THE Scottish Government has urged high-profile industrialist Jim McColl and Caledonian Maritime Assets to thrash out a compromise to their increasingly bitter dispute over a contract to build two ferries to operate on the west coast of Scotland.
Ministers revealed last night their “great concern” over delays to the project which centres on the contract awarded to the Ferguson Marine shipyard in 2015 to build the ferries for the Clyde and Hebrides Ferry Service.
The intervention came as it emerged that CMAL has dismissed a claim from Port Glasgow-based Ferguson to compensate the yard for cost over-runs on the project. Ferguson claims that repeated requests by CMAL for design changes have led to costs spiralling by millions of pounds.
A spokesman for the Scottish Government said: “While from a contractual perspective, the management of the contract is for FMEL (Ferguson) and CMAL as contracting parties, the ongoing delay to the delivery of the vessels is of great concern to Ministers and, clearly, hugely frustrating to stakeholders – particularly so for the communities who will benefit from their eventual deployment and the operator, CalMac.
“Scottish Ministers are closely monitoring the situation and strongly encourage both FMEL and CMAL to engage constructively, as appropriate, to address the situation.”
READ MORE: Tycoon McColl will lodge ferry cash claim before Christmas
Ferguson, which Mr McColl’s Clyde Blowers Capital vehicle acquired out of administration in 2014, was named by CMAL as the preferred tenderer for the £97 million contract for the ferries in October 2015. The specifications were for Ferguson to build two 100-metre passenger and vehicle roll-on roll-off ferries, which would run on liquefied natural gas and marine gas oil.
The first vessel, the Glen Sannox, was due to be delivered this summer, but CMAL said it is now running 13 months late. The second vessel, currently named Hull 802, was originally scheduled to be delivered in spring 2020, however CMAL said is now expected to be 19 months late.
Ferguson puts the delays down to repeated design changes requested by CMAL, with Mr McColl revealing in December that Ferguson would be lodging a “legal claim” for compensation from the state-owned ferry and harbour infrastructure body. And while he declined to put a precise figure on the claim, Mr McColl said he expects there “will at least be a 50 per cent to 60% increase in the price” of the vessels.
READ MORE: McColl makes impassioned case for apprenticeships
CMAL has dismissed the claim for compensation. A spokeswoman said last night: “Our legal advisors have analysed the compensation claim documentation submitted by FMEL, and concluded that it does not contain any valid grounds for compensation based on the agreed terms and conditions of the contract. We have provided an official response to FMEL with the assistance of our legal team. Scottish Government have been kept informed regarding our position.”
The CMAL spokeswoman noted: “We have urgently requested an updated timeline for completion of both ferries, and we are awaiting a response from FMEL. We, along with CalMac, Scottish Government and Scottish taxpayers, in particular those in island communities, eagerly await the arrival of the new vessels and we urge FMEL to focus on their completion.”
READ MORE: Ferguson Marine shipyard predicts £44m loss on CalMac ferries
Mr McColl said in December that Ferguson’s case would be boosted by developments on a similar dispute in Canada. He cited the successful claim launched by Davie Shipbuilding against the Government of Quebec, which saw the company compensated after costs over-ran on the building of two “first in class” ferries. Mr McColl said the similarities between the Davie and the Ferguson cases are “uncanny”.
Days later it emerged that Ferguson expects to lose more than £44m on the troubled CMAL contract, with the publication of its accounts for the year ended December 31, 2016. Ferguson reported a near £60m loss for the period and warned the difficulties it has faced building the vessels, and uncertainty over the renegotiation of loans provided by Scottish ministers, “represent material uncertainties that may cast significant doubt on the group’s ability to trade as a going concern”.
Earlier last year Ferguson found itself at a centre of row over a secret £15m loan it received from the Scottish Government to ease cash flow as work on the CMAL ferries fell behind schedule. Ministers were criticised by Audit Scotland for a lack of transparency.
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