State, federal govts force ferry operator to search onshore for new ship builder

Tasmania’s largest-ever infrastructure project is in disarray after the government announced it was going back to the drawing board to find replacement ferries for the TT-Line. LATEST >>

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TASMANIA’S largest-ever infrastructure project is in disarray after the government announced it was going back to the drawing board to find replacement ferries for the TT-Line.

Announced in 2018, the two new ferries were supposed to be in service in March next year.

Instead, the government has gone against the advice of the TT-Line board and will try to find a local builder for some or all of the $850 million plus project.

A decision is expected in three to six months and could benefit local fast catamaran company Incat — but there is no timeline, revised budget or new specifications for the ferries.

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Contract between TT-Line and German shipbuilder cancelled

Premier Peter Gutwein says there is no formal word on timing of new Spirit of Tas vessels

Premier Peter Gutwein he said the procurement process would be halted and a task force made up of state and federal officials plus TT-Line representatives would look at what the options were.

Mr Gutwein blamed the economic disruption caused by the coronavirus pandemic for the decision, which was taken in the last few weeks after consultation with Prime Minister Scott Morrison.

Tasmanian Premier Peter Gutwein during the press conference. Picture: Chris Kidd

“On one hand, we have a decision whereby we see more than $850 million invested in a European country supporting European jobs, providing what would without doubt be an excellent product and based on the TT-Line business case, a product that will stand the state in good stead for many years to come,” he said.

“On the other hand, we have the opportunity to explore how much of that investment could occur within the state, or within our country.

“What we need to do is to take every opportunity to consider how much investment we can deliver in Tasmania out of such a significant in purchase and how many jobs we can underpin in this state as we begin to rebuild.

“To me it’s a no-brainer that we take this opportunity to actually ensure we can get the right outcome and fit-for-purpose vessels at the end.”

The decision, taken three years into the replacement project, leaves it unknown who will build the ferries, at what cost and specification, and when they might be delivered. It is understood local builders were considered early in the process but none had the capability required.

TIMELINE:

• 1998: Current Spirit of Tasmania ferries built as the Superfast I & Superfast II by the Kvaerner Masa-Yards in Finland.
• 2002: Vessels begin service on the Bass Strait route. The 194m vessels can carry 1400 passengers and 500 cars at a top speed of 30 knots.
• 2015: Current Spirit of Tasmania vessels refurbished.
• December 2017: TT-Line announce two brand new purpose-built ships to replace the current Spirit of Tasmania fleet by 2021.
• January 2018: TT-Line Company Pty Ltd and European shipbuilder Flensburger Schiffbau-Gesellschaft GmbH & Co. KG sign a letter of intent for the construction of two new ships. Final design specifications provided for 212 metre long vessels that will accommodate 1,800 passengers and up to 600 passenger vehicles.
• May 2018: TT-Line Company Pty Ltd and European shipbuilder Flensburger Schiffbau-Gesellschaft have signed a contract for the construction of two new roll on/roll off ships to replace the current Spirit of Tasmania vessels.
• December 2018: Infrastructure Minister Jeremy Rockliff says “due to the Tasmanian Liberal Government’s strong financial management we will also be delivering two new, next generation Spirit of Tasmania ferries earlier than expected … on track to be delivered in the summer of 2021.”
• June 2019: Government revealed ferries could be delayed by up to two years.
• November 2019: Reports preferred shipbuilder Flensburger Schiffbau-Gesellschaf is in financial trouble.
• February 2020: The government cancels a $354 million-per vessel contract with German builders Flensburger Schiffbau-Gesellschaf after being advised they couldn’t deliver. It enters into a memorandum of understanding wit Finnish company Rauma Marine Constructions for delivering in 2022 and 2023.
• July 2020: Government announces it is forming a task force to come up with a new plan.
• 2028: End of expected service life for the current Sprit of Tasmania ferries.

TT-Line chairman Mike Grainger during the press conference. Picture Chris Kidd

TT-Line chairman Michael Grainger would not say if the TT-Line board was happy with — or supported — the government’s decision.

“We made a recommendation to our shareholder ministers that was ultimately not accepted,” he said.

“We we understand why that happened and we’ll continue to move on and make sure that whatever we do in TT-Line is the right thing to do.

“The board understands the government’s decision.

“We’re in very trying times and the world has changed dramatically. we’re all aware of that. “So that the board understand the decision and certainly there’s been no lack of communication between the board, myself and between myself in the shareholder ministers.”

Mr Granger said in the meantime the government-owned company would continue to operate the 22-year-old Spirit of Tasmania I and II, despite capacity restraints.

Minister for Infrastructure and Transport, Michael Ferguson said the state had the liberty of time to decide on a new builder. Picture: Chris Kidd

Transport Minister Michael Ferguson said there was “no rush” to replace the current vessels.

“We’re making an Australian decision today we’re making a Tasmanian decision because of course, as we know, we’re in very different circumstances to what we were only six months ago,” he said.

Mr Ferguson said the government had full confidence in the board and senior management of TT-Line.

Incat Chairman Robert Clifford said the company was looking forward to meeting with the taskforce.

“With a highly skilled workforce of over 600 people directly employed in Tasmania, and many thousands more supported through sub-contract and supplier arrangements throughout the country, Incat are supportive of keeping Australian dollars within Australia and maintaining and indeed growing the employment opportunities for all Australians during these troubled times,” he said.

“Incat looks forward to meeting with the taskforce, and assisting the Government and TT Line in achieving a successful outcome for all stakeholders.”

INITIAL REPORT: THE state and federal governments have forced the TT-Line to look onshore for a new builder for its new vessels, which were slated to hit the water in 2021.

The financially-troubled German company Flensburger Schiffbau-Gesellschaf (FSG) was supposed to deliver the new ships in March, 2021, however after several pitfalls, the company ultimately went broke.

In February the TT-Line had signed a memorandum of understanding with Finnish company Rauma Marine Constructions, which was on the original short-list of contractors, to discuss a deal.

However now, TT-Line will be forced to search Australia for a builder first to help stimulate the local economy.

Minister for Infrastructure and Transport Michael Ferguson said there is no rush to build the new vessels, despite the current ferries reaching the end of their financially-viable life in 2028.

A task force will be formed, in conjunction with the Australian Government and the TT-Line to determine how much work can be done in Australia, and in Tasmania.

Mr Ferguson said Australia’s global position, considering coronavirus and the economy, the situation required some “fresh” thinking, and the government will have expert advice on how to proceed in three-to-six months.

“There is a spectrum of possibilities and the first and most extreme one is that there is an international purchase. At the other rend of that, there is a fully Australian purchase,” he said.

“Wherever it lands, the greatest opportunity for us is to maximise Australian jobs.

“The state is no worse off, we still have the option we had prior to today, we’re going to pause, reflect on the current circumstances, work with the experts and work with the Commonwealth.”

A partial involvement by Tasmanian company Incat has been touted.

TT-Line’s chairman Michael Grainger said while the company’s board understood the government’s decision to investigate onshore options, he would not be drawn on whether they were happy with the decision.

“We have two good ships currently on Bass Strait, and while capacity is an issue for us we’ll continue to operate those ships very, very well since they arrived.

“The board understands the government’s decision, again, we’re in very trying times and the world has changed very dramatically.

“The decision is not a reflection of the quality of the business case developed by TT-Line, nor the ability of RMC to deliver the proposed contracts.

“It is simply a matter of timing and the unprecedented impact COVID-19 is having and will have on state and national economies.”

There is now no definite timeline for when new ferries may hit the water.

The search for a new vessel builder will not affect the move of the Spirit of Tasmania’s port to Geelong.

In the interim, the existing ferries crossing the Strait will cost more to maintain.

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