Ministers under fire as cheap deal for new lifeline Scots ferry is sunk ‘over £100,000’

THE owner of Scotland’s ferry fleet demanded a foreign firm pay up to £100,000 to gain UK maritime approval for a £9m vessel it was negotiating to buy to ease chaos on the network ending in the deal collapsing, according to the sellers.

Negotiations have been taking place to secure the Indonesia-built vessel for months to secure the ferry before the ‘summer of chaos’ across Scotland’s ageing ferry network.

But it fell through after it was claimed Scottish Government-owned procuring and ferry owning company Caledonian Maritime Assets Ltd (CMAL) made an “incredible” move to have the overseas owners fork out for the official approvals for any modifications to make it suitable for Scottish waters which are estimated to have cost no more than £100,000.

It has led to calls for the beleaguered ferry system to be radically overhauled after ministers failed to secure the ferry at a fraction of the cost of delayed vessels languishing in a Port Glasgow shipyard.

The Mull & Iona Ferry Committee have been pushing the purchase of the ferry because of issues with the ferry services after local experts discovered the vessel had become available last year.

Scots ex-pat Ken MacArthur, the commercial lead for Sealease, the Hong Kong based company selling the catamaran criticised the handling of the failed potential purchase by Scottish Government-owned procuring and ferry owning company, Caledonian Maritime Assets (CMAL) who he believed were never serious in completing a sale.

The experience ship broker has called on ministers to take a “long and meaningful look at process management and decision making in the Scottish public ferry sector for the sake of Scottish taxpayers and lifeline ferry users”.

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And he believed that transport minister Graeme Dey was “essentially rubber stamping” CMAL’s position on now such sales are conducted – a process one ferry users action group described as “incompetent”.

Joe Reade, chairman of the Mull & Iona Ferry Committee said there were questions over the need for CMAL and that the whole ferry system, from its operations and procurement and its ownership needs to be reviewed.

He has called on the First Minister to pay a visit to hear people’s frustrations over the ferry service saying the potential sale was dealt with in  “the most shocking and scandalous manner”.

At just £9.1m, the catamaran which is in the final stages of completion, was being offered at a tenth of the price of each of the two long overdue lifeline island ferries MV Glen Sannox and Hull 802 whose failure to be delivered by the Ferguson Marine shipyard has led to costs more than doubling from an original £97m contract.

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It would be able to take around two thirds of the number of cars that MV Glen Sannox would be able to accommodate and a condition of the sale was that it would have had to be approved by the the Maritime and Coastguard Agency (MCA), which provides official certification for all ships.

A Maritime Safety Innovations (MSI) assessment of the vessel by the University of Strathclyde funded by islanders and Sealease concluded that the ship would pass the MCA certification with only minor modifications and that in terms of stability and ability to withstand damage had “an unprecedented high level of survivability.”

The over-200 foot metre roll-on roll off ferry could take 300 passengers and around 80 cars and was originally designed for a non-UK company, and was regulated for the Australian market.

It was hoped that it could be secured for the Craignure to Oban ferry route that serves Mull and Iona which is said to be the most congested service in the entire CalMac network.

But transport minister Graeme Dey, said that after a review of the MSI report using consultants it was decided not to pursue the purchase of the vessel.

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He said there remained “significant concerns” around the ability of the vessel to be made suitable for operations in UK waters and around the impact of any required modifications on the capacity of the vessel “if compliance and operational issues were able to be addressed”.

He said: “This continues to mean that we can have no confidence in the ability of this vessel to meet our requirements and therefore be a suitable prospect to pursue.”

Mr Reade and the sellers condemned the decision – in the wake of the consultant’s report.

Mr Reade said: “We believe it is now time for the First Minister to come to Mull and Iona to hear directly from islanders, and get to grips with the complete shambles engulfing Scotland’s lifeline ferry network.

READ MORE: Row as fresh CalMac ferry cancellations hit weekend lifeline services in Scotland

“Politicians and officials in Edinburgh seem to be looking the other way, whilst we desperately try to tell them what the problems are, and how to fix them. It’s a slow moving car crash. The system is bordering on the dysfunctional.

“CMAL seem to be deliberately obstructing this muchneeded vessel, in the most shocking and scandalous manner that shows only contempt for islanders.”

Mr MacArthur said he had “reluctantly decided to break my silence on this subject as a matter of public interest in Scotland”.

He said:”From our extensive experience of selling vessels to overseas buyers, CMAL did not look like a serious buyer let alone a willing buyer.

“In the meantime the community has been deprived of the use of a vessel that could be berthed at Craignure and have a meaningful positive impact upon island life.”

He expressed shock that CMAL had insisted that Sealease were responsible for securing the sign off from MCA on design compliance, at their own expense, prior to them entering into any meaningful dialogue with the owners on sales terms.

Mr MacArthur said that he had told CMAL and the Scottish Government agency Transport Scotland that the market practice was that the buyer was responsible for paying for regulatory approvals.

“The notion of a seller being responsible for approval in the buyer’s jurisdiction.. has no precedent in our industry,” he said. “None. Zero.

“It does not happen… so far as normal business practice is concerned between experienced parties.

Mr MacArthur said Transport Scotland had agreed to “encourage” CMAL to enter into a negotiation which covered the commercial, technical, operational and regulatory aspects of a sale.

But he said by December, last year, there was no further input on any changes required.

“I cannot foresee a circumstance where we would ever assume the buyer’s responsibility for regulatory design approval in their own jurisdiction but there equally had been no constructive negotiations on either commercial terms or an understanding from CMAL on what design modifications would be required for reasons of operating preferences,” he said.

“The negotiating stance was to us quite bizarre as it appeared to be driven by the need to create a paper trail rather than a bona fide attempt to negotiate a purchase of a vessel. To be seen to be negotiating without actually negotiating anything.

“Transport Scotland had encouraged both parties to negotiate on the basis of commercial, technical and regulatory matters. Reality is this never happened. We were stuck in a regulatory loop with no clear exit ramp to negotiate an actual transaction.

“To be clear this ultimately was never a failure of vessel regulatory compliance. This was a failure of process management either deliberately or unwittingly or possibly a bit of both.

“No competent international seller would ever proceed on the basis CMAL proposed.

“It was fraught with risk for a seller in terms of time and monetary cost and the process CMAL required had no basis within our market. That process fails every time. How many vessels has CMAL looked at over the last year and how many have they bought? I’ll let others answer that question.”

He said CMAL statements that the vessel did not comply with UK regulations “may sound convincing to the public as an authoritative pronouncement but unfortunately it was completely unauthorative from an industry perspective”.

“Strathclyde provided both the analysis for direct approval and the template and analysis for approval through design modification,” he said.

“If someone at a level of authority within government was to start asking the right questions for future acquisitions that in itself would be a positive step for the future.”

Mr Reade added: “Transport Minister Graeme Dey has based his decision to refuse the catamaran on the advice he’s given by CMAL – but it is clear that advice is deeply flawed and misleading.”

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The ferry while under construction in Indonesia

In a letter to ferry users, Mr Dey said: “Unfortunately, the work undertaken by MSI does not move the position forward, nor offer the detail of any solutions.

“I appreciate this decision will be very disappointing, but please allow me to reassure you that the option has not been dismissed lightly.

“All parties involved have carefully considered this and had it been felt there was a realistic prospect of this vessel being able to be made compliant and operationally suitable we would have pursued this further.”

A CMAL spokesman said: “We are acutely aware of the need to replace vessels in the fleet and we have commenced an ambitious plan of vessel replacement as part of a £587 million investment to cover vessels and harbours over the next five years. In addition, we are actively searching the global market for second-hand tonnage to provide more immediate relief to the service.

“If this new-build catamaran was a viable solution, we would pull out all the stops to make the purchase happen. “As a public body, we simply cannot spend millions of pounds of taxpayers’ money on a new-build vessel that may not be able to secure a passenger certificate and therefore never be able to operate on Scottish routes.”

READ MORE: Ministers under fire as fears grow over collapse of Scots ferry fiasco firm

A Transport Scotland spokesman said: “There has been a lack of confidence in the vessel’s suitability from the outset of this process, but we are confident that CMAL has given it the appropriate level of due consideration given the strong feelings from the community on the issue.”

The sale failure came after the Scottish Government made repeated public commitments to make every effort to purchase second-hand ferries from the world-wide market.

CMAL have so far been unable to find any vessels that were deemed suitable, in the entire world-wide used vessel market.

The ferry committee had been introduced to the potential advantages of medium-speed catamarans by noted ferry experts Prof Alf Baird and Roy Pedersen.

In May 2020, Mr Pedersen wrote to the CMAL alerting him to the opportunity to buy the catamarn that was under construction in Batam, Indonesia.

Due to commercial uncertainties caused by the Covid-19mpandemic, the originally intended end-user had asked the seller to find an alternative buyer.

The vessel was therefore being marketed.

The catamaran is similar in design to the MV Alfred owned by Pentland Ferries which has been operating to and from Orkney. The ferry committee said it is widely appreciated by Orcadians for its reliability in poor weather, and by the ferry company for its low running costs.

Dubbed the most environmentally-friendly ferry service of its kind in Scotland, it is said to burn one third of the fuel of an equivalent CalMac ferry with space for up to 430 passengers and 98 cars, or 54 cars and 12 articulated vehicles/coaches. A shore-based wind turbine provides power when the vessel is docked overnight.

The Herald Scotland

The Herald Scotland

The Herald is a Scottish broadsheet newspaper founded in 1783. The Herald is the longest running national newspaper in the world and is the eighth oldest daily paper in the world. The title was simplified from The Glasgow Herald in 1992