New lease on life after long wait for DP World

Negotiations for the lease have been ongoing for several years and follow the New South Wales Government’s delays in approving an earlier agreement reached between the stevedore and Sydney Ports Corporation.
Addressing a Shipping Australia lunch in Sydney, NSW ports minister Joe Tripodi said Sydney Ports had again finalised terms with the stevedor.
Mr Tripodi indicated that this lease arrangement would be approved by cabinet.
Past efforts to renew the stevedore’s lease at the port had stalled at the desk of the then-treasurer and infrastructure minister, Michael Costa, with the State Government’s refusal to ratify the plan prompting DP World to delay plans for up to $50m of capital investment at the port.
DP World, then operating the site as P&O Ports, had been pushing for certainty on the issue as far back as 2005 but its efforts had been thwarted by government.
P&O signed a long-term lease in the early 1980s and exercised a five-year extension clause in 2004.
The stevedore had argued in 2007 that it could not justify to shareholders spending the $50m at the port given it did not have any guarantees it would continue to be a terminal operator on the site after 2009.
The then spokesman for Mr Costa said in August 2007 that it was not in fact the treasurer’s place to comment on the issue, choosing instead to pass responsibility back to Mr Tripodi who was similarly unwilling to discuss the reason for the delay.
Mr Costa was dumped from cabinet in September last year and Mr Tripodi was given the added responsibility for finance and infrastructure.
Mr Costa’s spokesman now works for Sydney Ports.
But Mr Tripodi warned that the new lease agreement would fall under new powers given to the State Government last year.
Mr Tripodi unveiled tough new reforms for Port Botany last year designed to give both DP World and Asciano’s Patrick Terminals incentives to meet performance benchmarks and disincentives for not meeting the targets.
The plan is part of a wider package of reforms that have overhauled the way the ports handle lease agreements in the wake of new statutory powers given to the State Government under the Ports and Maritime Administration Act.
The new lease is understood to allow DP World to reduce the amount it pays to lease the site if it can meet performance benchmarks and provided it follows through on its commitments to invest in the infrastructure.
The lease terms will also reward the stevedore for helping the State Government reach its 40% on-rail target.
Mr Tripodi said the lease would include provisions for handing over the site at the end of the term.
He did not specify how long the new lease would last.