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JOINT COMMITTEE ON TRANSPORT debate -
Wednesday, 8 Apr 2009

Cork Port: Discussion with Port of Cork Company.

I welcome the delegation. This is one of a series of hearings the joint committee will have with the commercial port companies. We have had representatives of the Irish Exporters Association before us and this is the first time we have had representatives of a port company in attendance. As part of its scrutiny and oversight role, the committee intends to scrutinise the activities of all the semi-State companies under the auspices of the Department of Transport.

We have been given a significant presentation which members can read. I ask the delegates to outline the salient points made in it. We would like them to deal, in particular, with their proposals for growth and development, specifically the planning application that was refused and the action being taken to put it right. We understand it was a source of much disappointment for many.

Mr. Dermot O’Mahoney

I thank the joint committee for inviting us to attend. We have prepared a presentation which Mr. Keating will go through. It is lengthy and if the Chairman would like us to move on, he should feel free to ask us to do so. Mr. Keating will give an overall view of the Port of Cork. We will then move on to consider future developments and the planning permission issue.

Mr. Brendan Keating

We are delighted to attend this afternoon. The presentation before members deals with our activities, terminal locations, trade performance, the development drivers and their context, our planning framework, the oyster bank planning application decision which the Chairman has asked us to address and the way forward. It also contains details of a recent economic contribution survey which we undertook. We deal with a major issue facing the Port of Cork, namely, the development of the docklands in Cork and the way infrastructure is being advanced at a cost to the port. That deals with something about which the Chairman asked in the past, namely, new opportunities, particularly associated with motorways of the sea — ATMOS, WEST-MOS — and other such issues. We will touch on the issue of corporate social responsibility, a matter with which I am sure all Deputies and Senators are concerned.

We are unique in Ireland in that our two ports, Dublin and Cork, can handle all five modes — bulk liquids, bulk solids, break-bulk, lift on — lift off and roll on — roll off. From our perspective, located on the south coast, we wish to emphasise the opportunities we are convinced are available for the Port of Cork as a location in the development of expanded trading links with the west coast of the United Kingdom but, more particularly, northern Spain and western France. I am showing a satellite photograph of Cork Harbour. It sets out the facilities we have available in the harbour and the depth of water at each location. The next slide shows the city quays where we handle approximately 1 million tonnes of cargo per annum. To this day it is an active and significant contributor to the viability of the company. An activity level of 1 million tonnes in a 10 million tonnes cargo is significant. At that location we handle break-bulk, both oils and chemicals.

Cork City Council has significant proposals for the development of the docklands area. The Port of Cork Company is supportive of the docklands development initiative. We have worked and will continue to work to our best endeavours to ensure it happens. However, from the point of view of the Port of Cork, these are assets of the company and, as directors of the company, we have an obligation to ensure nothing is done to undermine or compromise the value of these assets which are being challenged. Our viability is being questioned by the advancement of work on two bridges undertaken by Cork City Council. From our perspective, the proposals made by the council present a serious challenge and represent a punt by it in favour of redevelopment but at a cost to the port and all the economic issues associated with it. It dates back hundreds of years with a well established trading pattern.

The next slide shows activity at our container terminal on the eastern approaches to Cork city. It is a very extensive land mass and will be the key to funding the replacement facilities we are confident we will be able to deliver to the economy of Cork, Munster and the entire country in the years ahead. From our perspective, a key component of our business is container traffic. We also handle trade cars, bulk solids and bulk liquids at the Tivoli facilities.

The next slide shows Ringaskiddy, near the mouth of the harbour, where the depth of water in the basin is 13.5 m, which is unique in Ireland. We also have facilities for roll on — roll off vessels, bulk solids, bulk liquids and project cargo which in recent times is coming more to the fore.

(Interruptions).

Mr. Brendan Keating

Approximately 6.5 m and approximately 5.6 m in the city.

I passed over another slide of Ringaskiddy but it is obviously a vibrant area. The depth of water in close proximity to the mouth of the harbour offers unique and significant potential for the development of trade for the economy of Munster and the entire country.

Mr. Dermot O’Mahoney

The next slide shows the cruise terminal in Cobh. We made a decision a number of years ago to extend it. As a result, we can take the largest cruise liners visiting Ireland. This year we expect 54 calls and approximately 100,000 passengers. The first calls start next week and will continue through to October. I understand there will be one at the end of November. They are a significant contributor to tourism in the region. The number has grown from 36 in 2006 to 54. We have invested €4 million since 2004. Interestingly, when we first examined the issue, there was probably a marginal case for us to extend the terminal and the board decided to do it. We sought help from Fáilte Ireland but did not receive it, nor did we get anything from the Department but we went ahead and did the work ourselves. It has paid off and we are now making money.

Mr. Brendan Keating

The Chairman and members will be interested in the company's performance. The company has a turnover of €26 million and had an operating profit of €6 million in 2007 and €5 million in 2008. Our net assets stand at approximately €112 million and we have borrowings of approximately €9 million. The accounts for 2008 have not yet been approved by the board. There is a board meeting scheduled for 20 April, following which the accounts will be submitted to the Department. From our perspective, the trading performance in 2008 was satisfactory.

On the trade figures for 2008, we handled 10.1 million tonnes compared to a figure of 10.6 million tonnes in 2007, it being our record year in terms of trading levels. Imports stood at 6.5 million tonnes, with exports amounting to 3.6 million tonnes. Oil traffic accounted for a figure of 5.8 million tonnes and non-oil traffic, 4.3 million tonnes.

Uniquely, the Port of Cork, in terms of its lift on-lift off business, has a strong export business which accounts for almost 45% of volumes. Business in other ports is predominantly import-related. The total volume of traffic in 2007 was 10.6 million tonnes. There is a further breakdown of how the traffic has grown over the years from 9.5 million tonnes in 2003 to 10.6 million tonnes in 2007, back to 10.1 million tonnes in 2008. From the lift on-lift off perspective we handled 187,000 TEU in 2008, which is back from the peak figures of 2007 when we handled nearly 200,000 TEU.

Mr. Dermot O’Mahoney

It is interesting that since we applied for planning permission for a new container terminal, which we had been planning for a year and a half, the number of containers has gone down rapidly, Changes in the economy of the country can be seen very quickly at a port. From that point of view, the fact that our planning application was turned down would have been a much bigger problem for us if the number of containers had kept increasing.

Mr. Brendan Keating

It is important I should explain to the committee at this stage what we had in mind when we talked about the development of new facilities. Our focus was on the concentration of the majority of our facilities in the lower harbour adjacent to Ringaskiddy. The planning application we made in 2008 was for development of a container terminal and a multipurpose ro-ro berth at Ringaskiddy. We were talking about a facility which had a depth of approximately 13.5 m. The issues which drove us and which have not changed to this day are the need to plan for growth in trade and to have the capacity to handle that.

Members of the committee will know that there is continual increase in the size of vessels on the waters today and we have to be able to respond to that. We are confident we can come up with proposals to address the issues which have been presented to us, but in doing so we must be able to accommodate these larger-sized vessels. Docklands developments will require at some stage that alternative facilities be provided. The Port of Cork position on this matter, however, is that if we have to give up our quays to facilitate redevelopment we should be put in funds to provide alternative facilities elsewhere in the harbour.

Mr. Dermot O’Mahoney

On that matter, all we have asked the city council is that we should get fair value for our assets and even that it should get an arbitrator to put a value on it, and it is reluctant to do that.

Can the port be forced to give up its quays?

Mr. Dermot O’Mahoney

It can be forced if the council puts in bridges. We had discussions and, obviously, there were local area plans. Then, all of a sudden, we were faced with having to deal with a bridge with an open span. We could have dealt with that, but then there was a CPO for two bridges and the timing was up in the air. If there are two bridges within 600 m of each other it poses problems for navigation. Both would have to be open at the same time if a ship is arriving because there is no place to lay a ship up. We feel we have not been fairly dealt with. My view is that because we are a State company the city council views the land as State land. Unfortunately, or fortunately, we have a fiduciary obligation as directors to ensure that the assets of the company are looked after on behalf of the State.

Mr. Brendan Keating

As time goes on we will need to relocate, not for the purpose of facilitating docklands development but for the development of trade. That will require that if the quays are required for use we should be put in funds to provide alternative facilities. There are very significant business opportunities in short sea shipping by virtue of our location on the south coast of Ireland.

I do not propose to go through the policy statements of Government if that is acceptable to the committee other than to emphasise that it is without question stated in the national plan that in the delivery of infrastructure the port companies must operate without recourse to the Exchequer. The planning framework in which we currently operate very obviously relates to the national development plan, the national spatial strategy, regional planning guidelines, the Cork area strategic plan, referred to as CASP, the Cork City and Cork County development plans and local plans. In the development of all our plans we have had in the past and will continue in the future to have regard to and be guided by those planning issues.

I referred earlier to the Oyster Bank. I outlined our proposals on this map and I have circled them. One relates to the development of the Oyster Bank as a container terminal. We were talking about phasing that in and it being ultimately in a position to handle about 600,000 TEU. It would be a very significant development if it secured the necessary planning permission and, uniquely in Ireland, would have presented us with an opportunity to accommodate shipping with a draft of approximately 13.5 m and the berth, bearing in mind our channel has some limitations right now in that we have only 11.1 m on the approach.

We are also talking about the development of a multipurpose ro-ro berth. In November 2007 we made the planning application under the strategic infrastructure Act and we received the decision of An Bord Pleanála, that is its refusal, in late June 2008. Two reasons for refusal were given. One was the remoteness of the project from the rail network. The second reason related to the issue of congestion at junctions on the national road network. We were somewhat surprised by the decision. We respect that An Bord Pleanála has a role to play and we respect the decision made in this instance. However, we are confused with regard to the two reasons for refusal. With regard to rail and the development of rail freight in this State, the national carrier is no longer involved in rail freight business activities. We are also of the view that if rail were essential, remedies could be found to make the connection with it by way of alternative proposals. The issue of congestion on the national road network is very confusing particularly when the rationale in the majority of cases for the roads involved was to provide access to the port facilities already established at Ringaskiddy.

Mr. Dermot O’Mahoney

The N28 is the road in question and that is part of the plans of the National Roads Authority. The problem indicated by An Bord Pleanála has not been caused by port traffic. It has been caused by commuter traffic. It was never intended that commuter traffic would use the national roads. We can understand the reason in regard to rail. Arising from that, we have commissioned a consultants' report on the national rail policy.

Is it correct that Iarnród Éireann has discontinued rail freight?

Mr. Dermot O’Mahoney

Yes.

When did the Port of Cork apply to An Bord Pleanála?

Mr. Dermot O’Mahoney

In November 2007.

In June 2008 the application was refused because of rail freight and road infrastructure problems.

Mr. Brendan Keating

The reason for the refusal was that An Bord Pleanála determined that the proposal as presented was incapable of availing of future rail connectivity.

How much did the whole process cost? I would have expected that, rather than refusing permission, An Bord Pleanála would have put it to the port company that these issues needed to be addressed and given it an opportunity to address them. How far is the port from a rail head, and is it possible to access this point from rail? As a leading port authority, how much potential is there for the movement of goods coming through the port by rail on a commercial and environmental basis?

Mr. Dermot O’Mahoney

To answer the second question first, we would have considered that there is very little potential. One could make an argument on the basis of CO2 emissions and the carbon footprint that more freight should be transported by rail. It was in that area that we were caught. Since we were refused permission, we have reviewed the whole process and also asked external people to review it. We will be going back with more information and will be able to answer some of those questions.

The road is not our problem. The N28 was planned to serve the whole Ringaskiddy area, the IDA development and the port. If congestion is being caused by commuter traffic, we should not be the fall guy.

We would all wish to see more goods being brought by rail in future development. In a small country such as ours how realistic is rail freight service development in the next ten or 15 years? Will oil products or container traffic be brought by rail? What will be brought by rail?

Mr. Dermot O’Mahoney

It will be container traffic. We ship oil from the refinery to ports around the coast. Oil will be transported by sea. Rail traffic consists of containers and bulk. Rail traffic will only develop in a big way if penalties are imposed on the movement of similar goods by road. I do not see rail traffic being economical in current circumstances but I do not rule it out for the future.

Mr. Brendan Keating

TheChairman asked if there was a reasonable prospect that a connection could be made with the rail network by facilities in the port of Cork. Tivoli container terminal is already rail-connected. The Ringaskiddy location is not rail-connected and we undertook a study to establish the feasibility of rail connectivity. We found it would have been fiendishly expensive and, therefore, impractical. However, there are other ways of making connections with railheads such as the use of barges on the river and in the harbour. In 20 years time they could transfer about 1% of our projected volume at the time. We have engaged Booz and Company, an expert in the business of rail, to carry out a feasibility study of whether there is a reasonable prospect for rail freight services out of the port of Cork in the near future. Rather than Mr. O’Mahoney and I talking based on our own understanding, we decided the company’s best interests would be served by having world renowned experts look at the issue. This will feed into the current forum which the Minister for Transport has established. I compliment him on the support we have received on this issue from the Department of Transport, particularly from the rail freight personnel who could not be more helpful.

Is Mr. Keating's estimation that approximately 1% of projected volumes in the next 20 years could be transferred?

Mr. Brendan Keating

That is what we estimate. There is one other aspect to this, particularly with regard to the lift on — lift off, or box, business. We undertook an assessment of the origins and destinations of our traffic in 2007. We were able to articulate a position — the position has not changed dramatically recently — that about 65% of the volume of boxes coming in and going out of the Port of Cork were from Cork city, Cork county and County Kerry. The remainder were from south of a line from Dungarvan via Kilkenny and Thurles to Ennis. We do not serve major metropolitan centres. Forfás, in a recent study of port services, indicated that for a rail service to be viable it would need to be at least 150 km in length.

Another rail freight issue needs to be borne in mind. A rail freight service predominantly works where there are linkages between major metropolitan centres.

How much did the company spend on the application? Did An Bord Pleanála not give any indication before the decision was made that rail freight might be an issue? How much was wasted in the cost of the application?

Mr. Dermot O’Mahoney

I would not say there was waste because the information gained will be useful in the future. The application cost €1.3 million.

That was the cost of the application.

Mr. Dermot O’Mahoney

Yes. I would not say all of it was wasted. The information gained will feed into future activities.

We see a case for movement of freight by sea. It already happens with oil but other products could be moved in that way. We seem to be locked into the use of road and rail transport services. However, this is an island nation and we could move freight in smaller coasters. Containers already come from Dublin to Cork by sea.

Mr. Brendan Keating

That pattern is established.

Following the decision by An Bord Pleanála, the board of the Port of Cork Company asked for an independent review of all issues associated with the decision and a direct report to be made to it. We engaged further consultants to carry out a root and branch review of all the issues associated with the planning decision, the material we had presented to the hearing and other issues which had arisen throughout the process. The peer review has reported. From our perspective, it is encouraging. The consultants consider that, with a review of the strategic plan and further examination of all sites in the harbour, we will be in a position to come up with proposals which would be robust in terms of site selection criteria. We will then be more likely to succeed with a further planning application which the company will have to make if we are to provide for the future trading needs of the country and, more particularly, the Munster region.

Mr. Dermot O’Mahoney

The Chairman has asked how much the application cost us. If we make another application, that €1.3 million will be very small because we will make a saving in the cost of construction. One could say we were lucky.

Mr. Brendan Keating

In the intervening period the Cork county development plan has been reviewed and the members of Cork County Council have strengthened the provisions regarding Ringaskiddy as a location for port facilities in the future. We have had a significant strengthening of local policy in that regard. We have a target to have a completed proposal for consideration by the board late in the autumn.

As the committee has details of the economic study, I do not propose to go into it, other than to highlight the fact that the value of exports handled in the port of Cork in 2007 was €17.8 billion and the value of imports, €6.7 million. That study was undertaken by the economics department of University College Cork.

My chairman referred to the contribution made by tourism spending which the port facilitates. It amounts to approximately €125 million per annum and about 700 full-time job equivalents. The largest contributors are ferry passengers on the Cork-Roscoff link. We hope this will be strengthened with the re-establishment of the Cork-Swansea link. The liner business has a value of approximately €41 million to the Cork region.

We have highlighted the docklands issue. The slide on the screen is of an aerial photograph of the Cork docklands area. There are very extensive quays which make a significant contribution to the profitability of the company. The Port of Cork cannot vacate without securing funding to provide replacement facilities and ensure the docklands are advanced in a reasonable way so that trade and associated economic activities are not compromised just so that developers can realise a windfall gain.

The Chairman has asked in the past about new training opportunities and about the studies we have embarked on through the EU motorways of the seas projects, including ATMOS, WEST-MOS and others, which encourage trading links via roll on — roll off services linking Cork with northern Spain and western France. The objective of the exercise is to improve the economy of transport and ensure we make a significant contribution to a reduction in CO2 emissions, particularly in France and the UK. The projects will address road congestion in the UK and France and rising fuel and toll charges. Security will be addressed, as will a shortage of trained truck drivers and better enforcement of the working time directive. All major issues facing exporters of fresh meat, fish and other produce leaving our country will be addressed.

The Port of Cork Company is working with the port of Gijon and others in developing proposals relating to the motorways of the seas, one of which is the Gaelic Study. For example, a 40-foot trailer weighing 20 tonnes delivered via ro-ro from Limerick to Madrid would have to go from Limerick via Rosslare-Fishguard and Portsmouth-Cherbourg. It is approximately 2,000 km by road but by sea it is approximately 600 km. Road savings are 1,371 km and CO2 emission reductions would amount to 1,515 kilos per 20-tonne trailer load. We are trying to develop niche markets and are conscious of the opportunities arising from the need to address climate change and bring about CO2 reductions while enhancing security and reducing congestion, ensuring we get our produce to market more quickly.

Mr. Dermot O’Mahoney

We have identified traffic of 700,000 boxes going by landbridge across the UK, through France and down to Spain. If they could be transported by sea there would be big reductions in CO2 emissions.

Is the length of time taken by seabridge not a problem, given the way business works?

Mr. Dermot O’Mahoney

Yes, but the cargoes we identified were refrigerated and the difference in the time taken is only half a day.

Mr. Brendan Keating

They would be scheduled services, twice weekly.

The time taken has been an argument for road haulage.

Mr. Brendan Keating

Of course. The proposals need to be looked at from the point of view of facilitating road hauliers, especially those who have to get goods to market in a cost-efficient and timely manner.

Corporate social responsibility is an area on which the Port of Cork Company wishes to spend more resources. Last year, the company approved a policy statement on the issue, which included a major schools initiative. Last week we held an art competition on the theme of emigration from and immigration into the Port of Cork. Entries came in from schools across the harbour area and it was a very successful initiative, giving the schoolchildren of the city and county the opportunity to appreciate trade and shipping movements in and out of the port. We are also developing an integrated management strategy for Cork Harbour and are working in association with Cobh Town Council on the cleaning up of slipways and litter control, which will help enhance Cobh and Cork as cruise destinations.

We work in partnership with the National Maritime College of Ireland to develop training and development initiatives in ports across the world. We have appointed a community liaison officer to ensure we are much more proactive and supportive of community initiatives. We have an exiles project to strengthen the knowledge base about emigration from Cork in years gone by. Above all, we are unique in being granted ISO 14001 environmental management status and are the only port in the world to have an environmental and health and safety management system accredited by Bureau Veritas.

The issues for us relate to planning for essential port infrastructure, responding to evolving trends in vessel and trade needs, coping with urban redevelopment pressures, development of new trading opportunities and ensuring priority is given to recreation in the harbour, in which regard we support leisure activities and amenities for communities across Cork Harbour.

How does the company see the role of Irish ports in the context of national strategic infrastructure? I understand that Waterford Port objected to the company's application for planning permission. I am interested in what the witnesses have to say about freight being transported by barges.

Our letter of 1 April to the Port of Cork Company asked a series of questions arising out of our scrutiny and oversight role. Can the witnesses give us answers in writing as to its consultancy contracts and details of any acquisition of land in 2006, 2007 and 2008? We have received the company accounts and details of future development proposals but can the company give us an idea of the investment costs of the new harbour and how it proposes to pay for it? It might also let us have its business plans in this regard. What are the total numbers employed, the total wage costs and the remuneration of port executives?

What would the witnesses make of a proposal to privatise the Port of Cork, in view of the difficult financial situation in which the country finds itself at the moment?

Mr. Dermot O’Mahoney

I am not in favour of privatising essential port facilities because once they are privatised they are gone from public ownership forever. As a State company we will act on behalf of the State, not for the betterment or enrichment of ourselves. I am opposed to it and have always been opposed to it. The port company has to operate efficiently and competitively and has always attempted to do so. In the past three months we came to an agreement with the dockers, who are no longer in the Port of Cork, and we now employ people as and when we need them. If the port was privatised, the benefits in the future would accrue to somebody else but they should accrue to the State.

I was asked about Waterford Harbour objecting to our planning application. To say we were surprised would be an understatement. We would never object to the proposals of another port. Ports are in competition with each other but I do not know that Waterford Harbour would be in competition with us because Cork Port has a natural harbour and has greater depth.

Is there merit in a type of federal arrangement or close co-operation with Waterford and Rosslare harbours?

Mr. Dermot O’Mahoney

Under competition law, one cannot engage in such arrangements.

While competition is critically important and is something we want to see, the Irish Exporters Association has significantly criticised the capacity of the ports to service future needs. There is a concern about the ability of the ports to provide the most cost-effective import-export facilities. It does not augur well for Cork or Waterford ports that there are objections to the development of those ports.

Mr. Dermot O’Mahoney

We are a commercial company and our customers will tell us if we are competitive. We are aware of what happens in other ports outside Ireland. Our services connect with Europe — Belgium, Rotterdam and Le Havre. The shippers know the charges in other ports.

In response to the question about where we see ourselves in the future, Cork Harbour is a gateway. I have always described it as follows: because we are an island nation, the port is a gate to the motorway of the seas that finishes up somewhere else and becomes a road again. For the harbour to develop we have to create the funds to do so and we have assets that we will free up elsewhere to pay for that. Those are our long-term plans, of which the Department is aware.

As regards the Oyster Bank or whatever, the port would have no problem in financing that type of development.

Mr. Dermot O’Mahoney

That is correct.

Mr. Brendan Keating

The Deputy missed my reference to the current slide in my statement. We have undertaken a very comprehensive assessment with the support of Goodbody Corporate Finance which has helped us look at funding of the type of infrastructure which we feel is required. We have clearly earmarked the Tivoli landbank which is in excess of 100 acres and is identified in the Cork city development plan as the next area for redevelopment for mixed use in Cork. Once the property market recovers, we believe we are exceptionally well equipped with a very strong asset base to fund the type of facilities that will be required.

Let me elaborate on what the chairman, Mr. O'Mahoney, spoke about in terms of the strategic development of port facilities in the future. This is somewhat biased. On the island of Ireland, there are four major ports, namely, Belfast, Dublin, Cork and Shannon-Foynes. There are three ports linked to major urban centres of Belfast, Dublin and Cork. From the State's perspective, we have a strategic vision as to the role the Port of Cork will play in the future as a significant port to meet the island's needs for the next 50 to 100 years and beyond. Mr. O'Mahoney is continually referring to the need for a 20 to 25 year vision for ports in planning for the future. Our strategic plan when it was first developed in 2002 had a vision for a period of 20 to 25 years. Unfortunately, it fell at the first hurdle in terms of the Oyster Bank project. However, we are confident that with a review of the strategic plan and a robust process for selection of new locations in Cork Harbour, we feel that because of its location and the depth of the water, the strategic interests of the island of Ireland will be better served by ports such as Cork. I will not elaborate on other ports.

I will come back to some of the unanswered questions.

Mr. Brendan Keating

I am conscious that there is a very good port in the west as well.

I wish Cork Harbour board well and it should make a very interesting project. The influx of cruisers will add spice to it. Returning to the outcome of the planning application, it obviously went to an oral hearing. Did the NRA make a presentation at the oral hearing?

Mr. Dermot O’Mahoney

The NRA did not want to get involved but eventually it did.

It is quite obvious that the NRA was involved and had a major impact on one of the reasons for the refusal.

Mr. Brendan Keating

The NRA indicated that it had no objection. At the oral hearing it stated to the inspector that while there was congestion at some key junctions in the city, it was related to commuter traffic and measures would have to be introduced to alleviate it so as to give priority to ports and airports and access to major urban centres. The NRA was supportive and did attend the oral hearing.

The NRA was the only body that could have made it difficult to get planning permission.

Mr. Dermot O’Mahoney

The application was turned down by An Bord Pleanála and I do not know what processes it went through. We were given the reasons for its refusal, which I found incomprehensible, although I can understand the reasons for needing a railway. If one looks forward 20 to 30 years and if one was trying to take traffic off the roads, I could understand the need to make provision for greater use of railways.

Before the harbour board resubmits a planning application someone must explain the——

Mr. Dermot O’Mahoney

Before we make another application, we will obviously go back and talk, but we are not ready to do that yet.

Mr. Brendan Keating

There is a requirement to look at all appropriate sites in the harbour, including the Oyster Bank. I would like to come back to the point on congestion at junctions of national primary roads and the refusal to grant planning permission. From my local government days, I recall that national primary roads existed for three reasons: to link major urban centres; to provide access to airports; and to provide access to ports. We are somewhat confused by the decision in that context. We must accept the decision and——

Was the Port of Cork not missing some point? Deputy Lynch who is a member of this committee used to refer to the completion of the N28. Was that an issue?

Mr. Brendan Keating

Yes, we indicated at the time that we would not open the facility until the upgraded N28 was operational.

Did the NRA let Cork Harbour down?

Mr. Brendan Keating

No, I would not say that.

Mr. Dermot O’Mahoney

It has been planned. It is included in the development plan.

Cork Harbour was not high enough up on the agenda. We raised that matter with Mr. Fred Barry.

Mr. Dermot O’Mahoney

Yes, perhaps if we were higher up the pecking order. Even in hindsight, we could have been turned down on the grounds of the rail site. When we go back, we will be much wiser and we will have to find out——

The company will have all the ducks in a row.

Mr. Dermot O’Mahoney

We will.

Mr. Brendan Keating

It is important to point out that the reason for refusal has nothing to do with the N28per se. The issue was congestion at junctions such as Dunkettle, Bloomfield and the Kinsale Road roundabout.

Would the company have avoided much of that if it had picked a site on the northern shore as opposed to the southern shore?

Mr. Brendan Keating

Yes, that would have provided a link to rail. However, we would not have the depth of water. It was a case of a strategic choice. Shipping will become larger and it will require greater depths of water in the future. From that perspective, the choice made was to approach it from the viewpoint of providing greater depth for vessels.

I warmly welcome the delegation and I thank the representatives for their informative briefing, which provides a good insight. Their analysis of the major ports of the island is correct and we need to support the development of Cork Port for the benefit of the economy. The company is in a lucky position because developments at Dublin Port in territory I represent have led to the Bremore port issue, which will have a completely separate port and authority, although it is linked to what happens in Dublin. The ball is completely in the Port of Cork company's court with its wonderful and magnificent harbour and city. In that sense, it has great advantages. My Fine Gael colleague asked a number of questions about planning and development and our Cork-based colleagues will fill us in on the minutiae of the problems perceived by residents. From a national perspective, it was disappointing that the company could not move forward with its development plan.

The company is involved in the renewal of the Cork-Swansea ferry service and it must be congratulated in this regard along with the commercial interests in Cork city and county. The service is estimated to be worth €70 million to Wales and Munster. It is an important new chapter to get it back on stream. One of my former colleagues, Tony Ayton, a great trade union leader for SIPTU and the ITF, tragically died over Christmas. While he was a supporter of all ferry services, his great belief was salaries and conditions on board ships should be to the ITF or the best possible standards. That is a concern I would like to raise. I strongly support the resumption of the service, as it was a key link for the region. I refer to direct routes to Spain, which would be progressive. On the basis of the cost benefit analysis, is it green for go? Can this project be developed to enhance continental and Irish trade?

Mr. O'Mahoney answered a number of my questions about planning. I refer to trade performance over the past six to nine months. The company has experience steady growth over the years. Is trade becoming a problem? Ports are the gateway for 99% of the nation's trade. Is the horrendous downturn we have to cope with being noticed at the port?

Will mineral oil storage continue to have a major role in the port? When I was the Labour Party spokesperson on communications marine and natural resources, I was anxious that NORA would hold the largest stocks for between 901 and 120 days. Much of it was held on tickets for oil based in Wales and elsewhere. If we had an emergency, I would strongly support us holding more stocks. Is the port company involved in this?

The Harbours (Amendment) Bill 2008 will come before the committee shortly. Would the company welcome smaller boards, given our councillors are deeply and profoundly upset at their exclusion as of right from the boards and workers are deeply upset at their representation being reduced to one board member at the major ports?

Mr. Dermot O’Mahoney

We made a submission before the Bill was drafted. We have had a very satisfactory experience with the existing structure in Cork.

The Deputy asked about trade. Up to the end of February, our trade was down 12.5%. I read yesterday that trade through a port in Germany was down 25%. We are an island nation but we can see direct effects on trade in the construction area such as timber and cement products. As a port, everything comes in and out.

The Deputy referred to oil storage and NORA. That issue is ongoing and the agency is examining putting facilities in Ireland, some of which would be in Cork.

Mr. Brendan Keating

The proposal regarding the Swansea-Cork link is being developed by a community in west Cork, which formed a co-operative only last night. Those involved have raised significant resources and they are seeking to put final touches to the purchase of a vessel. They have made arrangements with a bank in Finland. The decision is not quite made yet but the people involved are heroic. They are trying to achieve strengthened trading links between Cork, Kerry, south Munster and perhaps the rest of Ireland with Wales. The concept of the development of a co-operative and the use of that principle is very encouraging. It is a demonstration of people getting up and doing something for themselves. The Deputy can be assured we have worked diligently with the people concerned. We will continue to work with them, encourage them, help them and do everything we can to re-establish this trading link, which is sorely missed.

Will the port company invest in the co-operative's vessel?

Mr. Dermot O’Mahoney

We are not allowed.

Why not?

Mr. Dermot O’Mahoney

The difficulty is if we invest in one ferry service and another one got into trouble, we would have to invest in that. It would not be a good investment for us. We have helped them.

Following the passage of the Bill, the port company could invest in a port in Wales, for example, but not in a seaborne service.

Mr. Dermot O’Mahoney

We have supplied manpower to them for their marketing. Their commercial manager has spent a great deal of time on that. I support Mr. Keating's comment that the co-operative deserves all our congratulations.

I also welcome Mr. O'Mahoney and Mr. Keating and I thank them very much for their presentation, which was most enlightening and interesting. I acknowledge the tremendous role the Port of Cork plays in facilitating trade in Cork and the southern region and I commend the company for its role in the community. The representatives have highlighted through their corporate social responsibility presentation their inputs locally, which are deeply appreciated.

The primary issue is the port's relocation downstream to the lower harbour area. There was much local opposition, as Mr. O'Mahoney and Mr. Keating will acknowledge. There were more than 500 third party submissions to An Bord Pleanála, which is a huge level of public interest and participation. The vast majority of those submissions opposed relocation, primarily due to fears that use of the harbour amenity by rowing clubs, sailing clubs and so on could be lost through the reclamation of around 18 hectares in the Ringaskiddy area of the harbour. Concerns relating to noise and dust were also raised along with general environmental concerns; the port responded as best it could. Mr. Keating has outlined the outcome of the board's adjudication in that regard.

Following the review, has the board decided to resubmit for the site at Oyster Bank or are other options being examined?

Mr. Dermot O’Mahoney

It will be ready for us in the autumn. We must look at other areas in the harbour to see what is suitable. This will not happen quickly. The local objections were not the reason given for the refusal but we learned from the process and certain things we do will result from this.

The N28 is a key issue. I live in Carrigaline and I use that road every day when I am in Cork. It is over capacity at the moment. The point has been made that national routes should facilitate developments like this but there is no other road for commuters to use. The N28 is congested and it was stated in the submission to the board that this facility would not be operational until the N28 was up and running. I foresee that funding will be the problem; the estimates given to date for completion of the N28 have ranged from €120 million to €200 million and some of these did not include the cost of the compulsory purchase orders. It is currently at design stage and has been so for some time. There is not prospect in the current climate of that road being advanced in the short term and this is a concern because it cannot accommodate a development of this nature with a capacity of up to 600,000 twenty-foot equivalent unit, TEU, on top of an existing congested road network.

Mr. O'Mahoney will be disappointed if I do not ask him about the Irish Fertiliser Industries, IFI, site at Marino Point. Has the Port of Cork concluded its deliberations on this matter? Where does it fit into the overall jigsaw of the relocation?

Regarding the city quays, it is disappointing to see public bodies like the city council and the Port of Cork clash in public when the docklands project is supported by almost everyone and is also supported by all of the local, regional and national planning policy documents. If the two bridges were to be built, is it the case that the current port activity on the city quays could not be accommodated? Does the quay issue simply come down to realising the fair value of the assets?

Where is the IFI site located?

Mr. Dermot O’Mahoney

It is halfway between the city quays and Ringaskiddy on the northern side. When we made the application for Oyster Bank the IFI site figured strongly in the discussions. The planning inspector directed us back to the IFI site. Events have overtaken us in this matter; somebody bought the site at a very inflated price and now wishes to get rid of it. We put in a bid at a lower price but the time ran out on it. We told the owners that we were still interested and I think the IFI site will appear in the assets that are becoming apparent on the banking side. We are interested in the site because it is on the river and has depths of 6 metres, 10.5 metres and 13.5 metres.

What potential uses does the site have? The Tivoli container terminal site and its capacity was a driver for the urgent need for relocation, given the downturn in the volume of trade. Has trade abated significantly?

Mr. Dermot O’Mahoney

The date has been pushed out by between four and five years.

What value was put on the Tivoli site when it was to be disposed of? What was the projected cost of the Oyster Bank project?

Mr. Dermot O’Mahoney

I do not know.

Mr. Brendan Keating

The projected cost of the Oyster Bank project was almost €200 million.

For how many metres of quay at 13.5 metres draught?

Mr. Brendan Keating

From memory it was 650 metres of quay. There was land reclamation of around 16 hectares. We only had preliminary estimates at that time because we had not proceeded to detailed design. There were commercial sensitivities around the Tivoli site but we had significant access to resources as it was 2007; the property market has since changed dramatically. When we proceed with this project we must do so in a way that maximises value to the company.

I also asked a question on the city quays.

Mr. Dermot O’Mahoney

One of the problems we have in dealing with the city council is that while it has local area plans to which we and others contributed, the city council management proceeds in a way that is not at all in accordance with the plans. The city council agreed with us that if the bridges were there the port would have priority. The council then put a compulsory purchase order, CPO, on our land and sought during the CPO inquiry that we should not have priority at peak traffic times. The city council keeps changing its mind; I feel that if there are two bridges it is not viable to have port traffic above them. Recreational traffic could visit naval vessels or a small liner could use the facility but if trading vessels went out at high tide to coincide with peak traffic there would be problems. We want an independent arbitrator to put a value on this area; we seek no more and no less.

Mr. Brendan Keating

We objected but were not happy to do so. We felt that as directors of the company we had fiduciary duty to ensure nothing was done that would under value the quays. Two bridges would diminish trading activities over the quays and this would lower the value of the quays. In terms of compensation, we want equivalent reinstatement, a well established principle under the rules of compensation devised under the planning Acts some years ago.

We did not object for the purpose of procuring funds; our objection was based on protecting company assets and trade. The quays make a significant contribution to the company's profits, not just its turnover. They make a proportionally greater contribution than other facilities because they have no depreciation costs. We believe they are very valuable. We have acquired the ADM jetty in the lower harbour and would be willing to begin the development of alternative facilities if we had some certainty, but we do not. The only people who have some certainty, based on the current proposals, are those in the redevelopment community. The economic engine of the region, the Port of Cork, has no certainty and we feel this is wrong.

Mr. Dermot O’Mahoney

Deputy McGrath asked about the IFI site and how we would use it. One of the immediate uses would be to service traffic that no longer goes into Passage; timber and so on. If we moved from the upper quays, some of that traffic would be there also. We would obviously have to go through the planning process again. The other area would be if we had to move back to the Oyster Bank and had to move containers by rail. They would be brought by barge from the Oyster Bank to the IFI site where there is a rail link.

Mr. Brendan Keating

In the same vein, it is important to point out that we could equally do so from Tivoli.

I extend a belated welcome to the delegation. As I am from Galway, I am not familiar with the position in Cork, but it strikes me that the Port of Cork is not best friends with the city fathers and that there appears to be a dispute going on. However, that has nothing to do with what we are talking about today. When I met the Dublin Port people a couple of months ago with the committee, one thing that struck me was that with the development of modern container traffic, shipping lines were getting bigger year by year. Will the port authorities be able to stay ahead of that technology?

Mr. Dermot O’Mahoney

The answer to that question is yes. Let me give a couple of examples. In recent years we started using a crane simulator in Cork and then Dublin Port came in with us; therefore, it is possible to train crane drivers on a simulator before they ever work on the quayside. That gives an efficiency saving of approximately 40%. Furthermore, our crane facilities and equipment for moving containers around are second to none.

I am talking about ships.

Mr. Dermot O’Mahoney

Mr. Keating has mentioned that we will be seeing bigger ships; therefore, there will be economies of scale. We are well placed to deal with this. Some of the other ports would not be able to do so.

I have been reading about the co-operative and it is nothing short of heroic. I sincerely hope it will be successful. However, I have spent a lifetime dealing with such groups and it is always necessary for them to receive a financial contribution from someone. As professionals, the members of the delegation know that if this was a commercial operation, a co-operative community group would not be handling it. Somebody else would have been in there years ago for profit.

Mr. Dermot O’Mahoney

The indications are that operations in the first two years from start-up might not be profitable but would be after that. It is indicative that the main drivers are people involved in the tourism industry who would have felt the lack of a ferry. They are the main drivers and the profit for them is not in the ferry.

Given that the Cork-Swansea ferry is a continuous story that even we in the west know all about and that the port authority made €6 million in operating profits in 2007, would it not be in the interests of the authority to invest or in some way or other to create a vehicle that would be of critical importance to the tourism business in the south?

Mr. Brendan Keating

Yes; there are ways of doing that by providing incentives, for example, in terms of the way in which port charges are addressed and the commercial arrangements which can be entered into with the tourism interests which are well versed in how to extract the best and the most advantageous terms from us.

I very much support the idea of having bigger ports with a 13.5 m draft. In that scenario, what parts of the country will be serviced? Is it envisaged the the west will be serviced?

In regard to cruise liners, it is impressive that the number of calls has increased from 36 to 54 and that the authority had the courage to invest €4 million. Is there potential — I do not ask as a Galway person and want an honest answer — for the cruise line business to extend to Galway or Killybegs?

Mr. Dermot O’Mahoney

There is. In the cruise line business one has to keep reinventing oneself in terms of tours and so on. The potential in the case of the west would be for smaller cruise vessels which previously used to call to Bantry and Glengariff. One could have a nice cruise all the way up the west coast. We see potential in this.

Mr. Brendan Keating

The challenge for all of us is to work together through Cruise Ireland. We are working with other ports on the western seaboard of Spain, Portugal and France in developing new cruise itineraries for the cruise lines. We develop an itinerary, sell it to them and promote it for them, rather than leaving them with the idea that they must continually develop cruise itineraries. That is a very significant role. The west is very attractive. We know of the potential for Killybegs. I am familiar with Galway and also with Shannon and Foynes. From our perspective, even though we are all in competition with each other, we all work very closely in Cruise Ireland, an all-Ireland organisation established for the promotion of the cruise business in Ireland. Dublin has been very successful in its development. Belfast has been equally successful. It currently has the chair of Cruise Ireland. Ours is not the only port which has been able to develop the business but our business is unique because we can go for the larger vessels because of the depth of water and the fact that we have the only dedicated cruise facility in the country. Working in Cruise Ireland we are all working on the development of the cruise business.

Mr. Dermot O’Mahoney

One has to sell it to the cruise companies also. I see the potential in Ireland, but it is more the historical aspect than scenic. Mr. Keating and the marketing manager visit cruise companies twice a year. I met them recently.

What are the main destinations? When passengers disembark at the new cruise terminal, do they have to take buses?

Mr. Dermot O’Mahoney

Yes.

How far is the cruise terminal from Cork city centre?

Mr. Dermot O’Mahoney

It is 15 miles away. As there is also a railhead, they can travel by train if they do not want to go on tours.

Do they have to take a train or a bus?

Mr. Dermot O’Mahoney

They could stay in Cobh where there is a heritage centre. Mr. Keating mentioned the emigration theme. Our plan for the future would be to beef it up as an attraction for cruise lines and other tourists to Cobh. From that point of view, we have put something back into the community. Having said that, our investment in cruise liners has paid off. It is a significant contributor to our bottom line.

Mr. Brendan Keating

The buses, for the major part, visit Blarney, Killarney, Midleton and Cork city. Some are starting to express an interest in visiting the Rock of Cashel. Waterford is also a very attractive destination.

From where would the ships normally come?

Mr. Brendan Keating

A significant number come from Southampton. Many are on cruises around Ireland and the United Kingdom. Others are travelling from Southampton to the Norwegian fjords or are on what we describe as repositioning cruises from the Caribbean where they have been from the autumn until late spring, relocating for the major part to the Mediterranean. The two major cruise destinations on this side of the world are the Mediterranean and the Baltic. From our perspective, we want calls by vessels going to and from these locations and also to develop itineraries. We are working with Cruise Wales to try to develop what is described as the Celtic cruise itinerary. An amount of effort goes into cruise development products.

I find that very interesting. Is there much repeat business? Do people want to come back?

Mr. Dermot O’Mahoney

They do. The advantage of coming alongside a terminal like ours is that the crew can stand down. If the vessel is moored in the bay, they are still on call. The crew are happy. Market research indicates that two-thirds of cruise passengers will return as full-time tourists. We are encouraging cruise liners to remain overnight at the terminal. The biggest one, Independence of the Seas, will come on a taster cruise from Southampton to Cobh, where it will overnight before returning to Southampton.

Do they go to Dublin from Cork?

Mr. Brendan Keating

They do. We share quite a number of calls with Dublin.

What draught can you take? What size cruise liners visit Cobh?

Mr. Brendan Keating

We have a quay length of 186 metres. We can take vessels of 340 metres in length. We have a depth of 9.5 metres, with 11.2 metres in the channel. We have a mechanism for pushing vessels away from the quay by the use of pontoons for these larger vessels. We are unique in the country in being able to take vessels of 340 metres. Dublin port can take vessels of Constellation class size and there would be other constraints on other ports.

An issue for this committee is that we must have a strategic approach to port development. On the strategic issue of Cork's expansion to take in more of the west coast, given Cork's greater capacity, what do you see as the future? Do you envisage large container ships coming into Cork and going on to Galway?

Mr. Brendan Keating

Yes, Chairman. I am very conscious of Galway's plans. There is a necklace of ports along the west coast. If we were to revisit and come forward with the Oyster Bank a second time, it would be for the purpose of accommodating larger vessels. We are primarily in the short sea shipping business, linking Cork and the island of Ireland with places such as Rotterdam, Antwerp and Le Havre. Because of the unique facilities we have, with 13 metres at the berth, we would have the option of accommodating transatlantic vessels. Of course, we have to be realistic in that vein. We would be competing against Rotterdam and Antwerp. We could not really build a case on that basis for such a trade. However, there are opportunities for servicing the west of Ireland out of Cork by coastal shipping. We think that is as viable an option as rail. In fact, we feel it is more practical. There is no ground-based infrastructure. This is a more flexible and responsive way of dealing with the business. It would require that places such as Shannon-Foynes and Galway should invest. They may have other plans and may wish to develop their box business so that they would be a port of call for some of these container vessels. It is their business to develop as they wish. However, from our perspective we are convinced that there is very significant merit in coastal shipping and we have the depth of water to service the island's needs in that regard.

Mr. Dermot O’Mahoney

It would be going back to what we did before.

Thank you for coming to the committee. We would like to get the information requested.

Mr. Brendan Keating

We will have it in a matter of days.

We wish you the very best of luck. We hope that you sort out the issue of the bridges and so on. It is in the interest of everybody that you should be able to move out and successfully build a deep water port. I was surprised by the Bord Pleanála decision and, given that it was done under a new strategic infrastructure heading, that it was not possible to renegotiate some of the issues rather than refuse the application. I hope that issue can be successfully addressed on the next occasion and that you persuade the Waterford people not to object again. We will ask them about that when they come to the committee.

The joint committee adjourned at 5.25 p.m. until 3.45 p.m. on Wednesday, 22 April 2009.
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