RETURN T9) REPORTS DESK RESTR'ICTED 'FILE C-OP WITHIN Report No. TO-364b ONE WEEK This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION APPRAISAL OF PORTS PROJECT NEW ZEALAND October 28, 1963 Department of Technical Operations CURRENCY EQUIVALENTS 1 New Zealand Pound = U. S. $2. 80 1 US Dollar = NZ 7s. 2d. Tonnages of cargo are given throughout in manifest tons, (weight or measurement). Fiscal Year: October 1 - September 30. NMgJ ZEALAND APPRAISAL OF PORTS PRhJJECT Table of Contents Page No. I. SUMMRY II. NIW ZEALAND PORTS 1 A. General B. Administration 2 C. Port Facilities 2 III. OPERATIONS 3 A. Operations 4. B. Labor 4 C. Traffic 4 D. Operating Efficiency 5 IV. FINANCES AND EAIM NGS 7 A. Budgets, Accounting and Auditing 7 B. Rate Structure 7 C. Earnings 8 D. Finances 9 E. Debt 9-10 F. Fixed Assets and Depreciation 10 G. Earnings and Finances - Project Boards 10-11 V. GENERAL DEVELOPMENT OF PORTS 1 VI. THE PROJECT 12 A. Description 12-13 B. Estimated Cost of the Proj.ect 13 C. Status of Authorization of the Project Items 13 D. Engineering Design, Construction and Procurement 13-14 E. Traffic Forecasts and Economic Justifications 14 VII. FUTURE EARNINGS AND FINANCES 15-23 VIII. CONCLUSIONS AND RECOivENDATIONS 24 ii Appendices 1. Tonnages of cargo handled at the ports, 1962. 2. Total Tonnages of cargo handled at each port, 1957 - 1962. 3* Past and Estimated Future traffic. 4. Project Ports and Items 5. Estimated cost of Project. 6. Statement showing Estimated Future Financial Data and Ratios. Maps 1 and 2 NEW ZEALAND APPRAISAL OF PORTS PROJ3CT SUM1EARY i. The Bank has been asked to help finance certain items of a con- tinuing program of modernization and development in New Zealand ports. ii. IMny of the existing port facilities were built long ago and are unsuited to moderm requirements. Traffic is expected to increase steadily at a moderate rate. The program consists of measures of modernization and extension needed to provide for the expected traffic efficiently. The pro- ject includes various items of the program, all of which will be completed by 1967. iii. The estimated cost of the project items is bNZ 4.5 million includ- ing iNZ 2.8 million (Us$ 7.8 million equivalent) in foreign exchange. The loan has been requested to meet the foreign currency cost. iv. The ports are managed and operated by independent Harbor Boards. The loan would be to the Government which would re-lend to the Boards. v. The management of the ports is efficient. Operations and mainten- ance are well conducted. vi. The past earnin,s and financial position of most of the Harbor Boards have been good. Financial data recently received indicate that the project boards may be expected to remain in a reasonably sound finan- cial condition. vii. The project is technically and economically sound. The estimates of the cost are realistic. Procurement procedures proposed are such as to be acceptable to the Bank. viii. The project is suitable for a Bank Loan of about US$ 7.8 million equivalent. An appropriate term would be 25 years including a period of grace of four years. NEM ZEALAND APPRAISAL OF PORTS PROJECT 1. INTRODUCTION 1. The ports of New Zealand are administered by independent Harbor Boards. The Boards have continuing programs of modernization and develop- ment of their facilities and the Government has asked the Bank to make a loan of approximately US$7.8 million to meet the foreign currency cost of certain items of these programs currently being carried out. The Borrower will be the Government, which will make the funds available to the Boards. It has already passed legislation empowering it to borrow from IBRD or other international financial agencies and re-lend to the Boards or similar public bodies. 2. Many New Zealand port facilities were built a considerable time ago and are unsuitable for modern requirements. Traffic through the-ports is expected to increase steadily at a moderate rate. For the most part, the project comprises measures of modernization and minor extension of facilities required to provide for the expected traffic efficiently, together with the provision and replacement of mechanical handling equipment also necessary for this purpose. 3. This report is based on an appraisal made by a Bank mission which visited New Zealand during October 1962 and data subsequently received. II. NEW ZEALAND PORTS A. General 4. New Zealand (Map 1) lies between latitudes 33 and 53 degrees south, separated by 1,200 miles from Australia, its nearest neighbor, and 5,800 miles from the South American continent. Of its total area of 103,736 square miles, 102,374 square miles are made up by the North Island (44,281 square miles) and the South Island (58,093 square miles) which are separated by a strait 15 miles wide. 5. In 1960, the total population was 2.4 million. Although the North Island is the smaller of the two, its population is twice that of the South Island. Animal husbandry, the most important economic activity, is spread fairly evenly over the two islands, but industrial activity is greater in the North Island. The country has, in general, a well developed transportation system. 6. Except along the northwest side of the South Island, the coast of New Zealand is fairly favorable to the establishment of ports and historically these sprang up in advance of land communications, transportation between areas in the earlier stages of development having been by coastal shipping. In 1961 there were 31 recognized ports, of which 19 were used by overseas shipping. (Appendices 1 and 2). Originally most of the latter had adequate natural depths but with the advent of deeper-draft ships artificial deepening was required in a number of cases. The mission visited twelve of the principal ports. -2- B. Administration 7. The more important ports are operated by invidivual Harbor Boards, of which there are at present 25. Board members are elected by the rate payers (payers of local taxation) of a group of counties approximately co- extensive with the poxt's service area, Generally speaking,-the Boards operate only one port. They enjoy a high degree of autonomy, virtually the only restrictions on their operations being, as described in greater detail below, that approval of the Ministry of Marine, generally automatically given, is required for their charges; and that their borrowing is subject to authorization first by Parliament, and then by the Local Authorities Loans Board (LALB), a statutory body. 8. lWhen initiating a capital project, a Board-first submits a bill to Parliament, setting out the nature of the project, its purpose, estimated cost, timing, and operational, financial and economic justification. Parlia- ment then gives or withholds approval in principle to borrow for the scheme. In doing so, it may give powers to levy "rates"1 (local taxes) for the scheme. The Board then applies to LALB for permission actually to raise the funds, submitting a somewhat amplified version of the earlier application to Parlia- ment. This is examined by the Ministry of Marine (mainly from the navigational standpoint), the Ministry of Wlorks (from the engineering and to some extent economic aspects) and the Ministry of Finance (from the financial aspect and also to some extent the economic). When giving approval, LALB generally does so only for a portion of the borrowing involved, calling upon the Board to submit further application for the remaining stages. Procedure after the giving of LALB approval is mainly formal. The Board must confirm its intention to proceed and the Governor General must issue an Order in Council finally authorizing it to do so. The procedure is carefully and conscientious- ly followed and the financial control so exercised is effective. 9. Local patriotism plays a great part in the motivation of the Boards. The Board and the general public which elects it are intensely proud of the area in which they live and are determined that it shall be developed. They regard possession of adequate port facilities as of first priority for this purpose. They are prepared to pay for such facilities, either through port charges on the goods they export or import or through local taxation levied to finance port development. Particularly in the intermediate-sized ports it is evident that the system has important virtues. There the Board members are in touch with the detailed needs of the community as regards port trans- portation to a degree which is unusual, and the alertness and efficiency with which these ports are managed is apparent. C. Port Facilities 10. The larger ports, Auckland, Wellington, Lyttelton and Otago are in the position familiar in Europe and North America of having "too much in- adequate accommodation". While the list of berthage in their handbooks appears impressive, on examination, much of it is found to be unsuitable for -3- modern requirements because of inadequate length of berth or depth alongside, inadequate approaches and storage area, lack of facilities for road traffic, etc. In the intermediate-sized ports, the principal purpose of which is the export of agricultural produce and the import of fertilizer, etc., the facilities are often simple and inexpensive, comprising plain finger piers, which, although narrow, nevertheless appear well suited to their particular purpose. 11. In all of the principal ports, mechanical appliances are available for handling bulk dry cargo. Pneumatic discharge of cement to an adjacent sacking depot is provided for in several ports and the system is being extend- ed to others. Coal and fertilizer are handled by grab crane into mobile hoppers discharging into road and rail vehicles. An exception is found at Dunedin, where phosphate is handled by conveyor from the ship's hold direct to an adjacent warehouse. 12. In respect of other dry cargo handling facilities a noticeable feature of the ports is the limited extent of transit shed accommodation. In all ports such accommodation is provided on a relatively small scale. The extent to which light handling equipment such as forklifts is provided for dry cargo is also in many cases limited. Generally speaking, the ports which handle substantial ordinary general cargo imports use quay cranes, others relying on the use of ships' gear. 13. As stated above, in certain ports, the depth alongside some of the older berths is unsuited to the increasing proportion of deep draft vessels to be dealt with. However, although in a few cases some limitation exists, the overseas ports are, in general, in a good position to accept vessels of the maximum draft trading in the area. Notable exceptions are Tauranga and Nelson, where bar problems exist. The generally favorable position results from the aggressive dredging policy adopted by the Boards in the past rather than from natural advantages. III. OPERATIONS A. Operations 14. Most of the Boards limit their functions to controlling shipping, providing navigational aids, and part or all of the cargo-handling equipment, together with labor to operate it, relying on others to supply wharf labor and stevedores. Exceptions are Napier, Nelson and Wellington, known as "wharfinger" Boards, which supply handling labor on the wharves. In Lyttelton, Port Chalmers, Taranaki and Timaru, where traffic is mainly handied by rail, the Railways Department supplies the wharf labor handling cargo to and from rail. 15. The system of leasing berths to particular shipping companies or of giving them priority at certain berths does not exist. However, in planning accommodation, the Boards intend, and the shipping companies expect, that except under truly exceptional conditions, a berth will always be available for a coastal ship on arrival; and that under normal conditions such will be the case with overseas shipping, policies which are common in North American and European ports. - 4 - 16. Bulk liquid cargoes, are handled at separate installations in the larger ports but in many of the intermediate and smaller ports at facilities also used for general cargo. Meat, wool and general cargo imports are handled conventionally by quay crane or ships derrick. 17. In general, both export and import cargo is not held in the port-areas except to an unusually limited extent; one consequence of this being that, as already described, shed accommodation is provided on a very small scale. The Boards explain this as being due to the nature of the traffic e.g. meat and dair; products which are taken direct from meat works or cold store to the ships' side and to the quick clearance of general cargo imports, customs and other procedures being such that an importer can clear a consignment within three or four hours of its leaving the ship if he is so minded. B. Labor 18. As explained in paragraph 15 above, in some comparatively few ports the Harbor Board or the Railway Department supply wharf labor. All other wharf labor and all stevedoring labor on ship is-provided by the Waterfront Industry Cormmission (WIC) a statutory body which, in liaison with the unions, produces men as required by the shipping companies, importers, or exporters, pays them and recovers the cost from the user. 19. The WIC labor works on a time basis with a guaranteed weekly wage and incentive arrangements and is completely unionized. Output per hour is satisfactory but over-all output is limited by: (a) shortage of men, a fea- ture met with throughout New Zealand's industrial activity; (b) while the generally permitted maximum working hours (59 hours weekly with the possibility of working up to 10 extra hours when required to finish ships) are fairly high, there is a generally rigid prohibition of night or Sunday work. The Harbor Board and Railway Department wharf labor also works on a time basis with a guaranteed weekly wage, but without incentive schemes, and is completely unionized. 20. Wage rates of Harbor Board, Railway Department and WIC labor are fixed by tribunals operating under the provision of various labor legislation. Disputes are subject to compulsory conciliation and arbitration procedures. Loss of-port labor time because of disputes has for many years been light, e.g. in 1961, there was only one dispute involving WIC labor, resulting in the loss of 7,816 man hours. C. Traffic 21. Total traffic in 1962 amounted to 12.1 million tons of which about two thirds represented overseas movement and one-third coastal (Appendix 1). Of the total, 9.6 million tons were-dry cargo and 2.5 million tons bulk petroleum. As shown in Appendix 2, the growth trend over the years 1957-1962, has been uneven. Measured on the basis of the terminal years, growth has averaged annually about 1.5 percent. Traffic during 1962 declined slightly compared with 1961. This is attributed to credit restrictions and import controls in force since 1961, the duration of which is generally expected in New Zealand to be temporary. - 5 - 22. The general pattern of traffic is that most of the ports load the country's primary produce, such as meat; dairy products, wool and timber, and discharge bulk items such as fertilizer, cement, coal and petroleum. The discharge of general cargo imports-is mainly concentrated in the ports of the larger towns, Auckland, Wellington, Lyttelton (Christchurch) and Otago (Dunedin) In these ports, which are the larger ones, traffic fluctuations during the year are comparatively slight; in the smaller ports traffic is more seasonal. 23. The pattern of overseas shipping movements is unusual. About two- thirds of the overseas traffic is carried by a group of British shipping companies generally referred to as the "Overseas Shipping Group" (OSG) operating refrigerated vessels. This group has since been joined by various continental European shipping lines. Collectively they have long-term con- tracts with the meat, dairy, and fruit produce boards under which they carry all such produce shipped to Great Britain at pre-determined freight rates which are the same for all New Zealand ports and size-of consignment. The groups' ships spend a long time in New Zealand waters, during which they call at a considerable number of ports, the average stay in 1961 having been 692 days and the average number of calls 8.3. The average tonnage of cargo loaded to or discharged from these vessels per. ship-day worked was 340. 24. In recent years there has been a tendency for the draft of dry cargo shipping in the New Zealand trade to increase, vessels drawing 30-322 feet fully laden being now fairly common. Cruise ships, comparatively few in number, have a laden draft as much as 35 feet. The consensus of local opinion is that the mean maximum draft of dry cargo ships is unlikely to increase beyond the present figure, although the proportion of deep draft ships will continue to grow. D. Operating Efficiency 25. At the time of the appraisal there was a tendency for users to question the efficiency of the ports. Criticism came principally from the OSG shipping group referred to in paragraph 23. The group had complained to the Producers' Boards which are the responsible Government agencies in- volved that the present system, under which their ships make so many calls often for small consignments, coupled with a slow rate of loading and dis- charging, is unnecessarily enhancing their costs, and that unless improvement can be effected, a freight increase will be necessary. In response, the Boards appointed a three-man committee to inquire into the matter and have arranged for a similar committee to be set up in the United Kingdom where parallel problems exist. The New Zealand Committees' terms of-reference primarily refer to examination of possible economics by palletization, mechanization and all weather loading; in the presentation of cargoes alongside vessels; and by a reduction in the number of ports of call. The Committee has not yet issued its report. Since the appraisal the criticism has to a large degree sub- sided. 26. Thie consicerations involved in endeavoring to assess the optimum number of por+s to be operatec for overseas shipping are very complex. In the case of meat, the principal export, loading on to the-ship is only one link of the generally well-organized transportation chain, farm - meatworks - ship - UK wholesaler - UK retailer. Changes in one phase of the operation cannot be made without consideration of the-effect on other phases. For- example, under the present system, the slhip, in moving from port to port, provides mobile refrigerated storage. Any appreciable concentration of loading, would mean an investment in additional refrigerated storage on land. Similarly, additional land haulage and investment in insulated vehicles would be involved. These additional costs might well outweigh the-saving in ship movement achieved. As regards fertilizer, a principal bulk import, the relatively small quantities at present involved at individual ports make it doubtful whether the saving accruing would justify the general installation of conveyor systems. On the other hand, it appears possible that the concentration of fertilizer handling at fewer ports might involve an increased over-all cost because of the addi- tional road haulage to the points at which the aircraft used in agriculture finally pick up their load. In considering the matter it must be borne in mind that the complaints as to the number of ports operated for overseas shipping arise-only from the OSG group in respect of their cargo liner traffic. Tramp shipping, and other shipping lines endeavoring to enter the trade, from time'to time, may continue to be prepared to call at the small ports for quite small consignments. This will constitute a factor tending to the retention of the use of such smaller ports for overseas shipping. 27. From considerations of the foregoing nature, it is therefore the consensus of opinion among all concerned locally that the maximum extent to which concentration would be feasible would be the closing of such minor ports as Bay of Islands, Wanganui, Picton, and Omaru to overseas shipping and that there is no doubt that Auckland, Bluff, Otago, Lyttelton, Napier, Timaru and Wellington will continue to be operated as ports for overseas dry cargo shipping. 28. As regards the slow rates of loading and discharge complained of, the main underlying cause is undoubtedly the shortage of labor, a shortage, as already explained, common throughout New Zealand's economy. The restrictions as to hours of work described in paragraph 19 are such as are met within many developed countries. The possibility of finding labor with which to increase the number of gangs available is constantly being explored, but no early solution of the problem appears likely. 29. Rates of discharging cased general cargo appear adversely affected by a low degree of palletization having the effect that forklifts are less used than elsewhere and efforts are being made to effect improvement in this respect. As regards principal exports, the further mechanization of the handling of wool would probably offer little advantage. This is not the case with dairy products and meat, where substantial savings arising from increased cleanliness, de- creased damage, and the avoidance of interruption because of rain are feasible if full mechanization is achieved. Much attention is being given to the -7- problem and an all-weather meat loading installation, the first of its type in the world is now being installed at Bluff. Timaru has a firm proposal for such a loader and other Boards are likely to follow suit. 30. In considering the rates of discharge and loading it must be borne in mind that direct loss other than ships' time has not been involved to any great extent. Apart from the somewhat low degree of mechanization referred to above, cargo is efficiently handled, congestion at the wharves is rare, generally only occurring when anusual circumstances, such as the imposition or removal of import restrictions, lead to artificial peaking. During visits to twelve ports the mission saw no instance of wharf or shed congestion. 31. In examining statistics of the traffic handled in the ports, it is necessary to take a number of factors into consideration which affect through- put as follows: the general stringency of labor supply described in paragraphs 19 and 28; the obsolete layout of much of the accommodation as described in paragraph 10; the policy adopted as regards berth availability as described in paragraph 15 and the small number of berths at some ports; the nature of the cargo which is often relatively light and bulky, and the lack of modern facili- ties at some of the intermediate-sized ports. Bearing these factors in mind, the annual amounts handled per berth are comparable with figures achieved under like circumstances in Europe and North America. IV. FINANCES AND EARNINGS A. Budgets, Accounting and Auditing 32. The various Harbor Boards of New Zealand are entirely responsible for their own operating budgets, and for their capital budgets except to the extent they involve borrowing money. 33. The accounting systems of each Harbor Board are similar in major respects. They have the principal aspects of commercial accounts - operating expenses include depreciation on a declining balance basis related to reason- able service lives of depreciable assets, but proprietorship accounts represent only investment of internally-generated funds. Aspects of Government account- ing include: (a) the establishment of a multiplicity of funds expressly author- ized by law, for special purposes; (b) the establishment of Special Rates Trust Accounts which are: (i) fed by total local taxes levied and any interest earn- ed on loan money invested; and (ii) reduced by unavailable local taxes whichkame been either written off or rebated and by transfers equivalent to the charge for interest, for payments to sinking fund or repayment of the loan in respect of which the special tax was levied. The accounts are kept in a manner ade- quate to a determination of the earnings and financial position of each Board. 34. Auditing is performed for all Local Authorities including Harbor Boards, by the Audit Office of the Controller and Auditor General in accord- ance with Section 88 of the Public Revenues Act, 1953. B. Rate Structure 35. Rates and charges are established by each Harbor Board under powers -8- granted by the "'Harbours Act - 1950". As described in paragraph 7, they are subject to the approval of the Minister of Marine. 36. Tariffs are generally simple, inasmuch as most of the Boards provide the wharfinger facilities for others to operate in the exchange of persons and property between water and land carriage. The principal charges are for pilotage, port use, berthage, rents and hire of equipment. Most of these charges appear to be reasonable for the service involved although the sum of total charges in some instances is on the low side. C. Earnings 37. Every Harbor Board is required to provide for its ordinary obligations in any year from the revenue of that year. Revenue is defined as all money receivable other than the proceeds of loans and thus, includes local taxes in some instances when they are levied on the port's behalf. (See paragraph 39 below). 38. Earnings are affected in most cases by non-operating income, the specific nature and significance of which varies from Board to Board, but generally appears to average about 10%-20% of gross revenue. Such income includes amounts obtained as local taxes levied and collected from general property owners within the relevant Board district; rents on non-operating land and other property with which a port may be endowed; the financial results of farm operations on land endowments; and interest earnings on investments usually in Government and Local Authority securities. 39. The power to levy local taxes is at times granted by Parliament to the smaller or less affluent Boards, or to Boards in the earlier stages of port development as security for a loan and as a means of servicing it. Where there is such power, the prior consent of the taxpayers to raising the loan must be obtained where: (a) the Loan Board requires it; (b) at least five per cent of the taxpayers demand it; (c) the Harbor Board so resolves; or (d) the consent of the taxpayers is required by some enactment other than the Loans Act. The tax is tied to individual loans, is subject to specific maximum amounts and may be levied only when specified minimum financial results of operations are not annually attained. Three of the seven ports involved in the present Project assess local taxes for port purposes. These are Napier, Timaru and Whangarei. Napier and Timaru are not expected to continue this practice for more than another year or two. 40. While no earnings data for all New Zealand Harbor Boards as a group are available, a review of the earnings position of the Boards visited during the appraisal mission indicates that in the past, before the year 1961/62, the general policy to maintain port facilities and services on - a self-supporting basis was achieved. For the fiscal year ending September 30, 1962, earnings declined principally because of reduced import traffic in some of the larger ports (see paragraph 21). Recently revised estimates of 1962/63 earnings based upon 10 or 11 months actual experience shows a generally im- proved earnings position, somewhat better than earlier forecast. -9- D. Finances 41. In general, the capital structure oF the Boards consists of internally-generated funds and loan capital. There appears to have been no initial investment of equity capital and, as a result, small Boards such as Whangarei which are undertaking new, relativei'y large investment programs, will for some time have public debt disproportionately large in relation to equity. All the Project Boards except Whangarei have invested large amounts in New Zealand Government or other local authorities, securities or in the National Provident Fund. Some of these funds represent specific purpose reserves and are earmarked for such requirements as marine, fire and workers' insurance. Other of these funds representing loans repayment and general purpose reserves could be used to cover interest and amortization payments whenever required and reflect a generally sound financial position. E. Debt 42. There is no dependence on Government for funds to meet capital expenditure needs. Recourse has been had in the past to the domestic public money market usually within the territorial jurisdiction of the borrowing Harbor Board. Money may not be borrowed, otherwise than in anticipation of revenue, without the prior consent of the Governor-General in Council following the procedure described in paragraph 8. Temporary loans by way of bank over- draft or from other sources require no special authority. 43. Local subscription to Harbor Board public issues had until 1961/62 been prompt for the full amounts authorized. In 1962 the supply of money had not equalled the demand by local authorities and some difficulty had been experienced in raising authorized amounts. This situation has eased materially during the last 12 months and there is no particular problem in raising money on the local market. 44. The interest rate on public borrowing has risen progressively from about 4 per cent ten years ago to about 5-1/4 per cent at t'ne present time. Maturity dates vary ranging from medium to long-term, that is, from 7 up to 35 years with the majority of the loans maturing in about 15 years. The Loans Board has since its inception adopted a maximum loans period of 35 years. It has adhered to this policy as a general rule, although it has reserved the right to fix a longer period in exceptional circumstances. Loans are generally made repayable over a period not exceeding a conservative estimate of the life of the assets to be created, having regard to the factor of economic obsolescence. 45. The proceeds of public loans must be paid into a separate bank account or accounts and may not be used except for the specific purposes of the loan. Loan monies may be deposited at interest with any commercial bank, trustee savings bank, the Post Office Savings Bank, in New Zealand Government securities or with the National Provident Fund Board. Any profit accruing or loss suffered in holding securities belonging to a Loan Account is to be credited or charged to the Loan Account as the case may be. Interest earned in respect of the investment of loan monies must be applied against the annual charges of the loan. There is no statutory authority for investment of loan monies outside New Zealand. - 10 - 46. A Harbor Board may establish, and many have established, sinking funds in order to provide for repayment of a loan. In such case, Sinking Fund Commissioners must be appointed by the Board for the receipt and in- vestments of the sinking-fund monies, including interest thereon, in such securities as the Board may direct. Special statutory provisions apply to the investment of Harbor Board sinking funds. The debt/equity ratios set forth below have been based on debt net of sinking funds. F. Fixed Assets and Depreciation 47. In no case are the gross costs of fixed assets or the historical total of accumulated depreciation shown on the balance sheet. The balance sheets show only net fixed assets at the beginning of the year, additions and write-offs during the year, the annual depreciation charges for the cur- rent year and the residual net fixed assets at the end of the year. Depreci- ation is recorded on a declining balance basis, without deduction of salvage value, related to service lives prescribed indirectly by the Local Government Loans Board in its schedule of loan periods for various works. Reasonable levels of depreciation appear to result from these methods. There is an ex- ception in the case of Napier which port charges a relatively small amount for depreciation because debt service is charged to revenue. G. Earnings and Finances - Project Boards 48. The earnings of the five Harbor Boards referred to herein as the Project Boards (see Chapter VI) are shown for the year 1961/62, in the follow- ing table, in thousands of New Zealand pounds: Net Operating Operating Operating Net Operating Harbor Board Revenues ExpensesV Revenues Income 2/ Ratio Auckland 1,984 1,905 79 6 96 Lyttelton 794 533 261 260 67 Napier 314 152 162 161 48 Timaru 183 128 55 102 70 Whangarei 68 54 14 25 79 Note: 1. Operating expenses include depreciation, exclude interest. 2. Net income is after non-operating revenues and expenses and after all fixed charges including interest. 49. The general financial position of the Project Boards is summarized in the following table: - 11 - % Net Revenues / Debt/ Debt/ Times of Net Current Equity Service Interest Harbor Board Fixed Assets Ratio Ratio Ratio Earned Auckland 2.4 3.9 to 1 52/48 1.0 1.0 Lyttelton 9.3 4.1 to 1 49/51 2.1 2.9 Napier 9.1 7.9 to 1 51/49 1.6 3.4 Timaru 6.a 2.1 to 1 38/62 2.3 4.2 Whangarei 4.3 2.1 to 1 84/16 1.0 1.6 Note: 1. All net revenues include non-operating revenues as described in paragraph 38. V. GENERAL DEVELOPMENT OF PORTS 50. The procedures under which port development is contrciled have been described in paragraphs 7, 8, and 9 above. Projects are initiated by the individual Harbor Boards to meet local demand and the requirements of shipping. Implementation depends on the Boardstability to provide finance and upon approval by Parliament and a statutory board given mainly on financial grounds. Government approval is-in theory required only as regairs the technical aspects although in practice, the statutory board's decisions are made in compliance with the Government's general economic and financial policy. 51. The Boards have a continuing program of development. Capital expenditure on the improvement and extension of facilities was of the order of ' TZ 3 million per annum during the period 1957-61 and expenditure at about this rate is expected to continue. tThile many of the works are minor, substantial projects are involved in a number of cases. In-the older and larger ports i.e. Auckland, Wellington, Lyttelton and Otago, the works concerned involve mainly the modernization of existing facilities or the building of new facilities in substitution for those which have become obsolete. At Tauranga a new port has been built in recent years to provide for the growing commerce of the area and further extension is contemplated. At Whangarei additional facilities are being provided in connection with the refinery under construction there, and at Taranaki extensions are planned to meet requirements in connection with future natural gas and liquid petroleum production in the neighborhood. At Bluff, a new port has been built in recent years, further extension of which will be undertaken if the "Comalco"l aluminium smelter scheme matures. At Nelson,-Napier and Timaru additional berthage is being provided. At October 1961, the esti- mated outstanding cost, of these schemes, many-of which were still being processed for Parliamentary and other approval, was about ENZ 13,000,000. It is expected that most of this amount will be spent during the period 1963-67. - 12 - VI. THE PROJECT A. Description 52. From the general program described above, a number of items have been selected as 1;uitable for Bank lending. Selection has been made principal- ly on the ground3s of degree of preparation and suitability of timing. Some of the items have already been put in hand, others are due to be begun in the near future. All will be completed by 1967. The works are being carried out by the Auckland, Lyttelton, Napier, Timaru and Whangarei Harbor Boards. Auckland Additional quay cranes, miscellaneous cargo-handling equipment and new dredging equipment will be provided for use at the main Waitemata facilities. At Onehunga, the existing berthage will be extended by 500 feet of marginal wharf, and a cargo shed provided. (Onehunga is a coastal terminal on Manukau Bay leading to the Tasman Sea, distinct from the main port facilities at Waitemata Bay, on the Pacific coast). The cost of the over-all capital program for Auckland during the period 1963-67 is INZ 3.5 million. That part of the program included in the project covered by this report amounts to ONZ 1.15 million. L&Ltelton TArelve portal cranes wilI be providod on a 3,000 marginal wharf at the Eastern Extension. This extension comprises a breakwTater, an embankment, extensive reclamatior. and transit sheds. It is now nearing completion and is not included in the project. Also excluded from the project is the Inner Harbor Schemes which consists of the reconstruction of existing obsolete piers and provision of up-to-date transit sheds. The full cost of the program is expected to be ;NZ 3.8 million, of which LNZ O.48 million, the total estimated cost of the quay cranes, is included in the present project. Napier A new-two-berth finger pier for general cargo will be built at a cost of LNZ 530,000. -Additional facilities would raise the total program for the period to LNZ 798,000. Timaru A mechanical loading installation including shed and-rail tracks, will be-provided for the all-weather loading of lamb carcasses, meat in cartons, etc.; also a transit shed at an adjoining wharf-and miscellaneous cargo handling equipment. This project will cost 1NZ 470,000 out of a total program through 1967 of ENZ 1.15 million. - 13 - Whangarei Tugs, a tug jetty, a pilot launch, a slipway, navigational aids, a workshop and offices, will be provided. These items will be used in connection with the greatly increased tonnage of shipping which will use the harbor as a result of the coming into operation of a new petroleum refinery, due for completion in 1964. The total program will cost about LMTZ 2.8 million with the project covered in this report amounting to LNZ 1.9 million. B. Estimated Cost of the Project 53. The total estimated cost of the project is WNZ 4.5 million, of which LNZ 2.8 million would be foreign currency and TNZ 1.7 million local currency. A breakdown of the estimate by port is as follows. (Details of the project are presented in Appendix 5):- Estimated Cost of Proiect (7NZ Million) Foreign Local Currency urreny Total Auckland .79 .36 1.15 Lyttelton (Christchurch) .28 .20 .48 Napier .14 .39 .53 Timaru .35 .12 .47 Whangarei 1.22 .65 1.87 2.78 1.72 4.50 C. Status of Authorization of the Pri ect Items 54. Most of the items in the project presented in this report, have re- ceived Parliamentary and LALB approval. However, it will be a condition of disbursement for each item that authorization procedure, covering the whole of the item including the issue of the Order in Council and ratepayers poll where involved, should have been completed. D. Engineering Design, Construction and Procurement 55. All the Boards involved in the project have their own engineering staff which carries out the civil engineering design and supervision involved, using-consultants only for specialized work such as soil mechanics investiga- tions, dredge design (in some cases), and architectural work. Where works - are submitted to LALB, the proposals are accompanied by preliminary drawings, these as described in paragraph 8 are _bxa-Iined by the T1inistry of Works' technical' staff, who, however, liniit their scrutiny to the extent necessary to determine whether the type of desi3On and layout are suitable and whether the estimate is reasonable. These arrangements are satisfactory. - 14 - 56. The estimates of cost have been prepared by competent persons and appear reasonable. They are based on prevailing prices of materials and work, the actual cost of recently completed work of a similar nature, or actual bids. Sufficient allowances for contingencies have been included. 57. Contracts for the procurement of equipment will be awarded after international competitive bidding. This is the usual practice of the Boards and was the case in respect of such major items as have already been ordered. The import duties which are applicable to the kind of items involved in the project are not likely to have a serious effect on international competition. The Government has requested the Boards to take into account the need to con- serve foreign exchange when placing orders so that, in effect, the degree to which bidders utilize domestic resources may affect the award of bids. The Government is able to exercise an influence in this matter by means of its im- port licensing system but there is no reason to believe that it will do so in an unreasonable manner. For construction, the Napier Board will use direct labor on the grounds that it is cheaper. Construction contracts at Auckland, Timaru and Whangarei have been or will be awarded after bidding open to foreign firms. In all cases, however the contracts would seem to be too small to be of interest to other than local firms. E. Traffic Forecasts and Economic Justification =$8. Economic growth in New Zealand, in the recent past, has been relatively slow but steady. Population has been increasing by an annual average of 2.4 per cent and during the last decade gross national product has risen by an annual average of 3.3 per cent. Declining export prices and the recent threat of possible loss of free access to the U.K. market has had a somewhat depressing effect on the economy. Imports have been at a reduced level because of restric- tive import license regulations. For private imports within the period July 1, 1962 to June 30, 1964, a UNZ 240-250 million level has been provided annually and this represents a considerable easing in comparison with the previous 18- month period. Efforts of the U.K. to enter the Common Market have lead to serious attempts to expand markets and some success has been achieved in this respect. The level of traffic passing through the ports will, however, depend on the volume of trade not on its value. Import restrictions are aimed at re- ducing the value of imports and will affect principally high-value cargo. Its effect on total volume may be limited. Similarly, a fall in the value of exports through a decline in world prices may in fact be accompanied by an increase in volume. 59. The various port Boards have approached recent phases of their con- tinuing capital-investment programs with the foregoing facts in mind, and the general climate - relatively slow-but-steady progress - has pervaded their traffic forecasts. Auckland's total traffic is expected to increase from 3,350,000 tons in 1961/62 to about 3,724,000 tons in 1966/67. Lyttelton's traffic during this same period would increase from 1,440,000 tons to 1,725,000 tons. Comparable increases in the traffic of the other ports have been forecast. (For details of these forecasts, see Appendix 3). 60. The current project is part of a program being carried out by most of the Boards for steadily modernizing and extending their facilities. During the years 1957-61 inclusive, loan sanctions for capital investments averaged 1NZ 3 million annually. The Project, as stated, is based on conservative esti- mates of the needs of the ports even with future growth. Each project appears to have ample economic justification. The principal considerations concerning each port are included in Appendix 4. - 15 - VII. FUTURE EARNINGS AND FINANCES 61. The Harbor Boards involved in the Project have prepared forecasts of future earnings and finances based on 10 or 11 months actual experiences in 1962/63 and on traffic studies for subsequent years through 1966/67. These data are shown in varying details-in Appendix 6. iIore detailed data are shown there for Auckland, pages 1 to 4, inclusive. The data for the other four Harbor Boards are presented in summary form. Auckland 62. The forecast of estimated revenues shown on pages 1 and 2 of Appendix 6 reflects an increase in charges of 20 per-cent which became effective on October 1, 1963. In making this rate adjustment, the Auckland Harbor Board adopted the recommendations of its consultant, a public accountant of Auckland, Messrs Ross and Melville, that L400,OOO in added revenues would be needed in 1963/64 and that the Board refrain from stipulating any fixed future period for the rate increase thereby leaving the way open for the recovery of any additional costs which cannot be foreseen at present. -The forecast also includes a 5 per cent increase in rates as of October 1, 1966. The forecast provides for a three per cent cumulative increase in non-operating revenues (rents) and a six per cent cumulative increase in operating expenses. In addition to these assumptions, the forecast assumes an increase in cargo tonnage as indicated in Appendix 3. 63. In reviewing the future financial position of the Auckland Board, particularly the interest earned and-debt service coverage, it should be borne in mind that there will remain, as shown on the pro-forma balance sheets, substantial-cash investment funds which will be available for any shortfall in earrings, such as occurred in the current year 1962/63. Of such reserve funds more than half are general purpose funds, amounting to 1NZ 458,000 until 1965/66 and to ;LNZ 309,000 in 1966/67. 64. A summary of the earnings forecast by the Harbor Board as submitted, in thousands of New Zealand pounds, for the next five years is as follows: Net Net Non- Operating Operating Operating Operating Net Operating Period Revenues Expenses Revenues Income Interest Income Ratio 1962/63 2;023 1,995 28 244 339 (67) 98 1963/64 2;468 2,110 358 249 369 238 85 1964/65 2;517 2,231 286 256 409 133 89 1965/66 2;567 2,360 207 262 444 25 92 1966/67 2,748 2,497 251 269 484 36 91 65. Interest was covered by ratios of 2.9, 1.6, 1.7 and 2.3 in the last four years before 1961/62. However, the interest coverage was only 1.0 in 1961/62 with interest of ,NZ 312,000 covered by MNZ 318,000 of net revenues. - 16 - For the five-year period 1962/63 to 1966/67 taken as a whole, according to forecasts by the Harbor Board, interest would be covered 1.2 times on the average and ind1962/63 not fully covered. The ratio would be 0.8 in 1962/63; 1.6 in 1963/64, when the 20 per cent rate increase is effective; and would decline thereafter to 1.3, 1.1 and 1.1 in the next three years respectively. This decline is the result of the Harbor Board's forecast that operating expenses would increase faster than revenues. Debt/service coverage in the future years is also meagre, averaging 1.3 times for the five-year period through 19666/67. The coverage would be 1.2 in 1962/63, 1.4 in 1963/64, 1.2 in 1964/65, 1.3 in 1965/66 and 1.1 in 1966/67. In view of the cash reserves referred-to in paragraph 63, the foregoing ratios although low in several instances, are acceptable. 66. Net fixed assets as shown in the balance sheet includes a substantial amount of non-operating property. Therefore,-the rate of return has been - calculated on the basis of total net revenues, operating and non-operating, and net fixed assets at the-end of the year. From 1962/63-to 1966/67, the forecast return would be 2.0, 4.3, 3.6, 3.0 and 3.3 per cent, respectively (see Appendix 6 page 1). 67. The Board's cash needs and sources of funds for these years are suimmarized below: Cash Requirements (.\NZ '000) Over-all Capital Program 4;200 Debt Service 3,524 Increase in Wrorking Capital 75 Regular Appropriations 40 Total 7,839 Sources of Funds Net Revenues 2;410 Depreciation 1,509 Transfer from Invested Funds -751 Loan Proceeds 3,450 Decrease in Working Capital Total 445 8,565 Increase in Cash Position 726 68. Internal cash generation would amount to INZ 3,919,000 and barely exceed debt service of t=NZ 3,524,000. An additional amount of LNZ 751,000 would be available from the cash resources of the port.- The proposed IBRD loan would amount to 1NZ 79°2,000 leaving some LNZ 2,658,000 to be obtained from other borrowings. The Harbor Board intends to obtain these funds as in the past by selling bonds locally. - 17 - 69. Long-tern debt would increase from LIZ 7.5 million less-sinking funds of LUTZ 611,000, or a net of TNZ 6.9 million on September 30, 1962 to a net debt of ENZ 8.5 million on September 30, 1967. Equity during this period would rise from UTZ 6.4 to LNZ 7.4 million. The debt/equity ratio would range between 49/51 and 52/48, during the next five years. Lyttelton 70. A summary of the earnings as forecast by the Lyttelton Harbor Board in thousands-of New Zealand pounds for the next five years is as follows: (See Appendix 6, page 5). Net Non- Operating Operating Operating Operating Net Operating Period Revenues Epenses Revenues Income Interest Income Ratio 1962/63 788 532 256 106 159 203 68 1963/64 858 534 324 101 205 220 62 1964/65 885 549 336 98 219 215 62 1965/66 914 565 349 92 232 209 62 1966/67 939 582 357 85 258 184 62 71. The Harbor Board's forecast except for 1962/63 assumes a moderate annual average rise in revenues of 3.0 per cent. Particular items of operating expenses are estimated both to rise and fall depending on how they are affected by future operations. Over-all, little change is forecast for the years 1962/63 and 1963/64, with annual increases of about three per cent thereafter. 72. Substantial amounts of non-operating property are included in the net fixed assets. The over-all return on total net fixed assets will generally decline from 9.3 per cent in 1961/62 to 7.3 per cent in 1962/63, 7.5 per cent in 1963/64, 7.0 per cent in 1964/65, 6.5 per cent in 1965/66 and 5.8 per cent in 1966/67. 73. Interest will be covered by total net revenues, 2.3 times in 1962/63. This ratio will decline each year until it reaches 1.7 in 1966/67. The average for the five-year period will be 2.0 according to the Harbor Board's latest estimates. The-annual debt/service ratios would be 1.3, 1.4, 1.3, 1.3 and 1.4 respectively, in each of the next five years. The average for the period would be 1.3. 74. The Lyttelton Harbor Board's cash requirements and availability for this period are as follows. Cash Requirements (UNZ '000) Over-all Capital Program 3;813 Debt Service 2,042 Increase and Working Capital 15 Regular Appropriations 670 Total X 0 - 18 - Cash Availability ( 1NZ 000) Net Revenues 2,104 Depreciation 367 Transfers from Reserves Funds 555 Loan Proceeds 3,380 Total 6,406 Decline in Cash Position 134 75. Internal cash generation would amount to iNZ 2,471,000 or more than the debt/service requirement for the period of NNZ 2,0142,000. An additional NZ 555,000 would be made available from the cash resources of the port* The Harbor Board intends to obtain vNZ 3,105,000 in addition to the Bank loan in order to cover the remaining requirements for its capital expenditures program. 76. On September 30, 1962, the total of invested reserve funds and special accounts was iNZ 2.6 million, being made up of TNZ 0.8 million special reserve funds, liNZ 1.0 million Loans Repayment Account and \IZ 0.8 million Port Develop- ment Account. These funds were invested principally in Government bonds, local body securities and the National Provident Fumd. 77. Long term debt would rise sharply from iNZ 3.1 million on September 30, 1962, to LNZ 5.6 million in 1967. Equity would increase substantially during this period, but at a slower pace than debt, despite a drawdown of the Loans Repayment Account of almost ENZ 300,000 for debt retirements. This account although not a sinking fund in the normal sense has been established specifically for debt service, and the annual net change therein has been taken into account in calculating debt-coverage ratios. The Board maintains this account in lieu of sinking funds. The debt-equity ratio would deteriorate from 52/48 in 1962/63 to 60/40 in 1966/67, but substantial amounts would remain in- Vested in reserve funds amounting to more than MNZ 1 million in 1966/67 over and above mNZ 728,000 in the Loans' repayment account at that time. Iapier 78. A sumviary of the financial position of the Napier Harbor Board is set fort' on page 6 of Appendix 6. 79. The Zpvenuec and expense position as forecast by the Napier Harbor Board for the years 1962/63 to 1966/67, in thousands of New Zealand pounds is summarized as follows: - 19 - Net Net Non- Operat- Operat- Operat- Operat- ing ing ing ing Net Operating Period Revenues Expenses Revenue Income Interest Income Ratios 1962/63 327 188 139 65 69 135 57 1963/64 329 159 170 48 58 160 48 1964/65 342 191 151 5o 39 162 56 1965/66 356 171 185 50 39 196 48 1966/67 368 206 162 51 35 178 56 80. Data for 1962/63 are based on 11 months actual experience. There- after, little change is forecast for 1963/64. For subsequent years revenues are expected to rise annually by about 4 per cent with proportionate increases in expenses. The fluctuation in operating expenses is due to the biennial ex- pense of over-hauling dredging equipment. Local taxes would no longer be a source of non-operating income after 1962/63. However, relatively large amounts of non-operating income would continue to be derived from endowment rents, non-port operations and interest earned. The operating ratios, calcul- ated before net non-operating revenues, range from 57 in 1962/63 to 48 in 1963/64 and 1965/66. 81. The over-all return on total net fixed assets, operating and non- operating is relatively satisfactory in each of the future five years. They are 7.8 per cent, 7.6 per cent, 6.5 per cent, 7.3 per cent and 6.6 per cent for 1962/63, 1963/64, 1964/65, 1965/66 and 1966/67, respectively. 82. Interest earned ratios are excellent, rising fromn 2.9 times in 1962/63 to 6.1 times in 1966/67. Debt service coverage, ranges downward from 1.3 in 1962/63 to 1.0 in 1965/66 and in 1966/67. The apparent reason for the good interest ratios in co.ttparison with the meagre debt service coverage is the result of the debt structure. Within the five-year period 1962/63 to 1966/67 inclusive, eight of twenty-two outstanding loans will mature and ENZ 1,065,000 will be paid out in debt amortization compared to net revenues, operating and non-operating, of iNZ 1,071,000 during this period. The debt-service ratios shown in the appendix take into considera- tion payments from and appropriations to sinking funds and other reserves which are specifically set aside for repayment of loans. In meeting debt- service requirements from earnings and such reserves, the balances of reserves other than sinking funds as shown in the appendix will range from iNZ 130,000 to LNZ 50,000 in the five-year period and these invested funds may be used for service of debt in event of any short-fall in earnings. - 20 - 83. As a result of the amortization schedule, long-term debt would decline from WNZ 1.451 million in 1962/63 to ;NZ 1.225 million in 1966/67 and the debt/equity ratio would improve substantially from 47/53 in the for- mer year to 35/65 in the latter year, 84. The Board's cash needs and sources of funds are summarized belocr for the five-year period as a whole. Cash Requirements (LNZ t000) Over-all Capital Program 729 Debt Service 1,307 Other 106 Total 2,142 Cash Available Net Operating Revenues 807 Net Non-Operating Income 264 Depreciation 91 Transfers from Reserves (Net) 335 Loans 563 Total 2,060 Decrease in Cash Position 82 85. Internal cash generation would amount to NZ 1,162,000 compared to debt/service requirements to LNZ 1,307,000. The Harbor Boardts financial plan would include, besides the proposed IBRD loan of aNZ 140,000 additional borrowing of LNZ 423,000. Timaru 86. Page 7 of Appendix 6 is a summary of the income accounts, balance sheet data and cash flow forecasts of the Timaru Harbor Board. 87. Revenues for 1962/63 are estimated by the Board on the bases of 11 months actual experience to be about on the same level as in 1960/61 and some- what higher than in 1961/62. Mloderate increases are forecast thereafter, the sharp rise in revenues in 196L/65 being due to the acquisition and rental of cargo-handling plant in that year, such rentals amounting to ON 50,000, ENZ 51,000 and ENZ 52,000 in 1964/65, 1965/66 and 1966/67, respectively. 88. Operating expenses, excluding depreciation, would rise moderately also, except for maintenance expense related to the new cargo-handling equip- ment in 1964/65 and thereafter. Depreciation expense would also rise sharply inthe last three years of the five-year period. - 21 - 89. Non-operating revenues consist of local taxes collected on behalf of the port, forecast at a constant b!UZ 50,000 each year, endom'ment rents ranging from LNZ 14,000 to ,NZ 16,000 each year according to the forecast and interest earned. 90. As shown in the Appendix, the operating ratios would be 74 in 1962/63, 75 in 1963/64, 72 in 1964/65, 71 in 1965/66 and 73 in 1966/67. The rate of return based on all net revenues, operating and non-operating would be 5.9, 4.6, 4.9, 4.9 and 4.8 per cent respectively, in each of the next five years. 91. Interest would be covered by an adequate margin with the interest earned ratio being estimated at 3.2 in 1962/63, 2.8 in 1963/64, 2.6 in 1964/65, 2.2 in 1965/66 and 2.3 in 1966/67. The debt/service coverage would range between 2.7 in 1964/65 and 1.6 in 1965/66 and 1966/67. Debt/equity ratios during the next five years would range between 38/62 and 41/59. 92. The Board's cash needs and sources of funds for the five-year poeriod are as follows: (i1,NZ 000) Cash Requirements Over-all Capital Program 1,150 Debt Interest 260 Debt Amortization 197 Regular Appropriations 203 Other 10 Total 1,820 Cash Available Net Operating Revenues 304 Non-Operating Income 359 Depreciation 232 Transfers from Cash Reserves 598 Loan Proceeds 651 Total 2,144 Increase in Cash Position 324 93. Of the total cash required including debt/service during the 1962/63 - 1966/67 period, 35 percent would be realized from loans, about 13.7 per cent from local taxes, and the balance of about 51 per cent from internally-generated funds. In addition to a proposed IBRD loan of LNZ 350,000, local borrowing of WZ 300,000 would be required. - 22 - Whangarel 94. A sumnary of the projected earnings and finances of the lThangarei Harbor Board is set forth on page 8 of Anendix 6. Future finances are closely related to the very substantial growsth in traffic indicated in AoPendix 3. This growth is exDected to trke place upon the completion of an oil refinery now under construction. In this respect, the Board will, with completion of the refinery next year (1964), find itself vrery much, but not entirely, in the same position as a new port just beginning its onerations. The existing rates, particulary wharfage charges, are the bases of the forecast revenues. 95. Based upon the estimates submitted, operations would be profitable, as indicated by operating ratios ranging between 81 and 49 during the years 1963/64 and 1966/67. 96. Local taxes amounting to 1NZ27,000 are included in 1962/63 non- operating revenues. Thereafter, non-operating revenues include only endowment rents and interest and average about five per cent of total revenues. 97,. The return on total net fixed assets represented by all net revenues, both operatin-. and non-operating in each case, would rise from 2.6 per cent in 1962/63 to 3.2 per cent in 1963/64 and then would be 13.5 per cent in 1964/65, 12.8 per cent in 1965/66 and 13.8 per cent in 1966/67. 98. The interest earned ratios would be 1.5, 2.0, 8.3, 2.2 and 2.5 in each of the five future ye2rs, respectively. The debt/service coverage would improve from 1.1 in 1962/63 to 2.0, 4.1, 1.4 and 1.7 in each of the subsequent future years, respectively. For the five-year neriod as a whole, the averae-e annual interest earned ratio would be 2.8 times and the average annual debt/service coverage would be 2.0 times. 99. Long-term debt would rise from ENZ 3.0 million in 1962/63 to £NZ 4.4 million in 1966/67, a rise of almost 50 per cent. As a result, the debt/equity ratio would continue to be unfavorable, although improving from 91/9 in 1962/63 to 81/19 in 1966/67. This unfavorable debt/equity ratio is inevitable because there exists no paid-in equity capital whatsoever (as is the case with all ports in New Zealand) and because of the extra- ordinarily rapid expansion of facilities needed to cope with the very sharp rise in traffic expected from the new oil refinery. However, the financial difficulties appear to be short-term. .100. The estimated cash requirements and availability for the five-year period are summarized as follows: Cash Requirements (ENZ '000) Over-all Capital Program 3,727 Debt Service 1,220 Refinery expansion preliminary expenses and interest 506 Other development prelifminary expenses and interest 5 Regular Appropriations 368 Repayme nt Bank Overdraft 15 Total 5,841 - 23 - (LNZ 000) Cash Available Net Operating Revenues 1,701 Net Non-Operating Revenues 211 Depreciation 490 Proceeds of Loans 3,495 Total 5,897 Increase in Cash position 56 101. According to the above summary, some 60 per cent of cash require- ment would be met from loans. After covering debt-service, nearly 32 per cent of the cost of the capital programs would be covered from internally- generated funds. In addition to a proposed IBRD loan of LNZ 1,223,000, loans amounting to LNZ 2,272,000 would need to be obtained. - 24 - IX. CONCLUSIONS AN1D RECOMENDATIONS 102. The project ports are w.ell organized, managed and operated. The past earnings of most of the liarbor Boards concerned have been good and they appear to be in a reasonably sound financial position. Future finances will remain good and substantial reserves will be maintained in most cases. 103. In general, the project is technically and economically sound. The estimates of cost are realistic. Procurement procedures proposed are such as to be acceptable to the Bank. lo4L The loan would be made to the Government which would re-lend the funds to the various Harbor Boards on the same terms as the Bank loan to the Government, in accordance with separate subsidiary agreements to be negotiated betwAeen the Government and the beneficiary harbor boards. The consummation of such subsidiary agreements would be conditions of disburse- ment by the Bank in the case of each harbor board. 105. It is recoriaended that a Bank loan of US$ 7.8 million equivalent be made to the Government. A term of 25 years including a four-year period of grace would be appropriate. October 28, 1963 Z1. Z1OAL.D POi ,TS T(121h i OF CAF-(0 ;.DI- J) DT FSNF1PAL PFRTL 1`62 maifeat tong Dr - Caro_ Petroleur3 nIJ?r^dr Outy arx!s Tot1 I Inr a-Ids Ouitards Total Total Port Coastal Overseas Constal Overseas _ C_tstal Overseas Coasttl Overseas Carao Bay of Islands 4,330 2,123 - 3S,752 35,235 - - - 35,235 Whangreri 124,505 29,290 173,086 *- 326,961 1 51,632 - - 51,633 378,594 Auckl-nd (,iaitemat-a) 614,696 1,'18,408 193,.'54 540,542 2,667,100 3,246 643,967 4,293 1,857 653,263 3,320,363 Auckland (Qnehunga) 80,'45 291 133,717 - 164,'53 25 - 478 - 503 164,856 Raglan 16,641 - 1,157 - 18,C98 - - - - - 18,098 Taurahnga 21,583 13',8,634 22,?,03 I2,510 575,430 - 165,429 - - 165,429 740,859 Ohiwa 1,212 12,130 - 13,342 - - - - 13,342 Gisborne 41,158 1,F54 14,553 g5,C96 75,659 11,295 - 2 - 11,297 86,956 Napier 93,257 159,114 16 192 153,?84 422,447 9,455 111,158 2,299 7,009 129,921 552,368 Tnranaki '7, 97 ?76,`33 5 122 1.2,C03 371,155 10,325 97,985 2,509 8,134 118,953 490,108 *"anganui 111,235 555 10, 77 2'9 122,746 8,172 - - - 8,172 130,518 iellington 519,681 598,,84 .n, ),57 241,770 1,764,052 S ,'00 500,210 139,063 23,705 671,278 2,435,330 Picton 'CI,CSS 2, 13 24,429 225,194 5,'79 232 27 _ 5,628 230,822 'Wa1r-u 5,235 - - 9,766 582 _ - £2 10,348 Nelson 57,279 19,164 5,2 .0 66,937 228,530 11,263 35,310 812 L7,'85 275,915 )4otueka S,404 - - 4,'5 - 30,?89 108 - - 108 30,997 Westport 3,237 3,0 : /'S ' 92 - 194,627 102 - - - 102 194,729 0reymouth 8,265 - 15, C'4 - 163,279 458 - 6 - 464 163,743 Kaiapoi 14,543 - 16,2.0 - 31,C23 2,149 - 66 - 2,215 33,238 Lyttelton 275,767 376,015 3.','8 `' 324,657 1,055,329 4,778 298,556 28,611 10,306 342,;81 1,37,910 Timara 21,562 16,410 9,r1] 91,19I 209,202 32,778 28 3 - 32,409 241,511 Oemaru 4,366 ',:6 24, 506 - 31,040 9,744 - 5 - 9,749 40,789 Otago 102,2.19 166,250 S'. ,466 92,714 445,849 7,914 120,793 56 - 128,763 574,612 Bluff 45,2(Y7 103,29 5 . j,061 132,523 306,220 14,905 87,553 540 - 103,298 409,518 Total 2,331,462 3,123,059 2,C'01,770 2,030,735 9,487,026 140,579 2,113,483 578,66o S1,011 2,483,733 11,970,759 Other ports 159.1,6 18.225D TCTAL 12,130,210 T ?rambipsnta incled an imward and ouward cargoj figurs are for calendkr year 1962. 2/ Prnctic, ily - rl orllk liruid . | e S/ Distributicn of traffic for '7 minor r-ort- n-t .,v ilable. NEW ZEALAND PORTS TotCil Tonn, e9 o4 Cargo t1Ardled at Each Port, 1957 - 1962 Minilest fn P o r t 1957 19qR 1959 1960 1961 1962 Mangonui 3,321 2,A13 2,659 3,q7c 5,872 3,712 Whangaroa _ _ ___83b x Bax of Islards 5,4h4 29,(1o 2C,31B 33,578 36,1T98 35,235 • Whangarei 310,420 321,701 102,192 293,060 343,076 37P,"9 • Auckland (Waitemata) 3,'1z,c2' 3,309,314j 3,091,7h5 3,289,976 3,W461,713 3,320,363 Auckland (Onehunga) 93,266 101,902 122,176 129,162 126,1402 164,856 x Raglan 114,778 17,2140 lr,352 19,R70 214,590 11098 Thaws I4,S81 5,2R9 l1,309 3,766 h,5214 3,662 x Tauranga 26r,966 399,1147 570,35q 61h2,59P 7K8,919 7140,959 x Whakatae (including ohiwa) 17,196 1Th,123 7, 99 12,)166 9,012 13,3142 Kutarere 9,326 r,434 4,011 _ Opotiki 3,921 1,488 9043 - s Tokacaru (Tokcmaru Bay) 3.186 2,2)41 1,500 1,¢12 1,139 8814 x Uama C.C. (Tolaga 9ay) 1,901 1,615 1,0114 1,39 2,907 911 • Gisbome 93,651 87,140 88,805 91,205 o1,2*0 96,9¢6 x lapier 422,263 427,857 1447,771h 498,973 856,971 552,368 x Taranki (Now Plymouth) 435,951 160,592 4152,029 460,1 29 C6l0,A12 1490,109 x Patea 11,,519 15,506 8, 06 71 I I Wangnui 142,597 118,530 130,305 129,336 13°,8214 l30,C18 • Wellington 2,612,821h 2,q65,1ll 2,237,660 2,1436,254 2, 63,3145 2,14'r,330 • 1arlborongh (Pieton) 98,5914 99,6h7 93,979 125,615 1?14,636 230,922 x Wairau (Blenheie) 8,297 9,759 0,791L 10,6314 8,326 10,3149 s Nelson 207,14814 207,719 2047,167 21r,766 299,950 27 ,°15 x Motueka 20,866 30,356 3r,911 31,106 16,390 30,9°7 Tarakohe 1r 2,U46 14!, 6h Westport 223,876 231,553 '06,025 ?27,011 202,14163 1C1),7'9 x Grey,.uth 210,538 1Q,02 207,C91 197,QO8 20¢ 101 161,7143 J-dcson Bay - - 908 796 Kaiapoi. - 11~,168 1'?,292 34E,lPi11 33,239 x Lyttelton (Chiristctureh) 1,1031,!t77 1,37 ,908 1,?99,,3 6 1 39'°A 61 1c 1,1 7, 23 • Timnaru 211,1<33 ?1?,flq( 219079 22,1 [oco I R 2b51R1 • Oamaru 55,664 -4 c0 2 c4c3QB 37,011 °lh ,°70 o0,79q I Otago (Dunedin) CQ r,31 -All rhc14,987 C89 ,914 601t,,6 c~71,612 • Southlandi (Bluff) 2914,372 32Q51335,357 367,029 ~ 403,118 1409,5_13 Half-Moon Ray 2h14h 32,132 3,726 14,513 4,063 3,9914 Totals 11,3144,7V16 11,11IJ,298 10,772,?62 11,110n,3141 12,590,9146 1,1V3,211 • Har'nor Iord rt NEW4 7EALAND PORTS Past ?nd Estimated Future Trqffic in Poits vhere there *re Project Items (a) 000 Mcnifest tons - …- A ctua----- ----t2 -- c-- - t-Estlimated- Fort 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1972 1. Auckland (a) Waiteri ta Bulk petroleum 641 583 534 599 616 600 612 624 636 649 662 731 Bulk dry cFrgo 694 646 594 604 675 611 623 636 648 661 675 745 Other dry cargo 2.185 2.080 1,963 2,087 2.173 1,988 2,028 2,068 2.110 2,152 2.195 2,423 Total 3!520 3.309 3,091 3.290 3.b64 3.199 3.263 3,328 3.394 3.462 3.532 3.899 (b) Onehunga Bulk petrolrum 1 1 1 1 1 - - - - - - - Bulic dry cargo 6 7 20 24 21 13 26 27 29 30 31 40 Other dry cargo 86 93 101 104 104 138 133 139 146 154 161 206 Total 93 101 122 129 126 151 159 166 175 184 192 246 2. Iyttelton (Cl-ristchurch) Bulk petroleum 290 258 289 310 404 370 379 400 414 429 443 508 Bulk dry c-rgo 156 142 1)6 106 94 119 122 129 134 138 143 164 O'her dry cario 985 976 90( 983 1,048 951 972 1,028 1.064 1,101 1.138 1.303 F7tE7 2-1'1 7 '79 1.,34" 1.3f 5,6 1,4/,0 14Z73 1,557 1,612 1..Oa 1.724 1.975 3. Napier Bulk petroleum 82 96 110 11 3 130 116 136 147 154 163 175 Julk dry cargo 142 114 133 137 171 144 159 167 176 178 183 ) 840 Other dry cargo 198 218 205 249 256 285 269 294 295 314 318 Total 1422 428 448 499 557 545 5614 608 625 655 676 8u) 4. Ano Bulk petroleum 16 18 18 22 33 38 40 42 42 44 46 54 Blk dry cargo 35 33 19 7 7 a 11 21 23 26 28 36 Other dry cargo 161 162 182 192 211 -08 209 217 220 240 251 295 Total 212 213 219 221 25) 252 260 -80 285 310 325 3B5 5. Whe=aei Bulk petroleum 40 38 4? 45 57 52 58 2,460 4,955 5,105 5,>55 6,545 Bulk dry cargo 228 240 200 203 230 259 301 311. 402 4115 427 5U Other dry ceargo 42 4L 53 45 56 70 86 99 133 139 1L.7 207 Totnl 310 322 302 293 303 371 445 2,373 5,490 5,659 6,029 7,266 _ (9) 1957-61 figures refr to c len ier years I 1962-72 figures to fiscal years endin- Sentember 30. Appendix 4 NEW ZEALAND PORTS Detailed Traffic Forecasts and Project Justifications A. AUCKLATD (MAP 2) i. Auckland, the largest city in New Zealand, stands on the narrow isthmus joining the province of Northland to the remainder of the North Island. The city thus fronts both the Tasman Sea and the Pacific Ocean. The, main harbor and port facilities are in Waitemata inlet, an arm of the Pacific, but the Harbor Board also operates a coastal shipping terminal at Onehunga, on M4anukau Bay leading to the Tasman Sea. In the main harbor there are 21 usable general cargo berths, all at finger piers. The layout of many of the berths is obsolete. In addition there are two coal berths, a cement berth and various bulk petroleum handling installations, all adequate for their purpose. Depths alongside are up to 35 feet and there is, in general, no difficulty in obtain- ing a depth adequate to the berth's usage providing maintenance dredging re- quirements are met. The controlling dlepth in the entrance channel is.32 feet so that the larger vessels using the port must enter on the tide. At Onehunga there are two berths each about 300 feet long with a depth of 15 feet alongside ii. Total traffic at the W1aitemata facilities in 1961/62 amounted to 3,199,000tons of which 600,000 tons were bulk petroleum, 611,000 tons bulk dry cargo, and 1,988,000 tons general cargo. The Harbor Board forecast a moderate future increase in traffic, with a total-of 3,532,000 tons in 1966/67 and 3,899,000 tons in 1971/72. Onehunga traffic, mostly general cargo, was 151,000 tons in 1962. It has risen sharply in recent years, having been only 95,000 tons in 1955, and the Board expects this increase to continue at a like rate, reaching 192,000 tons in 1966/67 and 246,000 tons in 1971/72. iii. The Harbor Board estimates that traffic will exceed the capacity of the existing Waitemata facilities after 1967, but their plans for constructing new berthage to meet this situation are insufficiently advanced for inclusion in the present loan project. However, they have in hand measures to improve efficiency at the existing accommodation by providing additional quay cranes and other cargo handling appliances. They also plan to purchase additional dredging equipment to replace existing obsolete equipment and to provide for the deepening of the entrance channel and at berths made necessary by the in- creasing proportion of deep draft ships now using the port. Procurement of the cranes and cargo handling equipment will be completed in 1966 and that of the dredging equipment in 1967. At Onehunga they are about to construct addi- tional berthage to meet the requirements of the increasing traffic of the terminal, completion of construction being planned for 1964. The project items are the quay cranes, cargo handling equipment and dredging equipment for the Waitemata facilities, and the wharf extension at Onehunga, including a cargo shed. Appendix 4 Page 2. iv. The ports service area comprises r,ost of the northern half of the North Island, there being only minor ports in the area in addition to Auckland. v. The area surrounding Auckland, the largest city in New Zealand, accounts for one-third of the country's present industrial development. Popu- lation in the ports service area is expected to grow faster than in New Zealand generally. Factory output of Auckland Province is 44 per cent of the national total. Despite this degree of industrial development much of the service area is as yet comparatively undeveloped farm land. Increased trade based on farm development may result in greater traffic than has been forecast. vi. The acquisition of new quay cranes and cargo-handling equipment will fill a known demand. The Board does not provide a full wharfinger service and handling of cargo is carried out by labor engaged by others. Cargo-handling equipment including cranes is however rented out by the Poard at rates covering its full cost. vii. The improvements at Onehunga are justified in view of the present shortage of berthage and by the increase in traffic estimated for the future. The expansion of this terminal for coastwise traffic will involve substantial savings in respect of traffic between the Auckland area and the principal ports of the South Island, since the latter are a day nearer to Onehunga than to Wlaitemata. viii. The dredging equipment is required to replace existing obsolete equipment and will be used principally for maintenance dredging and for the berth and channel improvements macle necessary by the increasing proportion of deep-draft vessels using Waitemata. B. LYTTELTON (CHRISTCHURCH) (MAP 2) ix. Lyttelton is the port of Christchurch, second city of New Zealand, from which it is six miles distant. Effective' access to the city-and the port's service area is at present by rail only, but a road tunnel, due for completion in 1964, will give adequate road access. The existing harbor stands on an arm of the sea. The depth at the existing berths, in the harbor and in the dredged approach channel is 32 feet at low water and there is no physical obstacle to its being further deepened. The existing general cargo facilities comprise 14 working berths of which ten are at finger piers. All are rail served and at present almost the whole of the traffic passing - through the port is handled by rail. The facilities are of considerable age, obsolete in layout and unsuitable for handling cargo to and from road transport. x. In 1961/62 the total traffic amounted to 1,440,000 tons. -Of this 370;000 tons were bulk liquid petroleum, 119,000 tons bulk dry cargo, and 951,000 tons other dry cargo. Since 1958 traffic has shown a gradually increas- ing trend. This is expected to continue and a total figure of 1,724,000 tons is forecast for 1966/67 and of 1,975,000 tons for 1971/72. Anppnedix 4 Page 3 xi. To provide for the existing and future traffic of the port the Harbor Board has already put in hand the construction of a 3,000 foot long marginal wha 'f including a breakwater, embankment, reclaimed transit area, transit shed 3 and quay cranes, and a depth of 40 feet below LU alongside. This work, known as the Eastern Extension, is outside the existing harbor and is due to be completed in 1964. The project item consists of 12 quay cranes for use on the marginal wharf. xii. The service area of the port extends over most of the 14,000 square mile Canterbury alluvial plains. The area is economically the most important on the South Island. It grows two-fifths of the nation's arable crops includ- ing 70 per cent of its wheat, and supports one-sixth of the nation's sheep. Beef and dairy cattle are also important in this area. The port directly serves Christchurch, the second largest city of New Zealand and the principal manufacturing center in the South Island. xiii. The carrying out of the Eastern Extension, of which the project item forms part, is well justified by the 1,300,000 tons of general cargo traffic expected in 1967. Hire charges covering the full cost of the cranes will be levied. C. NAPIER (KAP 2) xiv. - The port of Napier is an artificial harbor situated on the Bay of Plenty, a rapidly developing area on the east coast of the North Island. The present accommodation comprises three open finger piers 800 feet long by 80 feet wide, rail served and suitable for road traffic, used for all types of traffic including bulk petroleum. There are two transit sheds sited on the area at the root of the piers, these being used solely for the small amount of overseas import cargo handled. The depth alongside varies between 26 feet and 35 feet below LW, the entrance channel having a depth of 30 feet. There is no obstacle to further deepening. xv. In 1961/62 traffic amounted to 545,000 tons of which 116,000 tons was bulk petroleum, 144,000 tons bulk dry cargo, and 285,000 tons other dry cargo. The Harbor Board estimate that these figures will increase to about 676,000 tons, 175,000 tons, 183,000 tons and 318,000 tons respectively by 1966/67 and that the total traffic handled in 1971/72 will be about 840,000 tons. Traffic is fairly seasonal, with occasionally large maximum figures. xvi. The Board is at present extending the breakwater to afford improved protection in the harbor and proposes to provide for the growth in traffic foreseen in the next few years by constructing a fourth finger pier, of the same length as the existing piers but 90 feet wide, and with 35 depth of water alongside. The project will comprise the construction of this pier which will be completed in 1967. Appendix-4 Page 4 xvii. Future traffic increases of five per cent per year are considered conservative for the port's productive and relatively fast-growing service area. Its population increase is about four per cent per year and this will be reflected in a rising volume of imports. With the use of increasing quantities of fertilizers, production of meat, wool and fruit is rising rapidly. New industries are being established and existing industries are expanding. xviii. During 1961, all six existing berths were occupied on 94 days and 70 vessels were delayed from one to five days awaiting an-available berth. Additional berthage will be needed by the end of 1965, if satis- factory service is to be accorded users of the port. The construction of a fourth finger pier at Napier and the additional two berths to be acquired thereby are economicall-y Justified. D. TEURUU (M!iP 2) xix. Timaru is situated on the east coast of the South Island, approxi- mately nidway between Christchurch and Dunedin. It has an artificial harbor in which the principal present facilities are two very narrow finger piers 800 feet long by 50-60 feet wide, a marginal wrharf 1,200 feet long and a berth alongside one of the breakwaters 750 feet long. The depth alongside the berths is 32 feet at LW and in the entrance channel 27 feet. There is no physical obstacle to channel deepening. xC. Traffic in 1961/62 amounted to 252,000 tons of which 38,000 tons were bulk liquid petroleum. There was no significant amount of bulk dry cargo but meat loaded amounted to 51,000 tons. Total traffic has increased steadily over recent years. The increase is expected to continue at a moderate rate, notwithstanding some possible loss in coastal traffic trans- ferred to rail as a result of the institution of an inter-island rail ferry. Meat loadings are expected to increase substantially, estimated figures for 1967 and 1972 being 55,000 and 62,000 tons respectively. xxi. The Board has in hand the construction of marginal wharf 1,100 feet long to provide modern facilities in substitution for the existing finger piers. This work is complete except for a transit shed about to be put in hand. In addition, it proposes to install a mechanical meat loading appliance at an existing marginal wharf. -This will consist of a shed with rail discharging tracks and conveyor belts, and four enclosed conveyors which will carry the meat completely under cover from the shed into the ships' hold. Although all meat at present comes in by rail and is likely to do so for many years, the layout will be designed suitably to permit discharge from road vehicles if required. The conveyors will be suitable for meat in carton as well as lamb carcasses and could in fact load dairy products, although these are not at present involved in any great quantity. Experience with the loader recently installed at Bluff and commissioned December 1962 has been taken into consideration in the design. A small amount of miscellaneous Apenrix 4 Page 5 eargo handling equipment for general use will also be purchased. The project item will comprise the entire meat loading installation together with the transit shed and the cargo handling equipment. The loading installation wil'l be complete by 1967 and the transit shed by the end of 1964. The cargo handling equipment will be procured in 1964-65. xxii. At the present level of traffic it is conservatively estimated that the mechanization of meat loading at Timaru will save ship owners LNZ 43,000 annually through improved ship turn-around resulting from the elimination of weather, rail car, and equipment delays.- Similarly, the saving in handling labor costs should be at least TNZ 7,000 per annum. Additional savings will result from eliminating the rejection of spoiled meat and from the speed up in handling other cargo through the elimination of congestion on the quay. It-is thus concluded that initial net savings will amount to at least WNZ 50,000 annually and that these will grow by about 5% per year as tonnages rise. A tonnage charge calculated to cover the full cost of the installation will be made for its use. xxiii. The transit shed and cargo handling equipment are necessary for the efficient handling of the general cargo traffic of the port and rental charges covering their full cost will be made. The use of the handling equipment will reduce the number of men required in the port, an important benefit in view of the prevailing labor shortage. E. WHANGAREI (MAP 2) xxiv. Whangarei Harbor is an arm of the sea on the northeastern coast of the North Island. The existing port facilities comprise one overseas general cargo berth with a depth of 30 feet, one tanker berth with a depth of 28 feet, one coastal general cargo berth with a depth of 12 feet, and one privately owned cement loading pier with a depth of l8 feet. The entrance channel has a depth of 52 feet. Recently, Whangarei was selected as the site of New Zealand's first oil refinery, which is now under construction near the harbor entrance by a consortium of five major oil companies and-a local company. The refinery will have an initial annual throughput of 2,500,000 tons. Crude petroleum will be discharged and products loaded at a two berth pier. xxcv. Tn 1961/62 total traffic through the port was 381,000 tons-of which 52,000 tons were bulk petroleum, 259,000 tons bulk dry cargo, and 70,000 tons other dry cargo. With the commissioning of the refinery in 1964, the petro- leum will increase sharply, the tonnage for that year being estimated at 2,460,000 tons, 1966/67 5,455,000 tons and 1971/72 6,545,000 tons. Dry cargo is also expected-to steadily increase, a figure of 721,000 tons being forecast for 1971/72 (514,000 tons bulk. 207,000 tons other). xxvi. The Board has plans for increasing dry cargo berthage to meet the needs of the increasing traffic, but these are not sufficiently advanced to form items of the proposed loan. In addition, it is providing a number of items required by the greatly increased tonnage of shipping which will be AnpDendix 4 Page 6 using the harbor as a consequence of the construction of the refinery. These will constitute the project item and comprise tugs, a tug jetty, a pilot launch a slipway, navigation2l aids, a workslhop, and offices. Completion is planned for 1964. xxvii. IWith the siting-of the New Zealand Refining Companyts petroleum refinery at-Marsden Point, the small provincial port of Whangarei will, in the near future, become the largest port in New Zealand, based on tonnage through- put. Shipping movements will be greatly increased and tankers of the largest size will have to be handled. The additional facilities included in the Project are essential to proper handling of this increased traffic. The equipment will be used for both general purposes as well as for tankers. The jetty which is included-in the Project will be used primarily for mooring tugs and other Project craft,-but it has been designed suitably for future extension for use as a cargo berth, if this should be required by the expected increase in dry cargo traffic. NEW ZEALAND PORTS Estimated Cost of Project ( i0W Foreign Local Currency Currency Total Item 1. Pwrt of Auckland a) Cargo-handling equipment 24W,000 36,000 280,000 b) onehunga whart extension, including cargo shed 113,000 181,000 294,000 c) Dredging equipmut 435,0O0 ihO,Oo0 575,000 792,000 357,000 1,149,000 2. Port of tLtteltcn (Chriatchurch) a) Portal cranes for Fastern EWtension (12) 275 ,000 275,t000 205,000 80p00 v80,000 3. Port of Usier a) Now two-berth finger pier including rail tracks 143,W0 113,000 386,000 386,000 5299000 529,000 4. Pet of ?Imaru a) Nschanical meat-loading installation inel-iding conveyors, shed, rail sidings, etc. 300,000 100,000 hi0o0,0 b) Cargo-handling equipment and transit shed 50,000 20,000 70 O 350,000 120,000 b701,00 5. Port ot Whangarei Tugs, launch, jetty etc. l,221,000 1,223,000 651,000 6&1,000 1,97hi,000 1,87h,000 a Tat al 2,783,000 1,719,O0 4, 502,fn NETW ZE.AL/ND PORTS Statements Showing Summary and Detailed Financial Data for Auckland Harbor Board and Summary Financial Data for Lyttelton, NTnpier, Timaru and AThangarei Haerbor Boards, on Actual and Estimated Bases Together with Principal Financial Ratios for all Project Harbor Boards co Ft NEW ZEALAND PORTS Auckland Harbor Board Statement Showing Principal Financial Data, Actual and Estimated, and Principal Financial Ratios (I.) A ct u al Es3tI aa te d Year Fndinf September 30 1 Year Ending September 30 lOY~~ 1.959 190 1961 1962 1963 ~l 9 6h 1965 1966 1967 I. Principal Incsme Accounts Operating Revenues 1,OdS 1,Ro6 1,929 2,216 1,934 2,023 2,h68 2,517 2,567 2,748 Operating Expenses (inel. Depreciation) 1,515 1,610 1,7h3 1,B30 1,90S 1,995 2,110 2,231 2,360 2,497 Net Operating Revenues 469 196 186 386 79 28 358 286 207 251 Net Revenues (Before Interest) 666 406 455 689 318 272 607 542 1.69 520 Tnterest on Long-Term Debt 223 247 27h 292 312 339 369 409 444 484 Nel Incine (Loss) 443 159 181 396 6 (67) 239 133 25 36 II. Principal 13alance Sheet Accounts Current Assets 673 433 508 467 307 303 Investaeut (Reserve Funds) 1,415 813 823 833 83 704 Net Fixed Assets 13,383 13,856 14,230 1i.,591 15,3.28 15,797 Other 6S 55 h5 35 25 15 Total Assets 15,536 15,157 15,606 16,229 16,603 16,819 Current Liabilities 173 173 173 173 173 173 Special Reserves 1,415 813 B23 833 81.3 704 Buildings m Leasehold 65 55 h4 35 25 15 Long-Term Debt 7,1491 7,212 7,436 7,9141 8,310 8,515 Equity 6,392 6,904 7,129 7,247 7,252 7,a12 Total Liabilities and Equity 15,536 15,157 15,606 16,229 16,603 16,819 III. Cash low Data Year Ending September 30 Cash Required 1,357 1,h7h 1,611 1,670 1,727 Cash Available 2,219 2,388 2,568 2,630 2,711 Crsh Balance Ernd f Tear 892 911. 937 960 9804 nV. Ratios S Operating bxpenses of Operating Revermes 76 99 00 83 96 93 85 89 92 91 WSet Operating Revenues of net Fixed Assets 0.6 0.2 2.5 1.9 1.3 1.6 M Net Revenues of Uet Fixed A.sets 2.1h 2.0 4.3 3.6 3.0 3.3 Ratio Current Assets to Current Liabilities 3.9 t) 1 2.5 to 1 2.9 to 1 2.7 to 1 1.8 to 1 1.6 to 1 Ratio Debt to Eouity 52/108 49/51 11C/51 50/50 52/43 52/4r8 Times Interest Earned 1.0 0.8 1.6 1.3 1.1 1.1 Debt Service Coveraf,e 1.0 1.2 1.4, 1.2 1.3 1.1 a Etimated on basis of 10 mnnths actual exnerience 2,a a=o NEW ZEALAND PORTS PROJECT Auckland Harbor Board Statement Showing Income and Expenditures Actual 1957/58 to 1961/62 Estimated 1962/63 to 1066/67 4. 000) A c t u a 1 E s t i m a t e d Year Ending September 30 Year Ending September 30 * 105d 1959 1960 1961 1962 1963 1964* 1965 1966 1967 Operating Revenue Port Installations and Services 1,324 1,188 1,250 1,462 1,321, 1,350 1,647 1,680 1,711 1,835 Cargo-Handling Plant 67 2 550 599 672 591 603 735 750 765 819 Electrical Energv 47 4q S2 57 53 54 66 67 68 74 Miscellaneous 11 20 2S 25 16 16 20 20 20 20 Total Operating Revenues 1,984 1,806 1,929 2,216 1,984 2,023 2,468 2,517 2,567 2,748 Operating Expenses Port Installations and Services 613 661 766 829 811 Cargo-Handling Plant 378 355 332 404 132 Electrical Energy 31 23 25 29 29 Buildings, Machinery Plant 44 L1O 32 25 35 Subecriptions and Gifts 15 8 6 9 10 Engineering and Stores Unallocated 6;) 101 99 104 107 General Aduinistrative 157 160 174 186 197 Operating Expenses Excluding Depreciation 1,313 1,348 1,84* 1,586 1,621 1,718 1,821 1,930 2,046 2,169 Depreciation 202 262 250 244 284 277 289 301 3141 329 Total Operating Expmwes 1,515 1,610 1,743 1,83( 1,005 1,995 2,110 2,231 2,360 2,197 Net Operating Revenes 469 106 186 396 79 29 353 286 207 251 N1n-Operating Revenue 2 24*6 209 349 275 276 283 292 300 309 Von-Operating Expense 51 36 3) 47 36 32 314 36 38 40 Net Non-Operating Revenue 197 210 269 3n2 239 2h4 249 256 262 269 let Revenues 666 406 455 688 318 272 607 542 469 520 Interest on Lang-Term Debt 221 21*7 271* 202 312 339 369 1*09 444 484 Yet Izccse 443 159 181 396 6 (67) 233 133 25 36 Operating Ratios () 76 89 90 83 96 98 8S 89 92 91 * stimated on basis of 10 months actual experience B NEV ZEALAND PORTS Auckland Harbor Board Statement Showing Balarce Sheet Data Actual as of September 30, 1962; and Estimated as of September 30, 1963 to 1967, Inclusive L 000) Actual EI t i a a t e d Septembe 30 KAs of September 30 A a es e t aslyo 19963 I96 1965 1966 1967 Current Assets Cash on Hand and in Banks 258 Accounts Receivable 267 Deposits 1 Stores 142 Prepaid t-penses 5 Tatal Current Assets 673 433 508 467 307 303 Reserve Funds Deposit National Provident Peal 254 Rank of Rew Zealand 6 Government ani Local Body Securities 5hh Sinking FundsY 611 Total Reserve Funds 1,415 813 823 833 813 70k Fixed Assets Not Fixed Assets - End of Tear 13,383 13,856 14,230 1h,894 15,1428 15,797 Buildings on Leaseholda - Realization 65 55 45 35 25 15 Total Assets 15,536 15,157 15,606 16,229 16,603 16,819 L i a b i I i t i * s Ciwrerrt Liabilities Current Liabilitise Accounts Payable 91 Deposits 2 Accrued Expenses 7 Other 5 _ Total Current Lisbilities 173 173 173 173 173 173 Special Reserves 1,41 813 823 833 813 70k Buildings on Leaseholds - Realization 65 55 h5 35 25 15 Lone-Tern DebtY 7,101 7,212 7,636 7,941 8,310 8,515 Capital Capital Accounts 5,892 6,614 6,794 6,°r3 7,118 7,282 Acewualated Funds 500 260 335 294 134 130 Total Capital 6,3°2 6,Q00 7,129 7,247 7,252 7,412 4 Total Liabilities 15,536 l,11c7 15,606 16,229 16,603 16,819 co} 1/ Estimated data excludes sinking fund from Asset Reserve Funds S and from Liability Long-Term Debt ?V ZEALANIi PORTS Auckland Harbor Board Statement Showing Estimated Cash Flow Fiscal Years Ending September 30, 1963 to 1967, Inclusive F s t i a a t e d Financial Year Ending September 30 1963 1964 1965 1966 1967 Total Cash Required Over-all Canital Program 750 750 900 900 900 4,200 Debt Services Interest 330 360 409 WI URL 2,ol.5 Amortization 26B 270 292 316 333 1, 7,79 Total Debt Service 607 639 701 760 817 3,524 Increase in Working Capita - 75 - - - 75 Appropriation of Invested Fund3 _ 10 10 10 10 6O Total Cash Required t1,7!! 1,611 l,67n 1,727 7,339 Cash Available Decrease in Working Capital 2It _ 141 160 a4s5 6 Net Operating Revenues 2'1 358 2B6 207 251 1,130 15 Net Non-Operating Revenues 4'1 ?2L9 256 262 269 1,290 16 Depreciation 277 239 301 316 323 1,509 19 Transfer from Invested Funds 622 - - - _1L 751 9 Loan Proeeeda 600 600 750 750 7w0 3,650 4h Cash Available Beginning of Year 2r9 392 914 937 9-0 Total Cash Available 2,2?!9 2,338 2,'L9 2,630 2,711 9,'65 109 Cash available end or Year 89? 91L 937 960 931L lncrease in Cash Position 726 - 9 e 7,339 100 o C, NRV ZFALAND PORTS Lyttelton !Farbor Board Statement Showing Principal Financial Data, Actual and Eatimated, and Principal Financial Ratios (I 000) A c t a a 1EBti *ted Ye AEdit eatmel 3 Etimaa te d Year Ending September 30 * Year ELnding September 30 1959 1960 1961 1962 1963 1964 1965 1966 1967 I. Principal Incae Accounts Operating Revenues 668 709 816 79l 788 858 885 914 939 Operating Expenses (incl. Depreciation) bb6 b84 445 533 532 534 549 565 582 Net Operating Revenues 222 225 371 261 256 324 336 349 357 Non-Operating Revenues 129 lib 19 134 106 101 98 92 85 let Reverues (Before Interest) 351 339 520 395 362 425 b34 ai1 442 Interest 66 93 123 135 159 205 219 232 258 Net Inco e 285 2h6 397 260 203 220 215 209 184 II. PrFripal Balance Sheet Data As of September 30 Current Aasets 319 640 695 756 822 900 INmesteents (Reserve Funds) 2,606 2,009 1,818 1,632 1,70% 1,78b Yet Pixed Assets 4,235 b,975 5,653 6,232 6,812 7,683 Total Assetbs 7,160 7,624 8,166 8,620 9,338 10,367 Current Liabilities 77 78 79 80 81 82 Special Reserest 1,7bO 1,676 1,67b 1,578 1,488 1,457 Long-Term Debt 3,141 3,578 3,915 4,177 4,700 5,552 Equity 2,202 2,292 2,498 2,785 3,069 3,276 Total Liabilities and Equity 7,160 7,624 8,166 8,620 9,338 10,367 III. Cash Rloi Dat ear Ending Septe-ber 30 Cash ReqAired 1,253 1,270 1,26h 1,258 1,495 Cash Available 2,417 2,297 2,153 2,273 2,6h9 Cash t ai nce nd of Year 1,164 1,017 889 1,015 1,154 n . Rato f OPerating Expense of Operating Revenues 67 6A r5 67 68 62 62 62 62 N Ret Operating Hevenues of Net Fixed As3ets 6.2 5.1 5.7 S.b 5.1 I Not Reaeeues of Net Vixed Assets 9.3 7.3 7.S 7.0 6.5 5.8 Ratio Current Assets to Current Liabilities 9.3 to1 8.2 to 7 1 .8to1 9.b0to1 10.5to1 11.0 tol Ratio Debt to Enuity b./S1 t2/148 toI /1to 98/b46 56b1 to 60/a t 1 Times Intere-t Earned ? 2.3 2.1 2.0 1.9 1.7 Leb. Service Coverage 2.1 1.3 11.4 1.3 1.3 1.14. * Estimated On basis of 11 months actual experience. NEW ZEALAND FORTS Napier harbor Board Statement Showing Principal Financial Data, Actual and Estimated, and Principal Financial Ratios (L 000) A c t u a I I a t i na t o d Tear Ending September 30 * Year FEiding September 30 F959 1960 1961 1962 1963 1964 1965 1966 1967 I. PRINCIPAL INCOME ACCOUNTS Operating Revenues 230 257 302 314 327 329 342 356 368 Operating Erpenses (incl. Depreciation) 119 16- 172 152 188 159 191 171 206 Set Operating Revenues 111 9h 130 162 139 170 151 185 162 Net Revenues (Before Interest) 161 154 199 229 20h 218 201 235 213 Tnterest on Long-Tern Debt 61 66 68 68 69 58 39 39 35 Net Incoe 100 88 131 161 135 160 162 196 178 II. Principal Balance Sheet Acca nts As of Septber 30 Current kssets 2hS 183 101 86 118 170 Reserve Funds 121 125 130 50 53 55 Sinking Pwids 235 280 12 8 49 91 Net Fixed Assets 2,511 2,622 2,882 3,097 3,220 3,214 Total Assets 3,112 3,210 3,125 3,2hl 3,44o 3,530 Current Liabilities 31 31 30 30 30 30 Reserves 418 6O5 142 58 102 16 Long-Term Debt 1,475 l,h5l 1,2h5 1,2h6 1,28h 1,225 Equity 1,18B 1,323 1,708 1,907 2,02h 2,129 Total Liabilities and Equity 3,112 3,210 3,125 3,241 3,bbO 3,530 III. Cash Tbv Data Cash Recuired 271 737 482 395 257 Cash Available h19 833 599 500 3bl Cash Balance Ern of Tear 1l8 96 117 105 86 TV. Retios S Operating Expenfes of Operating Revenues 5? 63 S7 48 S7 48 56 48 56 % Met Operating Revenues of Ret Fixed Assets 6.5 5.3 5.9 4.9 5.7 5.0 S Net Revenues of ie' Fixed Ass-ts 9.1 7.8 7.6 6.5 7.3 6.6 Ratio Current Assets to Current Liabilities 7.9 to 1 5.9 to l 3.3 to 1 2.9 to 1 3.9 to 1 5.7 to 1 Ratio Debt to Iouity 51/49 67/53 h2/58 39/61 33/62 35/65 Times Interest Earned 3.6 2.9 3.8 5.1 6.0 6.1 Debt Service Corerage 1.6 1.3 1.1 1.1 1.0 1.0 c * Estimated in the basis of 11 ennths actual experience NEW ZFALAND PttRTS Timaru Harbor Board Statement Showing Principnl Financial Data (& Coo) A e t u a I F s t i m a t pF Year Fndinp Seutembpr 30 T Year Fniing September 30 10to 196 1(61 1°62 16, 106)j 1965 1066 1967 I. Principal Income Accounts Operating Revenue i',9 166 187 13 1R7 192 21,$ ?2hQ 252 Operating Expenses (inel. Depreciation) 101 106 107 129 137 ibb 176 179 9b, Net Operating Revenues S6 cc 90 SS hb l,q 60 71 68 Net Revenues (Before Interest) 131 130 1C7 134 120 120 1 0 Jl,1 139 Interest mi Long-Term Debt lV 1V. 19 32 39 b3 e3 6!, 61 Net Inco e)2 116 ljR 102 96 77 96 77 77 II. Principal Balance Sheet Accounts As of Septeiber 30 Current Assets 8S 75 75 75 75 75 Investzents (Reserve Funds) ho6 371 136 lh5 119 162 Net Fixed Assets 1.96'¢ 2,103 2,0S9 2*R13 2,973 2,R83 Total kAsets 2,hS'6 2,IChq 2,810 3,033 3,096 3,110 Current Liabilitles ho 37 20 1S 21 25 SDecial Reserves 311h 317 132 1 U l 1 lh° Long-Term Debt Rns 930 1,052 1,102 1,19c 1,126 E -titr 1,291 1,365 1,615 1,682 ls7bV 1,tql Total Liabilities and E'uity 2,tc6 2,0t o 2,910 3,033 3,09' 3,110 ITI. Cash Flow Data Tear Ending Septembwr 30 Cash Reouired 302 600 3 6 2?AO 227 Cash Avail'hle 900 1,160 o66 Cash Balance - End of Tear 49 C6h* 6h3 400 736 TV. Ratio* f Operating ExTenses of Operating Revenues 61, 66 c7 70 7L 7C 72 71 73 g Net Operating Revenues of Net Fixe Assets 2.9 2.3 1.8 2.Ec 2.c 2, f Net Rerenues of Net Fixed Assets 6.8 c.o h.6 h.0 h.9 1.1 Ratio Current Assets t' 7urrent Liabilities ?.1 to 1 2 to 1 3.7C to 1 L.2 to 1 3.6 to 1 3 to 1 Ratio Debt to !-'uity 3e/62 3R/62 10/61 hl/'0 bo160 31/62 'rit.es Tntere3t Earned ',.2 3.2 2.9 2.6 2.2 2.3 Debt Service C7vrage 2?A 2.0 ?.0 2.7 1.6 1.6 ol * Estited on basis af 11 mont,ns act,ial experience NEW ZEiLAND PORTS Whangarei Harbor Board Statement Showing Principal Financial Data, Actual and Estinated, and Principal Financial Ratios (L 000) A c t u a 1 e s t i a a t e d Year Ending Sept ember 3 * Year Ending September 30 1959 1960 1961 1962 1963 196b 1965 1966 1967 I. Principal Income Accounts Operating Revenues L 53 53 64 68 103 521 986 1,023 1,081 Operating Expenses (inl. Depreciations) 32 h1 50 54 78 424 462 519 530 Net Operating Revenues 21 12 14 14 25 97 524 504 551 Net Revenues (before interest) 46 38 43 65 77 129 561 546 598 Interest on Long-term Debt 24 27 29 40 51 65 68 2143 24b Net Inecse 22 11 14 25 26 64 k93 303 35b II. Principal Balance Sheet Pccounts Current Asseta 166 225 253 b11 192 227 Investments (Reserve Funds) - - 145 135 225 368 Sinking Funds 18 20 28 b8 74 100 Net Fixed Assets 1,517 2,973 3,999 4,160 b,251 b,3a8 Capitalized Preliainary Loan Expenses 74 173 360 530 5ao 580 Total Assets 1,775 3,391 4,685 5,334 5,322 5,623 Current Liabilities 80 5b 60 92 102 103 Reserves - Sinking Fund 18 20 28 48 74 100 Long-Tern Debt 1,411 3,034 4,279 4,580 4,519 1,130 Equity 266 2S3 318 6115 627 990 Total Liabilitim ' E-mity 1,775 3,391 6,6a5 5,3315 5,322 5,623 III. Cash Flow Data Cash Reouired 1,647 1,493 927 992 782 Cash Available 1,828 1,704 1,239 1,132 962 Cash 3alance - 2nd of Tear - 11 211 362 110 180 IV. Ratios % Operating ExI. of OperatUng Revenues 60 77 78 79 76 81 47 50 le (l Net Operating Revenues of Net Operating Fixed Aseets 1.1 a.9 2.6 13.1 12.6 13.b S Net Revenues of Total let Fixed Assets 4.3 2.6 3.2 13.5 12.8 13.8 Ratio Current Assets to Current Liabilities 2.1 to 1 4.2 to 1 4.2 to 1 4.5 to 1 1.9 to 1 2.2 to I Ratio Debt to Equity 814/16 91/9 0°/7 83/12 88/12 81/19 Times Interest Earned 1.6 1.5 2.0 8.3 2.2 2.5 Debt Service Coverage 1.0 1.1 2.0 4.1 1.4 1.7 lstiated on badis of 11 months actual experieno. I MAP 1 AY OF ISLANDS NEW ZEALAND PORTS PROJECT 0 PORTS AND COMMUNICATIONS AUCKLAND Onehungo Main highways ------ -----Railways 7 ALP ,ANGA Whokatane * Coastal ports Raglan n Onehunga * Coastal port at which project items are situated GISBORNE * Overseas and coastal ports E, , Overseas and coastal ports JRP]EJ 0 at which project items are located NEW PLYMOUIH \SBORNE 0 20 40 60 so 00 WESTPORT GREYMO)UTHg SOUTH PACIFIC OCEAN g < 9 g gORT ~~~~~CHALMERS 6Ty * F \3UY3 ~~OTAGO zX4 DIN INVERCARGILL IR 1 2 OCTOBER 1963 IBRO 1128R MAP 2 N< |LYTTELTON HARBOUR BOARD WHANGERAI HARBOUR BOARD /NARfNRPE I-E I I--~~~~i I I 41 l ff~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Oeug --t---) ,, TIMARU HARBOUR BOARD NAPIER HARBOUR BOARD 8 . ~~~~~~~~S --, , r I I A I I/1XS e00 I A 4 304 II 42 44 8 i0FI¾o o 0 >0_a a~~~~~~~~~LAF S A l S I 1L - |NEW ZEALAND PORTS PROJECT PROJECT ITEMS ODCTOBER 1965 611) 11251R