Mr Veniez against the world...

While the forces gather to try and block his plans of privatization, Dan Veniez, Chairman of Ridley Terminals continues on with his letter writing campaign, eager to share his vision with anyone within the range of a news stand or a computer terminal.

As we highlighted on our blog last week, the always media savvy Veniez had taken his corporate concerns over perceived government interference on the privatization issue to the national media, offering up a number of rapid response pieces for a variety of newspapers.

This weeks installment of the Chronicles of Dan, find the Chairman outlining his thoughts on why he thinks having the Port of Prince Rupert take over Ridley Terminals would be a bad idea.

Writing a piece for the National Post, posted to their website on Thursday evening, Mr. Veniez, with the zeal of an evangalist, outlines what he believes are the flaws in the argument that the future of Ridley Terminals would best be served under the umbrella of Don Krusel and the Port of Prince Rupert.
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Suggesting that the taxpayers of Canada may not appreciate the Port having to borrow more money to fulfill such an ambition.

While he goes about trying to gain momentum for his plans the private sector alternative, other community leaders are taking a more cautious approach. As the Northern View outlined on their website early Thursday afternoon.

In a story posted to their website, the Northern View reviews the thoughts of Prince Rupert mayor Jack Mussallem and the concerns of Port Edward council, as both bodies of municipal government feel that without further details, the prospect of a privatized Ridley would not bode well for the Northwest and leaves far too much at the whim of market forces.

As Mr. Veniez continues to send his opinions near and far, we can no doubt expect that more voices will be heard from those that are concerned about his plans and his push to privatize the assets at Ridley Terminals.

So far, Mr. Veniez has been but the sole public voice for the privatization option, while the opposition to the plan seems to be multiplying by the day. He may soon need to bring some fellow travellers to his side of the debate if he hopes to develop a sense of momentum for his ambitious plans.

The Ridley Terminals debate: Privatization still the best option
Posted: May 28, 2009, 8:40 PM
Handing Ridley to the Prince Rupert Port Authority would be a mistake
By Daniel D. Veniez

Mr. Pierre Gratton, president and CEO of the Mining Association of British Columbia, the association representing coal producers, praised efforts that made Ridley Terminals viable. But if he agrees that being viable is good thing, and it wasn’t viable before, how does giving it to the Prince Rupert Port Authority (PRPA) keep it viable?

The truth is that it doesn’t.

There are only three choices for this business. The first is continued government ownership. Cash injections would be required to fund operating losses, pension liabilities, capital maintenance and modernization programs, and of course, subsidizing users because they refuse to pay market rates. The second is amalgamation into the Prince Rupert Port Authority (PRPA).In October, 2006, Don Krusel, CEO of the PRPA said before the House Finance Committee:

“The PRPA can only raise $22-million. What we would ask for is support for the amalgamation of federal assets in Prince Rupert, in the same way as it’s happening here in Vancouver, where the three port authorities look to be amalgamated. There is a Crown corporation in Prince Rupert called Ridley Terminals. We would like to see that amalgamated with the operations of the PRPA. It would provide us with funds that could be directed to this Pacific Gateway strategy initiative. It would also provide the Port of Prince Rupert with the leverage to borrow even more money in the public sector so we can fulfill this initiative.”

Is the fact that the PRPA needs to increase its borrowing authority sufficient justification for this swallowing up of RTI? We’re not so sure the taxpayer would agree with that.

The Vancouver “precedent” cited by Mr. Krusel is not a precedent at all. The consolidation of three separate port authorities operating adjacent to each other is different than the concept of putting the port authorities into operating businesses (with the result that a quasi-governmental authority would become a competitor to other commercial operators seeking to develop or operate a business).

The third alternative is a private-sector solution.

RTI is a public trust belonging to all Canadians. And Canadians deserve answers to the assertions made by Mr. Gratton. He should explain where, precisely, are the synergies to flow from an amalgamation between RTI and the PRPA? Or how he defines a “competitive” rate? So, if a rate is “competitive,” doesn’t that by definition mean that it is comparable or slightly better than other terminal operators in Canada and elsewhere? And if that’s the case, why does he think a private sector solution is such a bad idea?

Coal producers in B.C. have at least five choices available to them because there are many alternative terminals to RTI on the Pacific Coast. That being the case, what then is Mr. Gratton’s definition of a “monopoly,” as he describes us? And why would a private-sector participant impose “monopoly” rates?

Is Mr. Gratton proposing that the taxpayer fund the $50-million in maintenance and upgrade capital RTI needs in the near term to properly service its customers? On top of that, should the taxpayer subsidize coal producers through the PRPA or by funding RTI? In today’s poor global market, coal producers generate $110 per tonne in revenues. Will the mines that Mr. Gratton represents go out of business because RTI charges what its “competitors” charge?

The “competitive” rates referenced by Mr. Gratton were established at a time that coal prices for export hovered around $80 per metric ton. Metallurgical coal export prices over the past year have ranged from $330-$140 per metric ton. RTI has suggested rate increases ranging from 1% to 2% of current export pricing for coal. Those increases reflect the “cost” of the activity inclusive of the capital required to renew the resource. Is that, by any reasonable measure, “monopolistic” behaviour?

If Mr. Gratton believes that RTI’s public policy purpose is to develop coal mines in B.C., and therefore subsidize them, does he also believe that RTI must offer the same economic advantage to pellet producers, petroleum coke producers, potash producers and sulphur producers? And if RTI, a federal Crown corporation, subsidizes them through deeply discounted rates, shouldn’t other commodity producers that ship elsewhere in B.C. and Canada get equal treatment from the taxpayer?

It is up to the federal cabinet to decide RTI’s future. Our promise and duty to them is to protect RTI, its people, the customers that will need our services for many years to come and Canada’s taxpayer.Financial PostDaniel D. Veniez is chairman, Ridley Terminals Inc.

The battle for Ridley Terminals set to grab the headlines again…

"We have not made their lives easy, we've run the place as a business."--The ever loquacious Dan Veniez raising his alarm bells over the latest developments in the Ridley Terminals saga.

Dan Veniez is back in the press again, using an interview with the Globe and Mail’s Patrick Brethour (a favourite conduit it seems for the Chariman), to take a shot across the bow of some Conservative MP’s who have put the Stop sign out over a potential sale of Ridley Terminals to private interests.

It’s but the latest twist in the twenty seven year old history of the waterfront terminal on Ridley Island, which has seen a number of Chairmen, Presidents, Managers and business plans come and go over the years.

The current debate over the fate of the terminal has a number of backbench MP’s led by Prince George-Peace River MP Jay Hill, who also is the Government House Leader in Ottawa,less than enthusiastic about a $131-million offer for Ridley Terminals, apparently one of four formal expressions of interest currently in play for the Prince Rupert coal terminal.

It’s an unusual scenario being played out as the British Columbia caucus of the Conservative government, seems to be questioning the management style of the Conservative appointed chairman and his board.

Veniez the former head man of the bankrupt and subsequently closed New Skeena Forest Products, returned to the Northwest amid much fanfare a few years ago, tasked it seems to getting Ridley Terminals ready for eventual sale to the private sector.

A task he suggests that is exactly what he and his board have done, and in the Globe and Mail article posted today, he bemoans the interference by government MPs from BC, in his usual bombastic style he explains that his board members are becoming increasingly concerned over the issue, “I can't keep my directors contained any more on this," and suggests that their reputations have been sullied in the process, “Our reputations have been dragged through the mud and we've been left hanging by the government."

For its part, the elected officials on the other side of the debate are simply suggesting that they are simply worried about the effect of privatization on coal-mining firms in the B.C. Interior. A rather unusual statement for Conservative MP’s but perhaps one framed by the fact that coal mining is key industry in many of their ridings and the cost of shipment to Ridley is always a major concern of those industry players.

Jay Hill who seems to have emerged as the spokesperson for the group says that Mr. Veniez and his board perhaps are misreading the role of MP’s when it comes to watching over publicly owned industries such as Ridley.

The first attempt to sell off Ridley to private interests, which was brokered by the Liberal government of Paul Martin, was cancelled when the Conservative took power in 2006. The concern then, as it seems to be today was that a privately owned terminal would raise the prices of shipment for coal to levels that would not be sustainable by the provinces coal companies.

Hill says that he’s still supportive of Ridley being run as a Crown corporation and in fact wonders if it should not be folded into the larger model of the Port of Prince Rupert.

One wonders what Mr. Veniez and board might think of that prospect…

The full article is posted on the Globe website complete with commentary from Globe readers…

We also provide a transcript of it below, as well as some past Podunkian items related to the developments at Ridley Terminals.

January 6, 2009

November 10, 2008

July 18, 2008

June 4, 2008

June 3, 2008

May 2008

December 19, 2007

December 8, 2007

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Update: Mr. Veniez has taken his case for privatization to the Vancouver Sun, with an article posted on the Sun's website on May 21st.

Battle brews as MPs oppose sale of British Columbia coal terminal
By Patrick Brethour
From Wednesday's Globe and Mail
May 20, 2009 at 4:36 AM EDT

VANCOUVER — Private companies are lining up to bid for the cash-strapped coal-shipping Crown corporation in Prince Rupert, potentially handing Ottawa as much as $131-million as it seeks to raise billions from the sale of government property this year.

But the $131-million offer for Ridley Terminals - one of four formal expressions of interest - is being stymied by government MPs worried about the effect of privatization on coal-mining firms in the B.C. Interior, says Daniel Veniez, the Conservative-appointed chairman of Ridley.

In an interview with The Globe and Mail, Mr. Veniez said the opposition has been spearheaded by Jay Hill, government House Leader and the member of Parliament for Prince George-Peace River, a riding that embraces a large swath of B.C.'s coal-producing region.

Members of the Conservative British Columbia caucus, including Mr. Hill, are also unhappy with Ridley's attempts to negotiate higher rates for the coal shipped from the Interior through its Prince Rupert facility, Mr. Veniez said. "We have not made their lives easy, we've run the place as a business."

But the conflict with Ottawa has taken its toll on Mr. Veniez and his board, who believe they have simply done the job they've been asked to do, and are now being caught in political crossfire.

"I can't keep my directors contained any more on this," the former forestry executive wrote in an e-mail to a senior adviser in the government earlier this month. "Our reputations have been dragged through the mud and we've been left hanging by the government."

In the interview, Mr. Veniez stressed that he does not believe Prime Minister Stephen Harper is aware of the simmering dispute.

For his part, Mr. Hill readily acknowledges his concerns about the future direction of Ridley, saying it would be "completely irresponsible" for him not to give voice to worries about the effect of privatization or higher fees on the coal industry in northeastern B.C. - and the hundreds of jobs that depend on those mining firms.

One of the larger firms, Peace River Coal, met with the B.C. caucus a month ago, an event that Mr. Hill said is not unusual. That is just part of his job as an elected representative, Mr. Hill said. "If someone is describing this as political interference, they don't understand the role of a member of Parliament."

The tug-of-war over Ridley is the latest chapter in the odd history of the terminal, which started life as a Trudeau-era Crown corporation in 1982, deliberately targeted at spurring the development of B.C.'s coal resources.

Ridley Terminals continually struggled, and had to turn to the government several times for loans. Finally, in 2005, Paul Martin's Liberal government decided to sell off the troubled asset to an Ontario-based coal-mining firm for a comparative pittance - just $3-million, far less than the $400-million that the federal government has sunk into Ridley over the past 27 years.

One of the first acts of the newly elected Conservative administration in 2006 was to cancel that deal.

A new board was put in place at Ridley, headed by Mr. Veniez, who went on to install new management and negotiate a long-term labour deal. Mr. Veniez said he was given the mandate to stabilize the business and allow the government the option of privatizing Ridley.

But the notion of selling off the terminal to a private company, which would charge higher market-based rates, is at odds with the vision (in line with the original Trudeau-era strategy) that sees Ridley as something more akin to a public service, providing reasonable shipping access to B.C. coal miners.

Mr. Hill, who supported the cancellation of the 2006 sale, said he still believes public ownership is appropriate for Ridley, perhaps through amalgamation with the Port of Prince Rupert, also owned by the federal government.

"I'm very supportive of it continuing as a Crown corporation," he said, noting it is an "anomaly" to have two Crown corporations so closely related operating separately.

The offers for Ridley come in the midst of an effort by Ottawa to sell $2-billion in government-owned property, including "enterprise" Crown corporations (a category that includes Ridley Terminals). Yet a government source said Ottawa is not "aggressively considering" the sale of Ridley.

Mr. Hill said he has not seen an offer - "certainly nothing in writing" - and that in any case he is not directly responsible for decisions on the strategic direction of Crown corporations.
The offers for Ridley are not final and the majority of the $131-million offer would be paid out over several years.