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Surprise boost for SIC’s Norröna investment

The Norröna on one of her rare stops in Lerwick in recent years, in 2012. Photo: John Bateson

SHETLAND’S oft-criticised investment in Faroese shipping company Smyril Line has given the isles’ local authority an unexpected boost by delivering a pre-tax dividend of £137,000 in the last year. 

Around a decade ago the SIC – through what was then Shetland Development Trust – controversially invested £4.2 million in Smyril Line’s ferry the Norröna, briefly providing the isles with a direct ferry link to Scandinavia.

But local politicians and officials were left with egg on their faces when, in 2007, the Faroe-Denmark route struck Shetland off its schedule.  

Of double irritation to islanders has been the sight of the Norröna continuing to steam through Yell Sound on her way between the two Scandinavian ports.

But while many had written the investment off as all but a lost cause, news of the cash dividend could yet alter that assessment.

Development director Neil Grant confirmed the £137,000 pre tax amount, which development committee chairman Alastair Cooper said appeared to be good news for the local authority.

Council finance chief Jonathan Belford is trying to clarify the tax position of the dividend – the council can reclaim tax on dividends made in this country, but it is not clear how much tax will apply to profits from Faroe.

Development committee chairman Alastair Cooper says the local authority is trying to find out the reasons behind the upturn in Smyril Line's fortunes.

Cooper is also keen to discover the reasons for Smyril’s upturn in fortunes before commenting in more detail.

Shetland has not had a seat on Smyril’s board since its stake in the shipping company was significantly diluted when the Faroese government stepped in with a sizeable rescue package after it sailed into financial difficulties.

Smyril Line has not responded to a request for comment from Shetland News.

In the past two years, council convener Malcolm Bell renewed diplomatic ties with the Faroese – partly in the hope of persuading prime minister Kai Leo Johannesen of the case for restoring a Lerwick stop-off to the Norröna’s schedule.

During Monday’s meeting of Shetland’s external transport forum, SIC councillor Jonathan Wills described the Norröna continuing to sail right past the islands without stopping off as “crazy”.

He asked whether there was any mileage in talking to the Danish government (of which Faroe is an autonomous part) about incorporating a UK port into the Norröna’s schedule as it “could possibly reduce demand for public subsidy”.

Wills said that, while Smyril Line said there was not sufficient freight (especially in winter) to justify stopping in Shetland, in the summer passenger demand “seems to be considerable”.

Victor Sandison of Lerwick Port Authority said the harbour was “well positioned to pick up that activity and service it”, but said questions remained over whether such a stop was commercially viable for Smyril.

“The passenger side was more successful than the freight,” he said. “There were occasions when it was coming in very light on both [counts] – it’s difficult to make the economics work.”

Forum chairman Michael Stout said bringing the Norröna back to Shetland was “something that should continue to be explored”.