Regional Development as the owner of the Port Development Corporation.
29.3.10 The Port Development Corporation would be able to integrate vertically and horizontally to develop an integrated transport undertaking.
29.3.11 Although the Corporation would have commercial freedom, the Department of Regional Development would ensure that any actions taken would not unfairly affect the operation or viability of other ports in Northern Ireland.
29.3.12 Although the commercial freedom of the Port would be enhanced, the amounts that could be borrowed would be restricted by the value of the fixed assets. The decision-making process for any significant changes would be protracted, as it would be necessary to consult with the Government. The public expenditure restrictions as detailed in paragraph 29.2.3 would also apply. All of the other criteria in paragraph 28 would be met.
29.4 Trade Sale
29.4.1 Under a trade sale there would be a full disposal of the Port and all its assets, including the land bank, to the highest bidder. The Port would operate as a private enterprise. It would be free to borrow money using its fixed assets and its land as collateral. Equity would be provided through the issue of shares.
29.4.2 This option would be the most likely to raise the maximum funds for the Department of Regional Development and the Treasury by means of a one-off payment. There would be no safeguards, however, against individuals or organisations profiteering in the future, nor any guarantees that any future benefits would be for the good of all Northern Ireland's citizens.
29.4.3 The Port could integrate vertically and horizontally to develop an integrated transport undertaking.
29.4.4 The regulatory duties relating to navigational safety, pollution control and environmental protection would be under private control, with the risk that commercial pressures to satisfy shareholders would take precedence over public safety.
29.4.5 There would be increased potential for an adverse impact on the other ports in Northern Ireland because all commercial constraints would be removed.
29.4.6 Although the Port would be given complete commercial freedom to compete, there may not be safeguards to prevent individuals or organisations from profiteering from the sale of assets, including the land, in the future. There would be no assurances that any benefits would be for the good of all Northern Ireland's citizens. The continuing viability of other ports in Northern Ireland may be called into question. There may also be concerns over Port safety and environmental protection. There would be no protection against any unwanted takeover bids at the point of disposal.
29.5 Public-Private Partnership
29.5.1 Under this option the Port and all its assets, including the land bank, would be sold. The Port would operate as a private enterprise. It would be free to borrow money using its assets and its land as collateral. Equity would be raised through the issue of shares.
29.5.2 This option does, however, provide for a golden share to be held by the Department of Regional Development and the opportunity for the Department to hold a minority shareholding (up to 20%) in the new company. The rights proposed in the golden share include:
(i) the right to veto an unwanted takeover;
(ii) the prevention of any particular group of shareholders from exercising undue control over the affairs of the company;
(iii) safeguards in relation to Port charges; and
(iv) the power to intervene and/or suspend the disposal of any freehold interest of any Port land.
29.5.3 Although very significant funds could be raised under this option, they would be tempered by the number of restrictions imposed by the golden share. As well as a one-off payment, there would be an annual profit stream to the Department because of its shareholding in the Company.
29.5.4 The Port could integrate vertically and horizontally to develop an integrated transport undertaking.
29.5.5 The regulatory duties relating to navigational safety, pollution control and environmental protection would be under private control. However, the public interest would be safeguarded by the Department's representatives on the board of the company.
29.5.6 There would be increased potential for an adverse impact on the other ports in Northern Ireland, although the Department, as a minority shareholder, would have influence over the commercial actions of the company.
29.5.7 Under this option the Port would be given more commercial freedom. There would be a very significant one-off payment together with an annual income stream from the Department's shareholding in the Company.
29.5.8 Although the golden share would appear to provide safeguards, there is the possibility of a future Administration changing the position. There are also concerns regarding the legality of golden shares under EU regulations and rulings.
29.5.9 There are no guarantees that all benefits achieved would be for the good of all the citizens of Northern Ireland, as there would be the need to satisfy shareholders.
29.5.10 Because the regulatory duties would be the responsibility of a private company there would be the risk of commercial pressures to satisfy shareholders taking precedence over public safety. The Department, as a minority shareholder, could exert some influence, however, control of such a strategic land bank would rest with the PLC.
29.6 Public-Private Corporation
29.6.1 Under this option there would be a Belfast Port Authority and a Public-Private Corporation.
29.6.2 The Authority would be a statutory body acting as a public landlord for the Port and its land bank. It would have responsibility for the regulatory duties relating to navigational safety, pollution control and environmental protection.
29.6.3 The Corporation would be entrusted with the commercial operation of the Port and its land bank. The Authority would sell the Port assets in the form of infrastructure, superstructure and cargo-handling equipment to the Corporation. The Corporation would be free to maintain, operate and develop these assets as it saw fit. The ownership of the Port's aquastructure and its maritime access would remain with the Authority, but the Corporation would be responsible for their maintenance and development.
29.6.4 A concession would be granted to the Corporation to use, maintain and develop all land under a leasehold agreement.
29.6.5 The Corporation would have commercial freedom to engage in joint ventures and make acquisitions.
29.6.6. The Department of Regional Development would have a minority shareholding of, say, 40% in the Corporation.
29.6.7 As with the Public-Private Partnership option, there would be a golden share to protect against a hostile or unwelcome takeover bid for the Corporation.
29.6.8 The Corporation would have a right of access to private finance according to its ability to service debt. It could use the value of its fixed assets and its leases as collateral. It could also raise equity through the issue of shares. This would allow the Corporation to invest in the Port and in other opportunities related to an integrated transport undertaking.
29.6.9 Membership of the Authority may include representatives of the senior staff of the Corporation, the Department of Regional Development, Belfast City Council, unions and financial institutions, as well as terminal operators and Port users.
29.6.10 Under this arrangement there would be an initial payment to the Authority for the sale of the concession. There would also be a continuous income stream from leaseholds and ground rents. These could be regularly reviewed.
29.6.11 The Department of Regional Development, with a 40% shareholding, would have important influence over any commercial actions of the Company that could have an adverse effect on other ports in Northern Ireland.
29.6.12 The Port would be given more commercial freedom to compete, but, because the Port Authority would own both the Port and the land, there would not be the opportunity for individuals or organisations to profiteer.
29.6.13 As the regulatory duties and environmental protection would be the responsibility of the Port Authority, Port safety would be safeguarded.
29.6.14 Although there would be no guarantees that all future benefits would be in the interests of Northern Ireland, the fact that the Authority would own the land, with the Department as a minority stakeholder in the Corporation, would greatly reduce the scope for profiteering.
29.6.15 The Department of Regional Development could significantly influence any actions of the Company that would have an adverse effect on other ports in Northern Ireland.
OUTCOME OF THE
EVALUATION OF THE OPTIONS
30. It is accepted by the Committee, and by the vast majority of the organisations that provided both written and oral evidence, that the retention of the status quo is not in the best interests of the Port of Belfast, nor of the people of Northern Ireland. This option meets most of the essential criteria but falls down most significantly on the need to give the Port more commercial freedom to compete in an ever-changing and aggressive market. The Port is essential to the economy of Northern Ireland, and it must be given sufficient freedom to compete with other ports.
31. Although becoming a trust port with extended powers would meet most of the essential criteria, the Committee believes that this option would not provide sufficient freedom for the Port to develop and compete. The Port must maintain and, where possible, increase its business. It cannot remain still while competition is increasing.
32. The semi-state option would also meet most of the criteria, but, again, the freedom to compete would, in the opinion of the Committee, be insufficient for the Port to develop and move forward at a pace necessary to ensure its competitiveness.
33. The Committee believes that the Port is an asset to be used for the benefit of all of the people of Northern Ireland. It is totally opposed to the Port's disposal under a trade sale, where the asset would be sold off to the highest bidder. There would be no guarantees that the interests of the people would be taken into account in any actions taken by the successful company. The Committee feels that, as the Port is crucial to the economy, it would not be in the best interests of Northern Ireland to dispose of it under this option.
34. Under the preferred option of the Belfast Harbour Commissioners, the public-private partnership, the Port, including all of its land, would be floated on the stock exchange. Although there would be a very significant one-off payment and an annual income stream from the Department of Regional Development's shareholding in the Company, the Committee is not convinced that it is necessary to sell the land in order to allow the Port to compete.
The Belfast Harbour Commissioners have put forward arguments for the necessity to treat the Port operations and the land as one entity in order to have a successful flotation on the stock exchange. The Committee does not accept this. It believes that it is possible to have a successful flotation without including the land.
35. Although the public-private corporation option would provide many safeguards against profiteering, the Committee is not convinced of the need to lease land not used for Port operations to a public-private corporation in order for the Port to compete successfully. The Committee does concede, however, that it would be inappropriate and harmful to any flotation to withdraw from any new company the income from current leases on both Port and non-Port related land.
36. The Committee considers that the land, currently under the control of the Belfast Harbour Commissioners, is a very valuable asset that should be retained in the public domain for the benefit of all of the people of Northern Ireland. The Committee is adamant that there should be no opportunity for individuals or organisations to profiteer from the Port or the land, in either the short or long term.
37. It will be necessary for this land to be managed. The Committee therefore proposes that a new statutory body, the Belfast Port Authority, should be established and considers that it should be merged with the Laganside Corporation, since both bodies will be doing similar important work in the heart of Belfast.
38. The Committee feels that many statutory bodies are filled by people who do not represent the views of the citizens of Northern Ireland. It is therefore the view of the Committee that 50% of the positions on the Port Authority should be allocated to elected representatives, with the remainder to include, among others, representatives of those directly involved with the Port.
39. The Committee accepts that the Port of Belfast will face increasing competition and that consequently it should be allowed to compete without undue restraint, while at the same time protecting the public interest.
40. The Committee believes that the best way of achieving this is to agree to the assets of the Port, in the form of the infrastructure, superstructure and cargo handling but not the land, being floated on the stock exchange. The Department of Regional Development, in order to protect the public interest, will retain a 40% holding in the new company and will appoint directors to the board. There should also be ample opportunity for the people of Northern Ireland to participate in the purchase of shares.
41. It is the Committee's view that navigational safety, pollution control and environmental protection are paramount to the safe operation of the Port. It is important, therefore, that there be clear lines of responsibility. It is the Committee's opinion that the new company should be solely responsible for these matters. The Authority's role will be to ensure that the Company complies with its regulatory duties.
42. The Committee regrets that the Chancellor of the Exchequer in his statement of 12 May 1998 linked the sale of the Port to the provision of a number of road schemes before the consultation process on the proposals of the Belfast Harbour Commissioners had commenced. The Committee notes, however, that the conclusions it has reached will allow for progress to be made on these schemes. It is satisfied that sufficient funds will be realised to allow them to proceed.
43. The Committee notes an announcement by the Minister, Lord Dubs, on 2 December 1998 in which he stated that "Under a unique arrangement the proceeds from the sale of the Port of Belfast will be retained in Northern Ireland."
44. The Minister has assured the Committee in written evidence that under this unique arrangement "receipts from the sale of the Port of Belfast would not, as would normally be the case, have to be surrendered to the Exchequer, but rather would be retained for the benefit of the Northern Ireland Block". The Committee expects the Government to honour these pledges, no matter how much money is realised. The Committee strongly considers that any proceeds should be used for the benefit of all of the people and not forwarded to the Exchequer.
45. Much has been made by the Minister, Lord Dubs, and the Belfast Harbour Commissioners regarding the retention of a golden share by the Department of Regional Development. The Committee is very much in agreement with the concept and recognises that, provided it is effective, it could provide an important safeguard against hostile takeovers or undue influence by organisations holding shares or attempting to sell off assets. However, because of conflicting evidence regarding the effectiveness of golden shares, the Committee is anxious that the Department ensures that, when detailed plans for the flotation are brought forward, it clarifies the position under EU law.
46. The Committee feels that the other ports in Northern Ireland play a very important role in the social and economic life of both their immediate hinterlands and much further afield. They are also important in ensuring that there is healthy competition for the Port of Belfast. It is also recognised, however, that all of the ports are facing increasing competition from outside Northern Ireland and that they must all be in a fit state to face this competition.
47. The Committee is most anxious that the trust ports at Lisahally and Warrenpoint are given extended powers to place them in a better position to compete. Their current powers are insufficient and action is urgently required by the Department.
48. The Committee recognises Warrenpoint's urgent need for a new deep-water quay to allow it to handle larger ships. It is anxious that the difficulties between the local community and the Warrenpoint Harbour Authority over the future development of the harbour can be amicably resolved. The Committee proposes that some of the money raised from the flotation of the Port of Belfast should be used to assist with the provision of the new deep-water quay.
i. A new statutory body, the Belfast Port Authority, will be established and it will merge with the Laganside Corporation.
ii. The membership of the Authority will consist of 50% elected public representatives, the majority coming from Belfast City Council and the remainder from the Northern Ireland Assembly (based on a fair geographical spread), with the remaining 50% appointed by the Department of Regional Development to include, among others, representatives from the wider Northern Ireland interest, the unions, terminal operators and Port users.
iii. The Authority will, on behalf of the Department, own all of the land vested in it, including that for which the Belfast Harbour Commissioners are currently responsible.
iv. The Authority will have responsibility for ensuring that the regulatory duties relating to navigational safety, pollution control and environmental protection are properly carried out.
v. The assets of the Port in the form of infrastructure, superstructure and cargo handling, together with income streams from the leases on all of the land currently held by the Belfast Harbour Commissioners, will be floated on the stock exchange. A new company, the Belfast Harbour PLC, will be formed.
vi. Before any action is taken, however, the Department of Regional Development must undertake both a full economic appraisal and an accurate valuation of the Port.
vii. The Department of Regional Development must ensure that all of the lessons learnt from the report of the Westminster Select Committee on Public Accounts on the privatisation of Belfast International Airport, particularly in relation to the valuation and advisers' costs, are taken into account.
viii. All proceeds from the flotation will remain in Northern Ireland.
ix. The Company will be responsible for carrying out all regulatory duties in respect of the Port.
x. The Company will be responsible for the infrastructure, maintenance and security of the Port.
xi. The Department of Regional Development will have a 40% stake in the new company.
xii. The flotation of the Company will be such as to give the widest possible opportunity for the participation in the purchase of shares by the Northern Ireland public. There should be a public tendering process to decide on the company to undertake the flotation.
xiii. The Department of Regional Development will hold a golden share to safeguard the public interest in the operation of the Port. In drawing up its detailed proposals for the flotation, the Department of Regional Development will ensure that the golden share element does not contravene EU law.
xiv. Any change of use of the land leased to the Company will have to be approved by the Authority.
xv. The Department will, as soon as practicable, extend the powers of trust ports in Northern Ireland to ensure that they are in a position to compete effectively with other ports.
xvi. The Department will use some of the revenue from the flotation of the Port of Belfast to assist the Port of Warrenpoint with the provision of a new deep-water quay.
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