ANCHORAGE, Alaska (AP) — Steep tariff hikes could be on the way at the Port of Alaska if the Municipality of Anchorage has to pay for repairs to the dock, a recent study says.
An analysis, prepared by economic consulting firm Parrish, Blessing and Associates Inc., considers how much tariffs on refined petroleum products and cement would have to be raised to cover the cost of borrowing $200 million to pay for replacing the port’s petroleum and cement terminal, the Alaska Journal of Commerce reported on Monday.
The municipality will have to sell $200 million in revenue bonds in less than a year to stay on the construction schedule for the petroleum cement terminal, Municipal Manager Bill Falsey said.
“I think we have to have some credible way to borrow approximately this amount of money by the year’s end or we can’t procure construction for 2020 so then we would be in a situation where we would have half constructed the petroleum cement terminal,” Falsey said. “How long could we have a half-constructed petroleum cement terminal in the water? I don’t know the answer to that but it’s certainly not anybody’s desire.”
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The port currently charges a tariff of 15.7 cents per barrel on petroleum products. The analysis says rates would need to be increased by 45 percent per year until 2023 — when they would reach $1.01 per barrel.
The tariff for cement is currently $1.61 per ton. It would increase 39 percent per year and hit $8.30 cents per ton in 2023.
The tariff rates would stabilize after 2023, according to Port Director Steve Ribuffo. The bonds would be 40-year revenue bonds calculated at 4.1 percent interest, he said.
Port and city officials will spend the next month talking with the customers using the terminal to try and determine what impacts the tariff increases could have on business, Falsey said.
Information from: (Anchorage) Alaska Journal of Commerce, http://www.alaskajournal.com