Memorandum submitted by Milford Haven Port Authority (MHPA) (P8)

1. As an introductory background, Milford Haven Port Authority (MHPA) operates the largest port in Wales and the sixth largest port in the UK (as measured in the tonnage of cargo through the port). The turnover of the port in 2008 was £18.5m pounds producing an operating profit of £740K and a profit before tax of £4.4m. As a trust port with no shareholders, MHPA is statutorily required to operate as a commercial, profit making business but with the profits invested for the benefit of existing and future users and stakeholders of the port.

Policy Framework

2. Ports other than what are termed fishing ports are not a devolved responsibility and therefore MHPA has a formal relationship with UK Government at Westminster, through the Ports Division of the Department for Transport. Our act requires that we provide our audited annual accounts to the Secretary of State for Transport and the appointment of the 10 non-executive members on the Board of the Authority (alongside the 3 executive members) are made by the Secretary of State - through a process that complies with standards of governance, Nolan Principles etc. Indeed the DfT has identified and recently updated through a review of ports policy the standards of governance and performance expected of trust ports and as issued in the document "Modernising Trust Ports 2" which itself builds on a similar document produced following a review of trust ports in 2000. MHPA complies with all the requirements of these standards and will continue to do so.

3. A current issue outstanding with UK Government is the fact that over 4 years ago, a ruling by the Office of National Statistics identified MHPA along with a number of other large trust ports as having public corporation status and therefore ostensibly subject to public sector borrowing requirements. This was a state of affairs that neither we, nor indeed the Department and Treasury required and on the Department's advice a Harbour Revision Order was promoted to removed the two criteria which the ONS decision had been taken - the ability of the Government to compulsory privatise under a clause in the 1991 ports act and the view that the port was Government "controlled" because the majority of Board members were appointed by the Secretary of State. This HRO ws objected to by private ports and therefore the Department put it in suspension, awaiting outcome of the recent ports policy review which would identify new and updated standards for trust ports. It is expected that the HRO will therefore be resurrected and passed during the middle of 2009, thereby removing the threat to the investment and development capability of MHPA.

4. Whilst not a devolved responsibility, MHPA recognises that increasingly Welsh Assembly Government sets the framework within which we as a business, located in Wales have to operate. It is therefore important that we build communication and partnership at a number of levels, so that we both promote an understanding of the value and role of the port in the Welsh economy to feed into policies and strategies being developed by WAG and also have an opportunity to make our views known as part of the process of establishing such strategies.

5. As well as informal and formal links that we have established with WAG at a variety of levels and in various departments, a more recent move has been the agreement to establish a Welsh ports group to have regular if not frequent contact with WAG and be a means of communication, discussion and identification of relevant issues. The first such meeting will take place in June of this year.

Contribution of Welsh Ports

6. The overall contribution of Welsh ports has been covered in the response to this inquiry made by the British Ports Association, of which MHPA are members.

7. As a port MHPA supports two refineries that produce over 20% of the UK's production of petrol and diesel, the largest tank farm in the UK and Irish Ferries one of the major ferry operators on the Irish Sea, running between Rosslare and Pembroke Dock, in addition MHPA is the largest fishing port in Wales, with around 4,000 tonnes of fish landed each year in Milford Docks. More recently the well heralded advent of Liquefied Natural Gas shipping into the port has taken place with the recent opening of the South Hook Terminal and the expected opening of the Dragon LNG Terminal this summer. Between them, these two terminals have the capacity to provide over 25% of the UK's gas requirements for decades to come.

8. On top of that, MHPA employs 200 staff, which whilst small in once sense is nevertheless a significant employer in the local context, given that Pembrokeshire is very much a small enterprise economy.

Increased Trade with other Countries

9. Cargos of crude oil to the two refineries are mainly sourced from the North Sea nowadays but with occasional cargos from elsewhere e.g. West Africa. It is expected that with investment in the refineries enabling them to deal with different ranges of crude oil and with the decline in output from the North Sea, that there will be an increase in crude oil coming from other parts of the world in increasing measure in years to come. One refinery in particular, sees opportunity for bringing more crude oil from the Caspian.

10. The refined product of the refineries goes out in the main by sea in smaller coastal tankers to serve the UK, Ireland and Northern Europe. Smaller proportions go out by pipeline, rail (Murco) and a very small amount by road. A significant proportion of petrol produced also goes to the USA, particularly from Chevron, which is a reflection of the imbalance between production capacity and market demand for petrol and diesel in Northern Europe and indeed in the USA. Murco have plans to increase capacity and a likely consequence of that will be exports to the USA.

11. The SemLogistics tank facility imports and exports from a wide range of sources.

12. Irish Ferries services used in the port provide a link within the southern TENS route running through Wales and like other ferry operators are experiencing a downfall in traffic particularly rated to the even more significant reduction in the Irish economy than that in the UK and elsewhere in Northern Europe.

13. As a port, we recognise we have spare capacity in our ferry terminal and are actively pursuing other routes and opportunities and in particular are working with the Port of Ferrol in North West Spain to develop a new freight service for unaccompanied freight vehicles.

14. We are also looking to expand other general cargo in the port which as we do not have an industrial hinterland nor good road/rail connection to the rest of Wales and the UK, is largely focused on local agriculture and engineering sector in West Wales.

15. Very real and significant opportunities exist however for the port and Pembrokeshire to establish facilities to serve the emerging marine renewable energy industry which will see massive explosion over the next decade as the UK seeks to meet its CO2 targets (and these for Wales are even more challenging). The key to opening up the potential is the development of the last significant brownfield site with water access which is currently owned by Pembrokeshire County Council with interest from WAG with both of whom we are working hard to bring this about.

Increase in Freight Movements and Adequacy of Transport Infrastructure

16. The Port of Milford Haven and indeed the Pembrokeshire economy is one of the two strategic Trans-European routes identified in Wales of which the northern corridor, along the A55 to Holyhead has received significant attention, support and investment by Welsh Assembly Government in recognition not only of its strategic value in the European context but also the benefit that such improvements bring to the economy through North Wales and into Anglesey and Holyhead.

17. On the other hand there has been a continuing and significant failure by WAG in failing to follow through on expectations raised of a similar approach to the southern corridor, particularly focused on the dualing of the A40 from St Clears. This not only hinders the development of increased freight and indeed other vehicle traffic through the ferry ports of Pembroke Dock, (within Milford Haven) and Fishguard, but also holds back the Pembrokeshire economy in the perception that this third grade level of infrastructure gives to potential developers.

Tourism

18. There is a very real potential for Wales to participate in the still expanding cruise market. MHPA have been seeking to promote the port and West Wales to the cruise industry for the past 10 years, through attendance at the annual Seatrade exhibition conference in Miami and membership of Cruise Europe, Cruise UK and being one of the founder members of Cruise Wales. We have had modest success with 6 or 7 cruise ships using the port of Milford Haven each year and through research and work undertaken by Cruise Wales, see potential for significant increase in this providing that we can obtain the necessary infrastructure i.e. an alongside berth for vessels up to 300 metres in length to meet the full needs of the cruise ships. At present only ships of 150 metres can go alongside at Pembroke Port. Above this size they anchor and tender their passengers into Milford Docks, which is perfectly feasible but expensive for the ship operator and indeed the port and also does not maximise the potential for the local economy in making it as easy as possible for passengers and crew to come ashore, experience the locality and of course spend their money and perhaps in so doing decide to come back again as individual tourists.

19. Another aspect of tourism is that of marine leisure in which the 60 square miles of sheltered waterway in the port of Milford Haven are an existing and increasing attraction; supported by the 2 marinas, one in Milford Docks, owned by MHPA and the other privately owned in Neyland. In addition the Authority manages over 1200 moorings throughout the waterway and planning permission has been granted for a new housing development, supported by a 300 plus berth marina at Pembroke Dock. A proposed marina at Fishguard will also enhance the marine leisure facilities in South West Wales and be part of what Welsh Assembly Government have previously identified in their marine leisure strategy as moving towards a necklace of marinas thus increasing the potential for greater tourism use of one of Wales' major assets, its coastal waters.

Security and Policing

20. As a port that has had ferry links to the Republic of Ireland since the 1970s MHPA has operated within the Aviation and Maritime Security act for decades, with the terrorism threat of the IRA. More recently with the introduction of the International Ship and Port Facilities Code (ISPS) which was brought in July 2004 as an international response to the USA's requirements for extra security provision following 9/11, the port and all facilities within it operate under the requirements of this code. This is monitored by TRANSEC and each facility within the port provides and manages a plan to meet TRANSEC's requirements which are then tested and practiced on a regular basis.

21. On top of this of course with the major COMAH sites of the 3 oil terminals and now the 2 LNG terminals which operate under similar very strict security regime monitored by the security services, there is an obvious link between the port and terminal security provision.

22. Whilst the ISPS Code does not work in this way, we as a port have through our initial participation in the MATRA pilot project worked in a collaborative way, sharing information and indeed assets rather than in isolated silos. This is undertaken through the Port Security Committee which is chaired by MHPA's Chief Executive and on which each of the terminals, together with the police, special branch, TRANSEC, civil contingency officers and others serve. With the European Security Directive for ports coming in in the near future, this model will be easily transposed to its requirements.

23. Another concern for Welsh ports is the UK Border Agency's move to stop the unfettered sea travel between Eire and the UK which has been in place for over 80 years and enforce passport style security requirements. Whilst this obviously has political dimensions in our relationship with the Republic of Ireland and has come under criticism from the EU in introducing differential standards between EU states, it also poses severe operational problems for ferry companies and ports.

24. I hope the above gives a brief response to the primary areas of investigation, but I would be happy to expand on any and if required to give further comment or evidence in due course.

May 2009