Plans had called for the construction of a 1.1 mile long deepwater terminal with six berths on Southampton Water, extensive landside facilities and transport linkages. ABP had included a comprehensive environmental compensation package as part of their proposal.

Announcing the Government's decision, Transport Minister Tony McNulty said, 'The government fully recognises the nation's and industry's needs for additional container port capacity in order to meet future economic demand, but every proposed port development must be justified on its own merits.

'One important factor in the making of this decision was the environmental impact of the proposals on internationally protected sites.'

The proposed Dibden Bay site, across the River Test from the current Port, was created by the disposal of dredged materials in earlier decades and has become a site of internationally important wildlife habitats. The UK Government agency English Nature said the development would have a detrimental effect on two Special Areas of Conservation, one Special Protection Area, and eight Sites of Special Scientific Interest.

Such sites are protected under the EC's Habitat's Directive and would have formed the basis for action through the courts had the project been approved.

As environmentalists rejoiced, the leader of Southampton City Council warned the decision could damage the local economy. Councillor Adrian Vinson said, 'It is vital that everyone with an interest in the continued prosperity of the region works together with ABP to minimise the threat this decision poses to Southampton's status as one of Europe's leading ports.'

ABP reacted swiftly to the news with its own announcement of plans to commence a new £100m share re-purchase programme in order to increase the efficiency of its capital structure. The group will write off substantially all of the estimated £45 million capitalised costs associated with the Dibden Terminal approval process.

MJ Information No: 19326