This item was published during the term of a previous administration that ended in April 2007
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Northern Isles ferries
08/04/2004
Vital lifeline ferry services to Orkney and Shetland are
to be secured through early retendering of the contract for
the Northern Isles routes, it was announced today.
Transport Minister Nicol Stephen said that the decision
to retender had been taken following financial difficulties
faced by the operator NorthLink. Scottish Ministers and
NorthLink have agreed new financial arrangements and early
retendering to ensure the long term security of these
important transport links.
Mr Stephen said:
"These are vital lifeline ferry services which are
crucial to the prosperity and wellbeing of the Northern
Isles and their communities. The steps we have taken today
will secure these ferry services for the long term and
ensure there will be no disruptions during the retendering
process.
"The decision to retender early was taken following
advice from NorthLink that they were unlikely to be able to
complete their existing contract on current terms. We have
since held detailed discussions with the company on the
funding necessary to secure these important services in the
meantime."
"The specification for the new contract will be
consulted on with the local communities and the European
Commission. Subject to these consultations we intend that
the contract should include freight and livestock."
In order to secure the service, the Executive has
provided an additional £13.4 million in total for the
period from the start of trading to date. Future payments
will be the minimum necessary based on Northlink's trading
and performance, to enable the company to continue
operating services until the new contract is awarded in
2005.
An advert will shortly appear in the Official Journal of
the European Union (OJEU) seeking expressions of interest
for the new contract with a view to the new contract being
in place as soon as possible in 2005. The specification of
the new contract will be subject to local consultation and
the European Commission.
NorthLink Orkney and Shetland Ferries Ltd is a joint
venture between Caledonian MacBrayne and the Royal Bank of
Scotland. NorthLink was awarded the five year contract in
December 2000, to start in October 2002. The company
receives an annual base subsidy under the EC Regulation and
Guidelines for State aid in the maritime sector.
The £13.4 million includes payments to NorthLink of
around £1 million which the Executive made in 2002-03
towards costs incurred by the company as a result of the
delayed completion of the new pier at Scrabster. These
additional payments have been made from the Transport
budget.