Sullom Voe’s financial future under review
The port of Sullom Voe may be worth £70 million, but if it was sold it could realise £100 million in investments, according to financial modelling.
But, said chairwoman of the harbour board Andrea Manson, the port is categorically not up for sale. It does, however, have to increase its income.
Ms Manson said: “It’s not for sale, we’re just looking at how much we could make by investing the money.” Regarding its income, she said: “The oil industry has to tell us what it needs.” She added that the report was the first of many.
Head of infrastructure Maggie Sandison said the oil terminal is currently at a “low point” in activity and therefore in income. The money coming in could be increased in two ways – by reducing its hours of operation, it currently operates “24/7”, or by increasing charges.
Mrs Sandison said: “What we currently have is not sustainable so something has to change.
“By changing the operating model [from 24/7] we could change the operating cost and increase return.
“Currently income is generated by harbour dues so we could change the charging mechanism.”
Sale is one option, she said, that was looked at in the report and checked by local government advisers SOLACE (Society of Local Authority Chief Executives). The valuation of £70 million, estimated by SOLACE after financial modelling done by the council, was based on the current low throughput.
Mrs Sandison said it is predicted that the throughput at the terminal will increase in the coming decades before reducing as the terminal runs down, expected to be around 2050.
This week a meeting of the harbour board heard that harbour dues at Sullom Voe could be increased by six per cent, which executive head of finance James Gray said would ensure the organisation would be achieving a financially sustainable budget for 2015/16.
Mr Gray also said that it was expected that gas throughput from Total would start by at least the autumn of next year, in the “last two quarters” of the financial year. He said that £1.349 million was a “realistic” figure for this period, and this would fund council services.