A NORWEGIAN salmon farming firm which is quitting Scotland putting at risk hundreds of jobs has received hundreds of thousands of pounds in taxpayer-funded support to develop operations, it has emerged.

Grieg Seafood through a subsidiary got over £600,000 of public money in 2012.

The cash boost was to allow subsidiary company Hjaltland Hatcheries Ltd (HHL) to develop a state of the art Atlantic salmon smolt hatchery facility at Girlsta on Shetland, creating seven jobs.

The project received £314,734 from the Scottish Government's community development agency Highlan5s and Islands Enterprise (HIE) and an identical sum went from Shetland Islands Council. The European Fisheries fund also provided grant support towards the £3.7m project.

READ MORE: Uncertainty over hundreds of jobs as salmon farmer Grieg Seafood looks to pull out of Scotland

Grieg Seafood is on a list of HIE clients which they "account manage" and with which the agency says it has a "strategic relationship".

In 2006, HIE also provided £14,654 support for an research and development project led by Grieg subsidiary, Hjaltland Seafarms.

The purpose of the project was to develop a new commercial farmed salmon diet, specifically formulated for Shetland waters.

Grieg Seafood blamed the Covid-19 pandemic for its decision to quit Scotland and concentrate its operations in Canada and Norway placing uncertainty over 200 jobs.

It last week announced a "strategic review" of its operations on the islands and says it is "aiming to sell when the timing is right".

The firm has 219 employees - operates 17 active seawater licences, one freshwater facility and one harvesting plant.

The Norwegian company said the Covid-19 pandemic had "severely" hit all of its markets and deeply hit their bottom line.

Grieg Seafood has previously stated it will cease operations at its five farms on Skye after the current harvest is completed.

It blame the" long distance" between the island and its main operations on Shetland.

"The distance is too great to operate the two areas as one unit, and the Skye operation is too small to be operated as a separate unit," it said.

The decision was expedited due to an incident of "high mortality" at three of the Skye farms between late July and early-September 2020, mainly caused by abnormal levels of jellyfish.

At the time of the taxpayer windfall for the project, managing director of Grieg Seafood Hjaltland, Michael Stark, said: “We very much appreciate HIE’s support towards this project. Introducing the hatchery to our existing business is an important development, strengthening our operation, creating new jobs and securing the existing jobs for the future.

When the council gave its grant, development committee chairman Josie Simpson added: “The project will allow the Hjaltland Group to grow its Shetland based company which will positively impact on the Shetland economy.

“In addition this grant will lever in significant funds from other sources to enable the project to go ahead.”

HIE said: "Considerations in approving the HIE investment in 2010 included the forecast creation of jobs with salaries above the regional average, generation of around £4.5m GVA [Gross Value Added] over three years, and the levering in of £3m further inward investment.

"The obligation period attached to our funding was five years, expiring in 2015."

Grieg Seafood became one of Scotland prominent salmon farmers through an expansion that included buing up one of the last Shetland-owned salmon companies for nearly £2.2 million in 2011.

At the time, the sale of Skelda Salmon and its subsidiary G Duncan (Salmon) Ltd by Robert and Alexis Nicolson from Twatt left just four working salmon farms in local ownership: two in Unst and one each in Yell and Skerries.

It left over 90 per cent of the industry in the hands of three powerful foreign operators.

In May, Grant Cumming, the managing director of Grieg Seafood Shetland admitted it was “not where we want to be” with regards to sea lice levels and escaping fish.

In August, high sea lice levels and low market prices contributed to losses of £1.0 per kilo for Grieg Seafood Shetland in the second quarter of this year.

But harvest volume was 3,770 tonnes, up 14% compared to Q2 2019, and total revenue was up 2% against the same period in 2019 due to higher volume.

The firm said sea lice level in Shetland remained high, with the corresponding intensity in mechanical treatments having an impact on survival rates, and driving up costs per kilo.

Sea lice have posed a major problem across Scotland’s farmed salmon industry, with parasites from open net farms earlier this year blamed for a slump in wild salmon numbers to their lowest level since records began.

The parasites, which thrive in cramped cages and feed on the mucus, skin and blood of fish, result in salmon being virtually eaten alive.

The Shetland operation’s measures to improve the quality of young salmon known as smolts, including a new vaccination strategy, were providing positive results, said Grieg at the time and the survival rates of smolts transferred to sea this sea had increased significantly.

A fire at the Girlsta hatchery in June resulted in the death of 250,000 parr but the firm said it had not impacted on targeted harvest volume.

Grieg said it had been delaying some harvesting until 2021 in the expectation of prices improving.

A new set of recommendations were issued by the Scottish Government to address the interactions between the farmed and wild salmon sectors in May.

Salmon farming had been identified as one of 12 pressures on populations of wild salmon.

One of the recommendations published is that Scotland’s finfish aquaculture regulatory regime should be reformed to ensure that it is fit for purpose, “comparable with the highest international and domestic regulatory standards”.

Another recommendation is that the Scottish Government should “holistically assess and review the approach to sea lice treatment, including access to medicines and the use of controls in their use, to deliver an evidence-based approach to sea lice control, whilst ensuring the protection of the wider environment and wild and farmed fish health and welfare”.

The report was created by the Salmon Interactions Working Group, which brings together salmon farmers, the wild fish sector and governmental bodies.

An HIE spokesman said: "Considerations in approving the HIE investment in 2010 included the forecast creation of jobs with salaries above the regional average, generation of around £4.5m GVA over three years, and the levering in of £3m further inward investment."

A Grieg Seafood spokesman said: "Grieg Seafood maintain that previous and existing investment into the hatchery facility will not simply disappear because of an acquisition. Any potential buyer will benefit from that investment and it will likely continue to be of value to the Shetland economy."

Shetland Islands Council declined to comment and would not discuss any other financial support provided before deadline.