Ministers have been asked to "come clean" as fears grow over the collapse of the nationalised firm at the centre of the Scots ferry-building fiasco.
It comes after the Herald on Sunday revealed the Scottish Government-controlled owners of Scotland’s lifeline ferries flagged concern of a risk of administration for the shipyard company at the centre of Scotland’s vessel building fiasco.
An analysis from former managers of the Port Glasgow shipyard at the centre of a ferry-building fiasco referred to “inevitable failure for the business” because of the way it was being run.
Ferguson Marine (Port Glasgow) Holdings (FMPG), which is controlled by ministers and supported by taxpayer cash, made a £100 million loss in its first four months of Scottish Government control.
Two previous companies running the Ferguson Marine shipyard have gone into insolvency in the past seven years.
Auditors for the state-owned FMPG have said there are no guarantees that it will continue to operate in the future although directors of FMPG have signed off recent financial statements on a “going concern” basis.
Scottish Conservative shadow cabinet secretary for Net Zero, Energy and Transport, Liam Kerr MSP, said: “This latest sorry development suggests there’s a fresh risk of collapse at Ferguson Marine.
“SNP ministers must come clean about their plans for the future of this company.
“Costs on ferries have already soared and the yard itself has lurched from one financial problem to another in recent years.
“The public are losing a fortune. The SNP Government has to deliver a plan that puts Ferguson Marine on a sustainable long-term footing.”
Questions over FMPG’s status have come in internal discussions held by the owners and procurers of Scotland’s ferry fleet, Caledonian Maritime Assets Limited (CMAL), in considering continuing risks to them over failures in contracts to build two lifeline ferries.
FMPG was set up by ministers as a vehicle to take over Ferguson Marine Engineering (FMEL) which had fallen into administration while trying to fulfill a disastrous ferry contract.
The collapse of FMEL, 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 and resulted in a Scottish Government management takeover.
It came five years after Jim McColl first rescued the yard when it went bust.
The delivery of new island ferries MV Glen Sannox and Hull 802, which were due online in the first half of 2018, was found to be between four and five years late, with costs doubling to over £200m.
The Scottish Government has said it believes it was acting in the public interest in taking complete control of FMEL by December, as it saved the yard from closure, rescued more than 300 jobs, and ensured that the two vessels under construction will be completed.
Ministers have now taken over the contracts for the ferries and terminated the existing agreements with CMAL.
When the ferries are completed and ready for delivery, it has emerged CMAL will be expected to purchase them for use at what they call a “fair market value”, raising the prospect that ministers will make massive losses on the deal.
The Herald has discovered that at a CMAL meeting attended by senior officials of the Scottish Government agency Transport Scotland, knock-on risks to them had been discussed.
Details of the April meeting of CMAL –which was forecast to make a £1.8m loss in the last financial year – referred to an “FMPG administration risk”.
It concluded that the risk of an FMPG administration had “decreased” because CMAL no longer had a contractual involvement with the Ferguson Marine shipyard “while the business remains under the control of the Scottish Government”.
It was also revealed that the CMAL meeting thought that progress on the vessels continues to be “far below” what they would normally anticipate.
The Scottish Government has pumped over £17m into the business during the four months to March 2020 – including £10m into the construction of the two ferries.
Scotland's public finance watchdog is currently probing claims of a misuse of public funds in relation to the controversial takeover which is being looked at alongside the awarding of £45m of taxpayers-funded loans from the Scottish Government to FMEL before it collapsed.
The Scottish Government is still owed over £40m from the collapse of FMEL having used £7.5m of what they were owed through the loans to buy the business.
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