ScotGov 'paying £100m too much' for less-green ferries built in Turkey

The Mull and Iona Ferry Committee (MIFC) which has been investigating the benefits of a community-run ferry service and commissioned a series of studies to evaluate the concept say they cannot go forward with it due to a failure by the Scottish Government to discuss the concept.

And they have condemned a failure to properly investigate all the options for the latest ferries in the wake of the revelations saying the new ferries are not value for money.

As part of its investigation they probed the costs the ferries commissioned by Scottish Government-owned procuring and vessel owning company, Caledonian Maritime Assets Ltd (CMAL) against those being brought in by neighbours Norway.

READ MORE: ScotGov blocks plan to wrest control of ferry services from CalMac

And they assert that over the 25-year lifespan of the ferries, the running cost of the four Turkish ferries would be £62m more expensive than that if they were to replicate the green Norwegian vessel.

The comparison was made between the 107-car diesel/hybrid powered ferries being in Turkey for the Islay and Little Minch route and a 120-car electric ferry being built in the same yard for Norwegian ferry operator Torghatten Nord.

The Herald has seen confirmation that the Norwegian ferry was priced at between £26m and £31m and is bound for the Bognes-Lødingen route in the northern part of Norway.

Four of those ferries would be estimated to have cost £114m, which is £106m less than the less green ferries Scotland has asked the same Turkish yard to build.

The contract for the Norwegian electric ferry was agreed in April 2022, the same month as the first of the four Scots vessels.

The cost comparison assumed the Norway vessel, which is the country's largest zero emmission ferry, was running 22 hours a day against the Islay specification of 14. It also assumes around 11 operating staff on board the Norway ship and 27 on the Scots vessel.

Joe Reade, chairman of MIFC said: "We are definitely not getting value for money for the Turkish vessels – but the cause is not the shipyard or the tendering to build them, it’s the design. Because CMAL and ferry operator CalMac effectively decide the specification of the Islay vessels in a closed room, there is no competition of design.

"The choice of ship was a foregone conclusion before any kind of options appraisal."

A ferry user group official said: "It is scandalous to think we are paying so much over the odds for a smaller and far less climate-friendly group of ferries. We were supposed to have learnt lessons from the debacle around Glen Sannox and Glen Rosa which islanders are still desperate to see support lifeline services. It would appear from this that that has not happened."

Islanders launched the plan for a possible community takeover of ferry services from CalMac in November 2022.

It launched a feasibility study to look at community ownership of ferries in the wake of concerns over continuing disruption to services with an ageing fleet on the Clyde and Hebrides Ferry Service (CHFS).

The study looked at whether services could be run by the communities themselves as an alternative to what it calls the current monopoly controlled by Scottish Government-controlled bodies.

The group was assisted by ferry expert and author Roy Pedersen, who scoped out a new ferry service for Mull that could have doubled capacity, lengthened the operating day, and increased frequency dramatically – whilst reducing operating costs on the route by 30%.

But their concerns have also been that Scotland still has not got a handle on getting the best value ships for the nation.

Nationalised Scots shipyard firm Ferguson Marine failed to get onto the shortlist of potential contractors after failing at the first Pre Qualification Questionnaire hurdle for the £105m contract for the first of two two-ferry contracts that were given to Turkey.

And it subsequently failed to even bid for the work on building the £115m second batch before it was again awarded to the same Turkish shipyard.

Ferguson Marine conducted a detailed analysis of bidding for the contract but concluded that, based on the associated documents published, the probability of winning the contract was "sufficiently low to recommend declining to bid".

Papers associated with the decision showed that it was believed that the qualification conditions in the tender documents contained criteria Ferguson Marine could not meet.

Key factors included that the two vessels in the series had already been awarded to Cemre Marin Endustri.

The Herald has already revealed concern that CMAL failed to stipulate that there should be any Scottish benefit from the £220m contracts given to Turkish shipyard Cemre Marin Endustri.

As of March 31, 2023 of the 58 companies providing products or services for ferries being built in Turkey - all are from overseas or based in England.

Meanwhile NB1091 Hinnøy, the Norwegian electric ferry being produced by Cemre was given a ceremonial launch in December, a year-and-a-half after the contracts were signed.

Mr Reade said: "The key thing is that Torghatten Nord won the contract for the route because they required the least subsidy. They required the least subsidy because they designed for efficiency and productivity. CMAL/CalMac have no incentive to design for productivity and efficiency," said Mr Reade.

"CalMac have to operate the ships CMAL give them. So they can’t improve their bid by proposing different vessels.

"The vessels are the fundamental determinant of operating costs – and if you can’t change them, what opportunity do you have to be more efficient or productive? Very little.

"If CMAL had followed a more competitive design process, they may have had ships similar to the Norwegians proposed to them. They are not just cheaper to build and cheaper to run, but they can operate 50% longer each day.

"So not only would each ship have been cheaper to buy and cheaper to operate, but they might not have needed so many, because one vessel could have provided the same daily capacity as two - more sailings, because longer operating day.

"But there could have been other solutions – like a larger number of smaller vessels, that if crewed productively, could have been better value for money, as well as adding to flexibility and redundancy. Many ways to skin a cat, but CalMac, CMAL and Transport Scotland only looked at one."

A CMAL spokesman said: “In terms of ferry design, CMAL receives a statement of requirements from the operator, which reflects operational and service needs. Potential vessel options and designs are then considered by CMAL’s in-house naval architects, who work with external ship designers and independent naval architects to provide objectivity and independent expertise in the process.

"They are supported by a professional team of engineers to deliver complex solutions suitable for the demanding operating conditions in Scotland. An important factor in all vessel choice for the Clyde and Hebrides Ferry Service (CHFS) is compatibility with specific routes, as well as flexibility to meet vessel redeployment needs across the network. The four vessels being built at Cemre to serve the Islay and Little Minch routes have been built to a standardised specification to ensure this flexibility.

“It is also worth noting that island communities are consulted throughout the process and their views, feedback, ideas and concerns are all factored into the statement of requirement provided to CMAL by the operator before vessel procurement begins. These discussions are soon to begin with communities on Mull regarding the replacement of MV Isle of Mull.”

A Transport Scotland spokesman said: "As CMAL have made clear, the vessels being built in Turkey are being built to the specifications of the routes they will serve and therefore comparisons with other vessels are not helpful at this stage.

“In line with relevant procurement legislation, an open tendering process was led by CMAL as the procuring authority.  The bid received from this yard represented the best value for money in terms of quality and price.

“The Scottish Government is committed to commissioning new ferries to support our island communities. The Islay ferry routes are some of the busiest services for freight on the west coast and the new vessels will help to grow the island’s economy, as well as bringing added resilience to the wider network.”