Scottish Government rules out new vessel for Mull despite a ‘summer of chaos’ across Scotland’s ageing ferry network
Mull and Iona community group describes state-owned ferry procurement agency CMAL as “obstructive, arrogant and incompetent” and invites First Minister to the islands
Islanders on Mull and Iona have called for the First Minister of Scotland to visit the islands after the Scottish Transport Minister, Graeme Dey, refused to sanction the purchase of a new boat for Mull, despite a summer of chaos across Scotland’s ageing ferry network.
The Mull and Iona Ferry Committee (MIFC) has also called for CMAL (Caledonian Maritime Assets Limited), the Scottish Government-run ferry procurement company, to publish its own report into the potential purchase of a catamaran that a team of naval architects at Strathclyde University found would instantly become one of the safest vessels in CalMac’s increasingly old fleet.
Joe Reade, chair of the MIFC, 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. 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.
“There is an ideal vessel available on the market right now, but CMAL seems to be too arrogant and incompetent to take advantage of the opportunity. But even worse than that, they seem to be deliberately obstructing this much-needed vessel, in the most shocking and scandalous manner that shows only contempt for islanders.
In a full account of events that has today been published on their website, MIFC allege a catalogue of failings by CMAL and their CEO in the handling of the potential purchase. They list early problems, including CMAL’s inability to correctly interpret vessel drawings, and failing to respond to requests for dimensions of piers so that terminal-fit could be assessed. They also detail CMAL’s poor handling of commercial negotiations with the seller.
Joe Reade adds:
“CMAL seems to have no understanding of the commercial norms of buying and selling vessels internationally in the used vessel market. They were instructed to procure used vessels by a former minister, Paul Wheelhouse. They hung the entire process on a bizarre expectation that the sellers must achieve regulatory approval for the vessel in the UK, before any price was agreed.
“CMAL wanted the seller to spend tens of thousands of pounds entirely speculatively, without any formal confirmation that it was a serious buyer. That’s simply not how international vessel sales work, and CMAL should know that. They have consistently used MCA approval as a red herring, asserting that until the ferry had approval from the MCA, they would not consider it. Anyone with any knowledge of the second-hand vessel trade, (and we have confirmed this with six different independent ship broker professionals), knows that these ships are predominantly sold on an “as-is, where-is” basis. In other words, it is the responsibility of the buyer to get the vessel through MCA approval after a sale price has been agreed. No commercial seller would agree to such a topsy-turvey process as expected by CMAL. They are either utterly ignorant of basic commercial norms, or are deliberately obstructing the sale.”
“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.
According to Reade, the Indonesian catamaran would have passed MCA approval easily. “The ferry was designed by a sister company to the sellers, Sealease of Hong Kong. They have naval architects and a commercial team with significant experience of selling into the international market. They are Scottish ex-pats who designed the MV Pentalina, owned by Pentland Ferries.
“The sale offer to CMAL included MCA approval as a condition of sale – if the vessel was not approved by the MCA, the sale would not conclude. All Sealease needed was an agreement on commercial terms before the MCA approval work began. “It was as unrealistic to expect the seller to spend tens of thousands of pounds on MCA approval entirely speculatively, as it would be to expect a car salesman to re-spray a car because a casual visitor to the showroom said they would prefer a different colour. What guarantee would they have of the potential customer coming back to the showroom to complete the sale, or paying the price of the work? It is commercial nonsense to expect a seller to incur such speculative expense without some agreement before-hand that if the conditions are met, a sale will conclude.
“CMALs incompetence and behaviour is astonishing and they must be held accountable. They had the opportunity to buy a ship that was perhaps the best value of any vessel ever introduced to the fleet. But they never showed any signs of being a good-faith party in the purchase, and instead put up barriers at every stage – either deliberately, or as a result of complete lack of competence in negotiating a second-hand vessel purchase. After months of circular and sporadic dialogue with CMAL, the sellers sent a sale offer to CMAL in December of 2020, that included their offer to make MCA approval a condition of sale. Astonishingly, this sale offer went unanswered. It wasn’t even acknowledged, let alone receiving questions or a counter-offer.”
Notes to editors: –
As a last-ditch attempt to overcome the impasse surrounding MCA approval, the Mull Committee fund-raised to pay for an independent assessment by naval architects at Strathclyde University. That report, which cost £14,000, concluded that the ship would pass the MCA with only minor modifications – and in fact it went further, by stating that in terms of stability and ability to withstand damage, it would be the safest vessel in the CalMac fleet. The full report is available here.
At just $12.5 million (£9.1 million) , the new ferry is being offered at a fraction of the price of a similarly-sized new-build monohull, such as the new ferry currently being planned for Islay. If CMAL opted to increase passenger space and add above-deck crew accommodation, change the vehicle ramps and make the small changes required by the MCA, the sellers estimated this would cost another $2.5m approximately. Together with the purchase, that would take the total to £11 million. The Islay vessel has similar passenger capacity and just slightly higher car capacity at 100 as opposed to around 80 – yet the budget is six times higher, at £67 million (including terminal enlargement not required by the smaller and lighter catamaran).
As well as being excellent purchase value, the catamaran was projected to burn half the fuel of a similar sized CalMac ferry, and require half the crew to operate it. It would also have been able to berth overnight all-year round on the island, something the current vessel (MV Isle of Mull) cannot do due to her larger size and weight. A vastly improved timetable could have been operated by this ferry, without any costly expenditure on pier improvements.
The Mull and Iona Ferry Committee have published many documents on their website, including an account of the negotiations from the commercial negotiator for Sealease. They have also published the Strathclyde University analysis that proves the ferry will pass the MCA.
CMAL is in possession of a report they commissioned from consultants that we are told challenges the analysis we commissioned from Strathclyde University. Despite being asked on multiple occasions, CMAL have refused to release it. This report is the basis for their recommendation to government not to proceed with the purchase – yet they refuse to release it. They claim it would be commercially embarrassing for the seller. Sealease have confirmed they have no issues with its release, yet CMAL continue to refuse to do so. The only excerpt we have seen from this report is quoted in the Minister’s letter, and it actually supports the Strathclyde conclusion by saying ‘…significant design changes … could address some and potentially all of the issues raised.’ We can only speculate on why CMAL are so determined to keep this crucial information secret, and meantime we have raised an appeal under the Freedom of Information Act.
Final confirmation that CMAL did not understand the commercial process of buying a vessel from an owner whilst still under construction, came in an email in late July, according the MIFC Chair. The CMAL CEO asserted that “…the Indonesian catamaran in question is an incomplete vessel and is therefore a newbuild and not … second-hand”. This assertion exposes both a lack of industry knowledge, and a fundamental failure to read the sale offer presented to them. Paragraph one of the sale offer made it explicitly clear that this was a vessel re-sale, not a newbuild contract. The two things are fundamentally different in terms of process, but CMAL seem only to have understanding of the newbuild route. Even allowing for some misunderstanding, it is shocking that the CEO of the nation’s ship procuring agency was unable to recognise his misunderstanding when it was placed before him in black and white. We are a committee of amateurs working in our spare time, but we have been able to grasp these simple commercial concepts over the past twelve months.
The communities of Mull and Iona are dumfounded by the apparent outcome to their efforts, and find it hard to understand the reasons for the rejection by CMAL. There is certainly no rational or commercial explanation for the deal to have failed. It is clear that there are some personality politics at play within the Scottish ferry establishment, with critics of the system receiving defensive and sometimes aggressive responses. It is interesting to note that one leading advocate of the catamaran, Roy Pedersen, was threatened with legal action by CMAL following evidence he gave to a parliamentary enquiry. The CMAL CEO was admonished by the parliamentary committee chairman for such threatening behaviour toward a witness.
But perhaps the most likely reason for reticence is how this catamaran could prove so many recent ferry procurement decisions to be flawed. CMAL have a track record of spending ever larger sums of public money on over-large, over-complex, over-expensive and over-crewed vessels. Look no further than 801/802 for evidence of that. The catamaran would not just have costed one sixth of a similar monohull new build, but it would have consumed half the fuel and needed half the crew, whilst delivering as good or better service. Perhaps that is the truth that CMAL did not want to have exposed. The people who are damaged by this are the islanders who rely on our creaking lifeline service, and taxpayers who have to underwrite these repeated poor decisions.