Ports & Terminals

Port of Vancouver rejects feasibility of think-tank recommendations on privatization

The largest Canadian port has strongly rejected the conclusions of a just-released think tank report recommending that Canada’s four leading ports should be privatized so that several billion dollars in additional funding could be allocated to such other national infrastructure projects as public transit and new highways. “From our perspective, the governance model that we currently have in place works very well to allow us to deliver effectively on our mandate, which is to enable Canada’s trade and to do so considering the concerns of the community and protecting the environment,” said a spokesperson for the Vancouver Fraser Port Authority who said its viewpoint has been transmitted to the federal government. “Nearly 90 per cent of our earnings beyond operating costs are reinvested in port infrastructure, and collaboration with local, provincial and federal governments continues to result in gateway development that is envied worldwide,” the spokesperson added. Continuing, the Vancouver port spokesperson said: “A private investor would require a return on that investment that would have to come from current infrastructure funding and/or higher rents and fees for port tenants and users. This would have a serious impact on the long-term competitiveness of the gateway.” According to the C.D. Howe Institute, the ports of Vancouver, Montreal, Prince Rupert and Halifax represent a potential cash boon of up to C$3.4 billion to the federal government under a proposed restructuring of a governance model – similar to an “asset-recycling” experiment in Australia - in place for 18 Canada Port Authorities (CPAs). These CPAs act as landlords, managing safety and navigation services, permits, and leases for different terminal operators. The report contends that “due to the competitive landscape facing ports, port users are unlikely to see significant changes in pricing and customer experience if the federal government chooses to involve private capital.” The report’s author, Steven Robins, argues the federal government should, in fact, “restrict CPAs from investing risk capital and instead rely on private capital to finance expansion, and harvest some of the value of its equity stake in other priorities.” The report goes as far, at one point, to urge the federal government “to cast a critical eye” on the planned C$2 billion Terminal 2 container cargo expansion at Roberts Bank in the Port of Vancouver aimed at meeting future demand in Asian trade. A controversy has been swirling in Canadian port circles since last November when Morgan Stanley was asked by the federal government to provide financial advice on its port holdings which have been operating since 1998 as financially self-sufficient entities at arm’s length from the government. An “if it ain’t-broke-don’t fix it” reaction has been pretty widespread in these circles. “Of course, privatization can result in more efficient operations,” observed the Vancouver port spokesperson who also stressed: “However, Canada Port Authorities are already corporately structured and operate in a quasi-commercial manner, mostly independent of government. Moreover, terminal operators and tenants at the Port of Vancouver are already private sector entities. Therefore, those benefits of privatization would not likely be realized here.”
Leo Ryan
Leo Ryan


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