"A phase of chronic inertia" is how Mr Gordon Irwin, chief executive of the Belfast Harbour Commissioners (BHC), describes the effect of the suspension of the Northern Ireland executive on Belfast Port's proposed flotation.
The BHC have been pushing to transfer the port of Belfast into private ownership through a public flotation on the London Stock Exchange since December 1997. The proposal was sanctioned by the British Chancellor of the Exchequer, Mr Gordon Brown, on the basis of a public/private partnership (PPP).
However, political instability in Northern Ireland has stalled the proposed sell-off on several occasions, and more than two years later, no decision on the detail of a sell-off has been taken.
"We had more political inertia as we struggled to get the assembly off the ground, which meant direct rule was not prepared to make any decisions," said Mr Irwin. Now, with a suspended executive, no one expects Whitehall to intervene in such a decision.
It is "highly unlikely" that direct rule ministers would take a decision of such magnitude, said a source within the Department for Regional Development (DRD) at the Northern Ireland Office. "It seems the way direct rule ministers are playing it they are creating a vacuum and in their own kind of way encouraging local ministers that they are required to take decisions," said the source.
However, without a port sell-off, Northern Ireland's road network could suffer. Under a scheme approved by Mr Brown, money from the port sell-off has already been earmarked for several road schemes, including the completion of the Westlink motorway, which is expected to cost more than £30 million sterling (€48.88 million). Without the sell-off, many of the planned road schemes will not be completed.
Although Mr Peter Robinson, Minister for regional development, said the port sell-off was a priority for his department, differences of opinion between the Harbour Commissioners and local politicians on the nature of any prospective PPP ruled out a quick decision on the matter.
Instead, Mr Robinson published an options paper shortly before the suspension of the executive earlier this month, outlining four different plans for the port:
Flotation on the London Stock Exchange, with government retaining a 20 per cent golden share, in line with the BHC's original PPP proposals.
A new statutory authority to be established to lease property to a private port company, with a 40 per cent stake to be held by DRD (the approach recommended by an ad hoc assembly committee).
The BHC's revised PPP proposal, which differs from the first plan in that the Government would retain ownership of the harbour estate and 75 per cent of non-port lands, as well as holding a 25 per cent golden share.
Retention of the port in the public sector, including a restructured trust port with extended powers.
The way forward could depend to a large extent on who takes the decision on the future. If devolved rule is reestablished, local politicians could bring pressure to bear on a local minister to push for the port to remain in the public sector. However, such a decision would not be favoured by Mr Brown and New Labour, which is ideologically committed to PPPs and financially committed to reducing its spend in Northern Ireland. An independent report by PricewaterhouseCoopers does not favour either a public option or the ad hoc committee approach. The report argues
that these options could restrict the company's flexibility and cause cash flow problems. Assessing the other two proposals, the report argues that a successful flotation would be best achieved through a simple plan. This would tend to favour the original BHC proposal.
The revised PPP proposal would, however, be more acceptable to local politicians. It was submitted as a compromise by the BHC following an assembly committee report which emphasised that more than 1,000 acres of port land should be retained in the public sector. Mr Irwin is adamant that the 215 acres included in the revised BHC plan is the minimum amount of land required to enable a successful flotation of the port. This area, which includes the Sydenham Business Park, the airport terminal, the D5 site and a 100-acre area known as the Titanic quarter, would transfer to public ownership prior to flotation and then be leased back to the harbour company on a long-term basis. PricewaterhouseCoopers estimates the value of the port at £90-100 million if this option is used.
However, the inclusion of a £70 million cap by the UK Treasury (which means any extra money generated through the sale of the port will flow out of Northern Ireland back to the Treasury) has strengthened the resolve of some Assembly members to retain port land in the public sector. The BHC is currently lobbying to have this cap removed, which may go some way to alleviating the concerns of local politicians. An important issue is the provision of a golden share in any flotation, whereby local government retains a percentage of the shares of a new company to prevent a takeover. But such golden shares are thought to be anti-competitive by the EU and may be unsustainable in the long term.
Despite political inertia and disagreement, the port continues to thrive. Trade through the port reached record levels in 1999, with passenger numbers exceeding two million, representing a 12 per cent increase on 1998.
