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Caithness News Bulletins July 2006
6 July 06
Orkney And Shetland Ferry Contract
The six year contract for lifeline ferry services to Orkney and Shetland has been awarded to Northlink Ferries Ltd.
The company takes over today having been formed following the appointment of Caledonian MacBrayne, ferry provider on the west coast of Scotland, as preferred bidder in March.
The new contract provides for:
Transport Minister Tavish Scott said: "Our aim all along has been to secure these vital lifeline ferry services to the Northern Isles for the long term. That is what we have delivered. "These ferry links are crucial to the prosperity and wellbeing of the Shetland and Orkney communities they serve.
"I am confident that this contract offers the best value for public money and will deliver real improvements for anyone using the service. Reducing freight rates for island businesses will benefit the economies of Shetland and Orkney and local crofters and farmers will welcome the new livestock container arrangements.
"I expect the new company to build successfully on the service previously provided by NorthLink Orkney and Shetland Ferries Ltd."
The Northern Isles passenger and vehicle ferry services tender process began in April 2004, and involved a detailed local consultation in the spring and summer of that year. The contract awarded is for a six year period as a public service contract under the EC Maritime Cabotage Regulation and guidelines for State aid in the maritime sector.
Bids were submitted by V-Ships UK Ltd and Caledonian MacBrayne. Handover from the current operator, NorthLink Orkney and Shetland Ferries Ltd is scheduled to takes place today.
The Caledonian MacBrayne tender includes plans for new livestock containers, as required in the Invitation to Tender. The new operator will liaise closely with the livestock industry on their detailed plans and implementation arrangements. For the 2006 livestock season, the stock boat arrangements have been secured.
NorthLink Ferries Limited, a wholly-owned subsidiary of David MacBrayne Ltd, will operate the services. David MacBrayne Limited was a dormant company, wholly owned by Scottish Ministers, which has been activated to take over Caledonian MacBrayne's ferry operating role. David MacBrayne Limited now owns NorthLink Ferries Limited and remains in the ownership of Scottish Ministers, as does Caledonian MacBrayne Limited which remains a separate Company.
The budgeted subsidy for the first year of operation is £31 million, subject to adjustments as necessary in the light of actual inflation and other factors provided for in the grant agreement. Thereafter, the subsidy will be calculated according to the terms of the detailed grant agreement, which was issued in draft to the three companies invited to tender for the contract.