Port corporation says new revenue sources are integral

Gary Kean gkean@thewesternstar.com
Published on May 22, 2014

Nearly a decade into operating the city’s waterfront, the need for the Corner Brook Port Corporation to find new revenues is becoming more and more important.

The divestiture of the port from Transport Canada became a reality in 2004 with a deal that saw the federal government hand over $15 million to go towards the stewardship and maintenance of the originally divested assets.

That money has to be used up within a 15-year period or it will revert back to the federal coffers.

In the financial statements released as part of the port corporation’s annual general meeting Wednesday evening, the entity indicated that the remaining repayable contribution of the divestiture money was at a little more than $5.6 million as of Dec. 31, 2013.

That amount does not reflect everything the port corporation has in its coffers. The port also has assets, including real estate, infrastructure and investments. The balance of its unrestricted net assets stood at nearly $3.25 million at the end of 2013.

The port does generate income too, including interest gained from the divestiture money, and the total net income in 2013 was $945,886.

“While this income may appear to be quite lucrative, it is important to remember that the corporation will have to generate adequate revenues to finance new capital investment and to maintain existing assets after divestiture funds have been depleted to ensure the future economic sustainability of the Corner Brook port,” read the corporation’s annual report.

The port corporation will continue to focus on three areas to generate its future revenue: industrial operations, real estate and cruise tourism.

 The loss of the Oceanex weekly freight shipping service in the spring of 2011 remains a significant blow to the corporation’s financial position, but the port continues to look for other revenue from industrial operations.

“We do feel strongly that this is really where the growth and potential is for the port to increase our overall business,” said Nora Fever, the corporation’s business development manager.

Short-sea cargo service

Fever said the establishment of the winter ferry service to Blanc Sablon has been a big help and passenger and vehicle traffic has increased every year the service has been offered through Corner Brook.

The port corporation still sees a short-sea cargo service — such as that provided by Oceanex — returning to Corner Brook, but said the local economy is not there yet.

“The continued lack of a regular freight service is a concern for us, but we recognize that a significant amount of outbound cargo is necessary to warrant a regular service,” said Fever. “We feel that increasing our industrial activity through different projects and different sectors could warrant the return of a regular cargo service.”

That’s why the port corporation supported the plans for Thomas Resources to establish a garnet and kyanite quarry west of Corner Brook, a project that has since been withdrawn by the company. The corporation also would like to see a wind farm project proposed for western Newfoundland by Beothuk Energy come to fruition, not to mention more activity in the oil and gas sector along the west coast.

In terms of real estate, especially the former Lafarge gypsum plant building, the port is interested in pursuing tenants that have the potential to increase tonnage to and from the port.

After a record year for cruise ship visits in 2012, Corner Brook saw 13 visits in 2013 and was still the busiest cruise port in Newfoundland and Labrador last year. The corporation said it sees this as an integral part of its business model because of the economic impact it has on the city and region.

There will be nine visits in 2014, with the first of those happening May 30 when the Marina visits with up to 1,250 passengers and 800 crew.

The forecast is for a similar number of ships as this year to head to Corner Brook for the next several years. The city will be playing host to the 2014 Canada-New England Cruise Symposium in June and the port corporation is hoping this event will help drum up further interest in Corner Brook as a port of call.

Ensure viability after 2019

Jackie Chow, the corporation’s chief executive officer, said the port has been covering its expenses with its operational revenues for several years now, but said finding new sources of revenue is needed to ensure viability after 2019 and the expiration of the divestiture funding.

“We need to be able to diversify our revenues so that, when we take on new capital and take on long-term maintenance of existing assets, we have the revenue to support it,” she said.

Since the divestiture of the Corner Brook port, the federal government has given over ownership of other Canadian ports with deals that include a 20-year deadline for federal funding to be used up or handed back. Chow said a deadline extension for Corner Brook beyond 2019 may be pursued, if it’s deemed necessary when the time comes.

“If we get to a point in time when that deadline is looming and we haven’t drawn down all that money, we would certainly go back and talk to Transport Canada about whether that period could be extended,” she said.