The wellbeing economy secretary has ruled out ploughing further millions into the nationalised Ferguson Marine shipyard as part of a new business plan to secure a sustainable future.
Neil Gray said that it has so far been unable to agree to put new investment into the shipyard firm to support a business plan that takes it beyond just the delivery of the much-delayed lifeline ferries.
It came as he gave assurances that it would not be cancelling the 'ferry fiasco' project - despite carrying out due diligence over the extra millions that are needed.
Lifeline ferries Glen Sannox and Glen Rosa were due online in the first half of 2018 when Ferguson Marine was under the control of tycoon Jim McColl, with both now due to serve Arran but they are over five years late. The last estimates suggest the costs of delivery could more than quadrupled from the original £97m cost.
READ MORE: 'Ferry fiasco'? 'Ageing fleet'? How did we get here?
Ferguson Marine was taken over by the Scottish Government four years ago after its financial collapse under the control of tycoon businessman Mr McColl as a row erupted over long delays and mounting costs over the delivery of the vessels.
The Ferguson Marine (Port Glasgow) board have said that it is felt that for the shipyard to improve its efficiency and to be competitive in the broader market, it must secure a pipeline of repeatable work over several years.
It previously highlighted two opportunities - the 'loch class' project and the development of work in support of the warship programme with BAE Systems.
It was recognised by the board as "strategically important for Ferguson Marine" prior to any other consideration of more complex, larger vessels in the future.
The vital contract work from BAE Systems - which is delivering City Class Type 26 frigates on the Clyde and trumpeted as "signalling a new dawn" at the yard was valued at just £2m.
Mr Gray has told MSPs that due diligence over an initial capital request over securing a future for the yard through the new business plan had so far failed.
He said: "our priorities are to preserve the skilled jobs and secure a sustainable future for the shipyard.
"Earlier this year we received a business plan and accompanying requests for investment from the yard, and we're currently working with them to refine those plans and try to put together a proposal that will provide the kind of future we all want to see.
"Any such request must meet subsidy control rules and needs to demonstrate value for money and be open to scrutiny. Our independent due diligence on the initial capital request concluded with the initial business case would not meet the commercial market operator test, a key legal requirements effort to demonstrate compliance with the subsidy control regime and therefore we continue to examine options that will be compliant."
He added: "The markets in which Ferguson Marine operate continue to change and indeed a key component of the initial case for investment was contingent on winning a specific pipeline of work that FMPG board and management have recently concluded should not be pursued at this time.
"Both the yard and ourselves recognize that it is vital that any investment support a business plan that reflects evolving circumstances, is genuinely deliverable and meets our legal requirements and subsidy control.
"So we will leave no stone unturned in finding a way forward and we'll consider all options for securing a future based on a promising order book.
"That will be done at pace and I expect to report back and progress as soon as possible. I understand that this may be unsettling for the workforce, but it is important we get this right. and I hope that I'm leaving no-one in any any doubt about this government's commitment to retaining shipbuilding on the Clyde and providing future opportunities for the new and indeed future workforce in the local community."
Scottish Conservative transport spokesman Graham Simpson said that workers will be "feeling a sense of despair".
He said: "A cross party group of MSPs wrote to the cabinet secretary on September 7 saying that investment in the new plating line was essential if the yard is to become competitive. And David Tydeman (FMPG chief executive] asked for 10s of million pounds for that and he has been clear that a decision is time critical.
"Today the cabinet secretary is saying that he cannot proceed. He talks about securing a future based on a promising order book. There will be no such order book without that investment."
Earlier Mr Gray said there were £36.8m in total extra costs for the two ferries above the estimates provided by the yard in September, 2022.
He said there was an uncommitted spend on the ferries at the end of September this year of £10m for Glen Sannox and £45m for Glen Rosa. There was a provision of up to an £30 million to cover contingency issues that may arise, particularly during sea trials that need to take place before final handover to CalMac.
He said the delivery date projection for the Glen Sannox is March 31, 2024 and 31 May 2025 for the Glen Rosa.
The minister said that the extra costs and delays were subject to due diligence but that there was no desire to do anything but complete the project.
He said: "To consider a reprocurement would be detrimental to the island communities."
It would mean pushing back the delivery date for the Glen Rosa to 2028 and he said he was not prepared to let the communities down in that way.
He later said that the Scottish Government were working with the yard on a revised business plan to ensure it can remain competitive.
He added that any government investment that does not meet the correct regulatory standards and subsidy legislation would leave any such award open to legal challenge.
It comes as Alex Salmond's Alba Party called on the Scottish Government to directly award new CalMac ferry orders to Ferguson to ensure “a pipeline of work to keep the yard alive”.
Alba Party secretary Chris McEleny said the direct award of Scottish Government ferry orders to Ferguson is vital.
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