Lower range of dividends to ORC proposed

Port Otago has changed its dividend policy in relation to its 100% owner, the Otago Regional Council, in part to underpin future capital expenditure, including funding for its ''inland port'' at Mosgiel.

Port Otago yesterday delivered its three-year draft statement of corporate intent to the ORC, which also included notification that no final decision has been made on Port Otago's dredging programme, other than the increasing likelihood it will undertake the project using its own dredge, as opposed to the more capital-intensive option of using a contractor.

The company is also in negotiations with an unnamed party to build another multimillion-dollar warehouse at Sawyers Bay, which would be a second 4000sq m building.

Since 1988, the ORC has received almost $130 million in dividends from Port Otago.

Port Otago wants to amend the present policy of delivering 70% to 80% of the group's operating surplus after tax towards the dividend payment, down to 50% to 70%.

It stated an annual intent to deliver $7 million in dividends, with provision to consider more in a special dividend, which it has delivered in four of the past six years.

During the past three years, Port Otago has delivered $36 million in dividends, including special dividends each year which totalled $15 million.

The proposed dividend change attracted minimal discussion from ORC councillors, other than several noting the proposed 50% to 70% was similar to general corporate expectations.

Following the meeting, Port Otago chief executive Geoff Plunket said that for each of the past three years the dividends had been supplied within the proposed range 50% to 70%.

Mr Plunket was asked if reducing the dividend range offered Port Otago some financial ''breathing space'' to assist its capital expenditure requirements.

''Yes, definitely. That will enable us to reinvest more, as and when it is required,'' Mr Plunket said.

He could not reveal more details of the possible expansion of a second Sawyers Bay warehouse, but if successful, tilt-slab construction could begin by the end of the year.

Some capital expenditure on the books includes $3 million being spent on a build and lease development in the Dunedin Harbour basin and a $2 million to $3 million upgrade of buildings and paving at its Strathallan St container terminal.

On the question of developing an ''inland port'' at Mosgiel, with rail services to Port Chalmers for general and dairy cargo, Mr Plunket said a budget had not yet been struck, but the company hoped the container hub could be operational by 2017.

Also in the early stages of design is an extension of the multi-purpose wharf at Port Chalmers and the Boiler Point fishing wharf.

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