$700 million deal for two new Bass Strait ferries to replace the Spirits of Tasmania

THE TT-Line has signed a $700 million contract to replace its Bass Strait ferries by 2021.

An artist’s impression of the new spirit of Tasmania ferry design.

THE TT-Line has signed a $700 million contract to replace its Bass Strait ferries by 2021.

Chairman Mike Grainger said German shipbuilder Flensburger Schiffbau-Gesellschaft (FSG) would soon start building the two new ships.

The purchase is believed to be Tasmania’s biggest infrastructure investment.

The colour of the new ships and whether they will be called Spirit of Tasmania I and II is not yet known.

“TT-Line Company Pty Ltd exhaustively assessed vessel types and fleet configurations to determine the most suitable vessels to operate daily crossings on Bass Strait,” Mr Grainger said.

“The board is pleased with the final terms of the contract, as negotiated between the parties since signing a letter of intent last year.”

The contract is a fixed price in euros, with each vessel costing €219 million ($A350m).

TT-Line, which reported a record profit before tax of $36 million in 2016-17, will use cash reserves and also take on debt to complete the contract.

MORE: TT-LINE SETS PASSENGER AND PROFIT RECORDS

Mr Grainger said the new vessels would be 212m long and accommodate 1800 passengers and up to 600 passenger vehicles.

“The new purpose-built vessels will also be able to carry increased freight volumes when compared to the current Spirit of Tasmania vessels,” he said.

“The new Spirits will be designed to run on dual fuel, including liquefied natural gas, to comply with all international regulations.”

The existing ships, which are 194m long, were bought in 2002 for $350 million.

Last year’s TT-Line annual report valued the vessels at $104 million each.

Mr Grainger said the valuation was steady because of a strong ferry resale market.

The introduction of daily crossings using two vessels galvanised demand, lifting passenger numbers from 314,000 in 2002 to 433,295 in 2016-17.

In its business case to the Government, TT-Line looked at capacity, customer expectations, operating speed, seakeeping properties on Bass Strait, capital and operating costs, and operational efficiency.

TT-Line says independent expert industry modelling projected a continuation of strong passenger and freight growth.

The shipbuilder is currently building cruise ferries for Irish Ferries and Brittany Ferries, which are similar in design to the new Spirits.