Features / Harbour board approves new charges but concern raised over surplus draw

Tanker Leo leaving the port of Sullom Voe. Photo: John Bateson

SHETLAND Islands Council’s harbour board has given its backing to new charges which includes a 52 per cent uplift in fees for tankers arriving into the port of Sullom Voe.

The budget proposals still need to be ratified by the policy and resources committee and full council later this month.

They had their first airing in front of the council’s harbour board on Wednesday.

But councillors issued a warning over plans to transfer all of the anticipated total harbour surplus of £18.2 million straight into the SIC’s general fund to meet the cost of service provision.

This is unlike previous years, where in some cases around £6 million or £7 million of the surplus has been transferred.

The proposed Sullom Voe fee increase for tankers was deemed to be “extremely high” by users of the port.

But the rise has been proposed due to increased energy costs and reduced tanker production performance against estimates in recent years.


Infrastructure director John Smith said: “Clearly increases in charges is not welcome in any commercial arrangement, but there’s appreciation in the oil and gas industry more than anywhere else what’s happened to energy prices.”

He said analysis showed the council’s budget for energy increased to the tune of £4 million between last year and this year.

Other charges for ports and harbours are in line to increase by around five per cent.

The budget for 2023/24 anticipates a surplus of £16.6 million on harbour activity through 2023/24 and rental income from the Shetland Gas Plant of £1.6 million, with all due to be moved to the council’s general fund.

Shetland Central councillor Davie Sandison said he did not want the board to lose the ability to manage its own business.

“We need to know what scope we’ve got within this board to make decisions about the essential nature of the business what we conduct, the cost of doing so, the maintenance requirements of that – and also how quickly we can progress our aspirations for projects to enhance the business of the harbour,” he said.

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Meanwhile Lerwick North and Bressay member Stephen Leask said: “I find it absolutely unsustainable that we can actually take that draw [from the surplus], and I’m struggling to live with it to be honest.”

Development committee chairman Dennis Leask, who represents Lerwick South, also said the council stands to draw more from the harbour board surplus than from its own reserves – something which he called unsustainable.

Board chairman Robert Thomson said the harbour needs to retain “its competitive advantage, and invest in or support new technologies” amid the long-term decline of oil.

The proposed 2023/24 budget includes an anticipated increase of £5.33 million in shipping income for tankers entering the Port of Sullom Voe, which the council operates.


Meanwhile another report presented to the board for the current financial year said there is a projected year-end surplus for 2023/23 of around £10.7 million. This is nearly £2 million down against budget.

Among the factors in this are less Sullom Voe tanker movements than expected, reduced oil and gas related commercial shipping dues in Scalloway, a higher-than-budgeted pay award and fuel and energy inflation.

Ferry and airport operations and port infrastructure manager Andrew Inkster said: “We are making progress but our ability to perform is impacted by a number of external factors.”

These included the delivery of materials contractor resources and recruitment – with the ports and harbour team having to prioritise work.

“At the moment the work that we’re deferring is sustainable in the short term – certainly not in the longer term,” Inkster said.


He added that plans for a replacement mooring vessel remain at an early stage, but following questioning from Dennis Leask, Inkster said the cost could end up being in the region of £1 million to £1.5 million.

Regarding Sullom Voe tanker movements infrastructure director John Smith acknowledged that east of Shetland old fields are in decline.

He added that tanker activity this financial year has been affected by maintenance programmes east and west of Shetland.

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