A ‘MILESTONE’ payment of more than £1m was paid to a Scottish shipyard the day after Nicola Sturgeon launched a new ferry that remains unseaworthy and languishing in the yard to this day, it can be revealed.
The £1.2m launch payment was made to Jim McColl’s Ferguson Marine the day after the First Minister’s fanfare launch of Glen Sannox, one of two ferries that are delayed by over five years with costs rising from £97m to £250m.
A further £1.2m was paid just over two weeks earlier after an inspection of the hull – despite it failing to meet international standards.
It comes amidst a new row over the minister-controlled ferry owners and procurers Caledonian Maritime Assets Limited had become obliged to pay out 85% of the £97m initial price of both the ferry fiasco vessels Glen Sannox and the unnamed Hull 802 to Jim McColl-led Ferguson Marine in advance despite having serious concerns about its delivery.
Audit Scotland have raised concerns that milestone payments paid to pre-nationalisation Ferguson Marine when successfully completing stages of the creation of the two lifeline vessels were not clearly defined and had no link to quality standards.
It meant that Ferguson Marine was able to claim the launch payment even though at the time due to delays, the outfitting that is typically done prior to a vessel going into the water, such as the installation of machinery and pipes, was outstanding.
Because a refund guarantee was not in place for the contract, despite the misgivings of CMAL, some of the risk was transferred from the shipbuilders Ferguson Marine to the buyer and meant it was not effective when problems emerged. The delivery Glen Sannox and Hull 802 will be delayed until at least next year at the earliest – over five years later than planned while costs have at least doubled from £97m to £250m.
Ferguson Marine (Port Glasgow) Holdings (FMPG), as a takeover vehicle to nationalise the shipyard firm at the end of 2019 after it had fallen into administration while trying to fulfill the disastrous ferry contract.
The collapse of the firm, which runs the last remaining shipyard on the lower Clyde, in August 2019, came amid soaring costs and delays to the construction of two lifeline island ferries with both CMAL and Ferguson Marine blaming each other for the debacle.
The Herald has learned that the last but one of 18 milestone payments for Glen Sannox of £1.2m was paid to Ferguson Marine for a successful launch gthe vessel two years earlier.
The payment was made on November 22, 2017, the day after Nicola Sturgeon headed a Saltire-waving launch of what was billed at the time as the UK’s most environmentally friendly ferry.
Nicola Sturgeon presided over the 2017 launch of Glen Sannox.
The only payment that was not made in connection with Glen Sannox was the £4.85m for its final delivery.
Glen Sannox was presented as the first dual-fuel ship in the UK to be powered by liquefied natural gas (LNG) and marine gas oil, and was to sail on the Ardrossan to Arran route for CalMac.
At the launch ceremony, the First Minister, who was joined by transport minister Humza Yousaf, said the launch was showing the way forward to the rest of Britain’s shipbuilding industry.
“What a wonderful occasion this is. A very emotional occasion as all ship launches are. But this is emotional in particular because of the very special place this shipyard has in the heart of this community and indeed in the heart of Scotland,” she said.
“When its future has been in doubt in the past, you’ve seen how the community has rallied behind it, and that tells its own story about the importance of the yard.
“This launch is also important for the engineering, shipbuilding and manufacturing reputation of the country as a whole, and that makes it a very special part of the Scottish economy overall.”
She added: “Ferguson’s is pioneering and innovating with Glen Sannox and her sister ship, and that is something to be really proud of. I know that the management and workers of this yard are determined to compete and win orders well into the future.”
Mr Yousaf said; “Real excitement and very proud that commercial shipbuilding on the Clyde [is] alive and well.”
Greenock and Inverclyde MSP Stuart McMillan played the pipes for the launching ceremony and added: “This marks an important milestone in Ferguson Marine’s journey to becoming a world-class shipyard.”
A further £1.2m was paid 17 days earlier after a hull inspection.
Yet before the official launch of the vessel, the bulbous bow, which is an extension of the hull was rejected by Lloyds Register.
A bulbous bow is a protruding bulb at the front of a ship just below the waterline which modifies the way the water flows around the hull.
During inspection, the surveyor deemed that the manufacturing process failed to meet International Association of Classification Society (IACS) construction standards.
The replacement of the bulbous bow has been a crucial part of Glen Sannox’s current programme of remediation work which also has included the installation of deck windows, paint and coating repair, hull cleaning, pipework modification and more.
It was a privilege to launch MV Glen Sannox at Ferguson’s shipyard today. She is the UK’s first dual fuel ferry – so good for the environment as well as the island communities she will serve. https://t.co/8tEvQGiT56
— Nicola Sturgeon (@NicolaSturgeon) November 21, 2017
Public finance auditors have expressed “frustration” over a lack of documentary evidence around why ministers were happy to accept the risks of proceeding with awarding the controversial order to Ferguson Marine without mandatory refund guarantees from the shipbuilder.
The lack of a full refund guarantee transferred the risk from the builders to CMAL.
The auditors say that the scheduled payment milestones for both vessels, up to and including delivery, were not clearly defined had no link to quality standards and CMAL had been legally obliged to fork out £82.5m despite its concerns about the ferries’ delivery.
Highlands and Islands MSP Edward Mountain, the former convenor of the rural economy and connectivity committee whose inquiry branded the ferry management process a “catastrophic failure” said: “Where was the oversight? The Scottish Government handed over £82.5m over the course of milestone payments for vessels that were faulty and nowhere near finished.
“It is scandalous that the milestone payments kept being made, especially after 801’s Bulbous Bow was rejected in 2017. In the same year, another payment was made for the launch of 801, ignoring the fact that it had fake funnels connected to pretend engines and painted on windows.”
Mr Mountain, a surveyor with 15 years’ experience added: I am astounded at the apparent lack of checks and controls in this ferry contract.
“While we know now that John Swinney had a hand in signing off this contract, we still don’t know who checked these milestones and who approved the payments.”
He said the Scottish Government were still keeping secrets on the fiasco and had delayed every one of his questions over the milestone payments so fair.
He said: “The public deserve to know the truth and this why there must now be a full public inquiry.”