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Cooper ‘uncomfortable’ on tug purchase

The Multratug 29. Photo: SIC

AN EMERGENCY meeting of Shetland Islands Council’s harbour board is due to take place to allow it to have its say on proposals for the local authority to buy its leased tug at Sella Ness at a cost of over £7.6 million.

Members of the policy and resources committee on Tuesday were asked to approve the council’s plans to buy the Multratug 29, which was chartered in April for three years as a replacement for the outgoing Tirrick.

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But North Mainland councillor Alastair Cooper questioned why the harbour board had not been consulted, leading to a motion from South Mainland member Robbie McGregor for an emergency meeting to be held “urgently”.

The motion was passed, meaning that it is likely an emergency policy and resources meeting will also have to be scheduled as members examine the financial aspect of the plans.

SIC lawyer Jan Riise said the harbour board had effectively been bypassed because the proposal was developed as a business justification case, which are heard through the policy and resources committee.

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The matter was due to be passed through to Wednesday’s full council meeting.

A report presented by capital programme manager Robert Sinclair on Tuesday said the council has an option in its contract to purchase the two year old Dutch Multratug 29, which would cost £7,614,640 if bought after six months of operation on 25 October.

The performance of the tug has been monitored and the “vessel has in most cases exceeded both the specifications and expectations of sea staff”.

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The option to purchase the tug was deemed to be more cost effective than to continue to charter the vessel for the next three years, which would cost £1,040,250 per annum.

The capital costs of buying the boat would be funded by external borrowing.

The borrowing costs are estimated to be in the region of £716k per annum over a 20 year period, and they would be “funded through the fees and charging structure within the harbour account” and therefore would not “impact on the council’s financial position.”

Cooper also raised concerns that if the council decided to externalise towage in the future, the local authority might lose out financially if the tug was later sold.

“I’m rather uncomfortable with it,” he said, but finance chief Jonathan Belford noted that the value of the vessel in three years time would still be around £6.96m.

Lerwick North member Stephen Leask suggested that there needed to be more time for consideration of the proposal.

He said letting go of tugs previously had been like a “fire sale” and added that it is never guaranteed you can sell things at what you deem the highest value.

Leask said he doesn’t want members to be “lost in some sort of quagmire of fire sales” and expressed his desire to see more discussions held on the matter, particularly due to the “high figures” involved.

The council needs to give firm notification of its intent to buy the tug by 20 September if it wants to purchase it on 25 October.

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