Shipyard must meet cost of ferry construction delays, insists CalMac
Scotland’s state-owned ferry firm has insisted it will not pay any extra cash for two new boats being built to serve Scotland’s island communities, despite the work running over time and over budget.
Caledonian Marine Asset Ltd (CMAL), which is responsible for buying and leasing ferries for operators CalMac, revealed it had known for more than 15 months that “things were not going to plan” with the construction of the vessels.
The Ferguson Marine shipyard in Port Glasgow won the £97 million contract to build the ferries – which will be the first in the world to run on a dual fuel system using both diesel and liquefied natural gas.
CalMac managing director Robbie Drummond told MSPs it would have made a “significant difference” to services if the new ships had been delivered on time.
The vessels, which will serve islands on Scotland’s west coast, were due to come into service this year, he said, adding: “We’re as disappointed as our communities are that that has been delayed.”
CMAL chief executive officer Kevin Hobbs said delays to the work mean the ferries would now cost “an awful lot more” than £97 million.
He told MSPs on Holyrood’s Rural Economy and Connectivity Committee that he had been aware there were problems for some time.
But he insisted any increase in costs would be met by the Ferguson yard, which was rescued from administration by businessman Jim McColl in 2014.
He also warned there could be further consequences for the shipyard, saying there are “a number of things at the end of the contract we will have to weigh up”.
He told the committee: “We were advised in July 2017, some 15 months ago, that there were cost overruns. Because we have a team embedded in the yard anyway, we knew well in advance of that that things were not going according to plan.
“I think we need to be very, very clear on the type of contract we tendered for and the type of contract we signed. It is a design and build contract, it is a fixed price of £97 million and it has some fixed dates for delivery.”
He insisted it was “known from stage one” that the work to build the two vessels was “a fixed-price contract”.
Mr Hobbs added: “Ferguson Marine, along with everybody else that were bidding for that contract at the time, they are private companies and with a private company there is risk and reward.
“They signed up to that contract knowingly and willingly and as far as we are concerned, £97 million is what we have to pay.”
He also told MSPs about “underinvestment” in Scotland’s ferry services.
About £50 million a year needs to be invested in the CalMac fleet and harbours, he said, but CMAL had received an average of £23.5 million over the last decade.
With passenger numbers on ferry services across Scotland having soared, Mr Drummond said the existing fleet is “already working to the limit of its capacity”.
A record 1.4 million vehicles and 5.2 million people travelled on its services in 2017, with numbers for the peak 2018 summer period up by 4%.
Mr Drummond said the increase in passenger numbers and sailings has “significantly reduced our capacity to manage disruption, which given the average age of the fleet is inevitable from time to time”.
The two new vessels being built at the Ferguson yard “would have provided enormous capacity for us and really improved our resilience”, he added.
He said: “In the past we’ve been able to manage with weather disruptions and technical disruptions, what is happening now is while the level of disruption isn’t significantly different, the impact is much greater than it has been in the past because the vessels that are being impacted are full.
“That means when they are cancelled it is much harder to deal with that level of disruption.”