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Trouble at the port

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Photo: CentrePort

Wellington.Scoop
CentrePort has been slow to admit the serious results of last week’s earthquake. But the facts are at last coming out.

On the day of the quake, the port was closed because, said its website, “we have sustained damage to buildings and the port and also some liquefaction and differential settlement in places.” But all seemed hopeful. It was “working through a process with tenants to ensure all buildings were safe before they were re-occupied, which would happen over the coming days.”

One day later, in its first press release, CentrePort talked three times about its buildings having “performed well.” However two of these buildings “would require more extensive inspections to assess the level of damage,” which was a clue to what was to come. And in one final sentence it said the port had

…suffered damage to some wharves and roadways with some liquefaction and differential settlement in places. Staff were working to get assessments done so the port could resume operations safely and as early as practicable.

All was sounding optimistic for getting back to normal. And things were still sounding good when CentrePort announced on the 16th

CentrePort has managed to resume key parts of its business within 72 hours of Monday’s 7.8 magnitude earthquake … we managed to get ferries up and running and we’ve also got the Seaview oil terminal open and today we’ve got a rail line working so we can begin moving freight off the port to waiting customers…Port staff were working alongside other agencies on the recovery effort to get the port up and running again safely and as early as practicable.

On the 17th, there was a certain strangeness when CentrePort was welcoming a government inquiry into “the performance” of several buildings including Statistics House. Two days earlier that CentrePort-owned building had “performed well.” But now it was known to have suffered some kind of floor collapse. For the first time, the port was admitting that things might be serious:

“We know that the earthquake was a very large event that impacted large parts of the port and the CBD, and we’re in the process of assessing the damage and understanding what happened to our buildings and infrastructure.”

Nevertheless, “as early as practicable” was again promised on the 21st, when chief executive Derek Nind said:

“Six days ago we had no water, no electricity, no phone lines and no email, [and now] we have large areas of the Port up and running. Engineering inspections were needed everywhere to make the Port safe, and they are ongoing. We had to review all operations and processes in light of the earthquake. Safety is our number one priority, and the reality is the seismic engineering inspections take time. We understand the importance of the Port to the regional economy, and are committed to resuming operations as soon as practicable.”

Some staff have been unable to work because of the earthquake, others have been deployed to different roles and we’re looking at possible employment opportunities at other ports. There is much work to be done, particularly in our container shipping operation, which remains suspended. Potential solutions may mean the Port has to work differently in the short, medium and long term. Damage to the Port is more extensive than during the 2013 Seddon earthquakes. Many buildings remain off limits, with staff working in back-up locations across the Port and outside the CBD.

The next day the port company tried again to be optimistic with another announcement of “good progress.” But in the last two paragraphs CentrePort briefly acknowledged the seriousness of its container wharf problems:

The Port’s container cranes are currently non-operational and there is liquefaction and substantial differentiated settlement across the container operations area.

Then on the 25th, the full story:

Chief Executive Derek Nind says the suspension of shipping operations from the damaged container terminal had forced the company to think differently about its business.

And yesterday, no more talk of “good progress. ” Instead, after a Regional Council meeting, some startling news. The DomPost reported that many aspects of the way the port operates were likely to be disrupted for years, that council chairman Chris Laidlaw was “vowing not to let CentrePort fail,” and warning that the government may be asked to invest money into the quake damaged port.

Laidlaw raised the prospect of a central government bailout. “Well, there’s a chance that the government will have to invest money and the government regards it as a strategic asset, and we’re all on the same page.”

CentrePort declined to comment on Chris Laidlaw’s comments. But the Taxpayers’ Union came out with some fierce criticism. Its executive director Jordan Williams said

“Councillors were warned in 2012 that the Council’s debt guarantee of up to $150million of CentrePort’s borrowings amounted to a subsidy for risky property development. I was in the room when they were warned it could come back and bite ratepayers…These property developments should never have been a role for the Council … Chris Laidlaw was warned that the Port lacked the expertise to develop commercial property…”

And more.

“Much attention has been given to CentrePort’s damaged container wharf, but that’s not where the real financial hit is. Mr Laidlaw’s comments will add fuel to the rumours circulating in Wellington that major design flaws in CentrePort’s investment properties are the reason for such extensive damage. CentrePort knows that no insurance company will pay out for buildings which had hidden defects in the first place.”

The Regional Council owns 76 per cent of CentrePort, with the balance held by Horizons Regional Council, which covers the Manawatu-Whanganui regions. The two councils shared $7.5 million in dividend payments in the year to June 30. Such a dividend is not likely next year.

RNZ: CentrePort has $600m insurance to draw on
Unions: First container ship since quake

13 comments:

  1. Elaine Hampton, 30. November 2016, 11:12

    Another nasty cold to be caught by ratepayers, who had no say in the building of this entity on reclaimed land! Too clever by half is the phrase that comes to mind, especially when the decisionmakers’ pockets are not affected.

     
  2. Mark Shanks, 30. November 2016, 11:26

    Empire building using ratepayers as guarantors. Reminds me of WIAL. Councils are public entities. They are not private businesses.

     
  3. TrevorH, 30. November 2016, 16:21

    Time to wind up the Regional Council. Not a cent more of ratepayers’ or taxpayers’ hard earned money. The buildings can be used for landfill.

     
  4. Cr Daran Ponter, 30. November 2016, 19:01

    There should be no impact on ratepayers in relation to the office buildings on Port land as these are covered by insurance. If there is a concern about an impact on rates, then that lies with the affect of the earthquake on the Port’s operational areas.

    Several warehouses are going to have to be demolished and I suspect that the container wharf will have to be be largely rebuilt (from the piles up). The impact here is that the Port is likely to have to borrow funds and will not be paying a dividend to the Regional Council for some years (a dividend which assists to offsets your Council rates).

    The upside is that we may get an opportunity to look at the better configuration of Port operations (e.g where the ferry and cruise terminals are based) for the medium to long-term, and also to look at the Port – CBD interface, which in my view serves as a very poor introduction to Wellington City.

     
  5. Hel, 30. November 2016, 21:41

    The cost of insuring these buildings in the future will be astronomical if they are insurable at all; this will mean increased cost or risk for the ratepayers. These buildings are in danger of becoming untenant-able lemons when the leases come up for renewal; this cost will also fall on the ratepayers as will the guarantees to AMP. To suggest there will be no impact on ratepayers is hard to credit.

     
  6. Morris Oxford, 1. December 2016, 7:26

    Daran, I cannot share your affection for the effect “of the earthquake on the Port’s operational areas.” This sort of thing is far too serious.

     
  7. Lindsay, 1. December 2016, 8:20

    Daran: that’s a great idea about reconfiguring the layout of port operations. Cruise ships should be berthing alongside the CBD and not way out in an industrial area. The Interislanders too. And the container wharf has been an ugly blight on the landscape since it was created so long ago. Tell us more about how these changes could be made.

     
  8. City Lad, 3. December 2016, 10:01

    Mayor Blumsky was keen to move the container port facility to Ngauranga and to use the existing reclaimed land for housing development. Thank goodness this never happened. Loss of life would have been considerable in the early morning quake.

     
  9. Guy M, 4. December 2016, 0:08

    City Lad – rubbish. Housing on that site would be suffering from some liquefaction, same as the port has, but there is no reason for loss of life. NZ house construction may leak occasionally, but they generally don’t kill people in earthquakes.

     
  10. Casey, 4. December 2016, 8:56

    Daran. The impact will be be felt by ratepayers as the loss in income from all Centreport activities will result in no dividends being paid to the GWRC for some time. Ratepayers will be forced to pay for these losses in higher rates.

    Instead of the new GWRC council as first order of business voting themselves a pay rise, they ought to have been looking at the cost impact of the earthquake and what projects will need to be halted in the short term. Again we see poor leadership that is devoid of commercial nouse in my opinion.

    The Statistics Building damage may be covered by insurance, but insurance doesn’t cover betterment which is what that building needs. There is insufficient mass in its foundations and to correct this the owners will need to pick up the tab. One has to wonder why the building was built the way it was when nearby is the Railway Station where it was recognised that lack of mass in foundations on reclaimed land was an issue that needed to be mitigated against. Hence the hundreds of tonnes of concrete added to the foundations in 2003 – 2004.

    Nearby is the Central Telephone Exchange, also on reclaimed land, which was recognised in the early 1990s as being at risk in a major earthquake. A substantial sheer wall was added on the Whitmore Street side, as well as a massive concrete slab under the street that ties into its foundations.

    The damage done to both the Statistics Building and the BNZ Centre in 2013 ought to have been a wake up call, not that Centreport appear to have acknowledged the design shortcomings. The Customs building is of similar construction.

     
  11. City Lad, 4. December 2016, 10:20

    Guy M should refer to this article’s photograph of the destruction of CentrePort’s reclaimed land. And be reminded there would have been some high-rise residential buildings there too.

     
  12. Cr Daran Ponter, 4. December 2016, 16:35

    Casey: Don’t believe everything you read in the papers – the base rate for Councillors has stayed the same – it is set by the Higher Remuneration Authority.

    I don’t deny that there may be some financial effect from the earthquake on the commercial buildings….I am simply saying that my bigger concern though is with the Port operations and the cost and opportunities of remediating the damage cause by the earthquake.

     
  13. Tony Jansen, 14. January 2017, 8:46

    The city continues to face major infrastructure challenges and all the GWRC have done, apart from feed from the public trough, is give the rail passenger services to an overseas multinational thereby ending any chance for integrated ticketing. Oh and encourage lowball tenders for split off bus routes, and support CentrePort’s ridiculous harbor dredging fantasy at a minimum cost to the ratepayer of 42 million dollars…do I have to go on?
    I am sorry to say but there are too many career politicians feathering their own nests instead of people who are there to serve. It would be funny if you weren’t doing so much damage to the city and our future.