Milford Sound's main harbour will undergo a $6 million upgrade, involving the rebuilding of the 22-year-old breakwater, starting in January.
The Milford Sound Development Authority (MDA) has received approval through the Department of Conservation and Environment Southland to extend the basin 10m from shore.
The MDA is a private company responsible for the facilities and infrastructure at the harbour.
The Skeggs Group owns 49% of the MDA, Real Journeys 49% and the Southland District Council 2%.
The company's board chairman, Jeff Grant, said the purpose of the upgrade was primarily to satisfy Maritime New Zealand safety concerns and improve efficiency in the harbour.
Concerns included overcrowding on wharves during the peak season (November-February) and hot berthing of boats - boats disembarking their passengers and mooring in deep water overnight.
The extension would allow for 150,000 more passengers on top the 400,000 total per annum at present, but allowing for extra boats or cruise ships was not the MDA's aim, Mr Grant said.
"It would allow for more passengers in the sense it will make the movements of the boats a lot quicker, but there is no proposal there will be more boats."
The new basin, to be built from rock on site and rocks from the Cleddau River, 2km away, will allow boats to moor in the freshwater basin rather than the nearby deep-water basin.
The project will involve moving the breakwater and dredging to enlarge the harbour, realigning wharves or replacing them with floating wharves and redecking and extending the visitor terminal.
During the summer season the harbour is one of the busiest in New Zealand, with up to 120 vessel movements per day.
Mr Grant said the upgrade had been six years in the planning and would "ensure Milford Sound maintained its reputation as New Zealand's leading tourist attraction".
The proposal underwent a public consent hearing about two years ago, and 18 months of Doc investigation.
The MDA hired an environmental analyst from Hamilton to look at the environmental effects on the neighbouring estuary and there would be no "harm" done, Mr Grant said.
"There wasn't any strong opposition to it.
"Essentially, we are just shifting the breakwater."
The rock stockpiling for the reef would begin in January and full construction would start in March at the end of the peak season, Mr Grant said.
He expected the harbour to be completed by August and said the works would temporarily restrict boat movements, but noted "80%" of visitors to the harbour came during the peak season.
The project was the most significant investment by the MDA since the original tourism development work done between 1989 and 1991.
The $6 million would come from the MDA levy, which is funded by companies that used the freshwater basin - Real Journeys, Southern Discoveries, Mitre Peak Cruises and Jucy Cruize Milford.
"To do anything in Milford Sound is not a cheap option."
Another possibility being explored by the MDA was a reconfiguration of the wharves and it was also "endeavouring" to open up the Bowen Waterfall walkway, which had been closed for seven years.
