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Trouble at the port

centreport [1]
Photo: CentrePort

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 [2], 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 [3]

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 [4] 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 [5], 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: [6]

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 [7]:

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 [8] 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 [9]. 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 [10]
Unions: First container ship since quake [11]