Ferries agency pays in full for unfinished CalMac ships built in Turkey

Scotland's publicly-owned ferries body has paid in full and taken legal ownership of three CalMac ships being built in Turkey - even though they are still unfinished.

Caledonian Maritime Assets Ltd (CMAL) said it was a "precautionary measure" because the Cemre shipyard was facing economic challenges.

The unusual move means the ships - MV Loch Indaal, MV Lochmor and MV Claymore - could still be brought to Scotland even if the shipyard went bust, although CMAL would have to finance the cost of completing them.

CMAL's chief executive Kevin Hobbs said he was disappointed by the circumstances but believed it was the best way of protecting investment already made in the ships.

CMAL placed two contracts totalling about £200m with the privately-owned Cemre shipyard in 2022 and 2023 for a total of four large ferries for the CalMac fleet.

The first ship, MV Isle of Islay, was delivered in January this year, about 15 months late, and is currently in service on the Kennacraig to Islay route.

The remaining three are at various stages of construction at the shipyard, located at Yalova in the north west of Turkey, with the second vessel due for delivery shortly.

In shipbuilding it is common for owners to make a series of payments - usually about four - at various stages of construction but the final payment is normally withheld until the finished vessel is delivered.

One industry insider told BBC Scotland News that making the final payment early would help Cemre's cashflow.

He added: "I think the fear will be that if the shipyard collapses, then whoever takes over the yard would take ownership of the ships.

"They've now taken ownership so that, if needs be, they can float them away and finish them somewhere else."

Cemre has previously blamed the delays in delivering the CalMac ships on external factors such as the war in Ukraine, the 2023 Turkish earthquake and supply chain problems due to tensions in the Middle East.

CMAL said its decision to take legal ownership of the ships early was taken against a "backdrop of exceptionally challenging economic circumstances affecting Cemre and many businesses within the region".

Chief executive Kevin Hobbs said: "While we are disappointed by the circumstances that have led to this decision, our priority remains the completion of these vessels for the communities that depend on them.

"Taking ownership of the vessels at this stage is a precautionary move to reduce risk, protect the investment already made and support our objective of bringing these vessels into service as quickly and efficiently as possible.

"We will continue to work closely with the shipyard and partners to maintain progress towards delivery."

This is a defensive move by CMAL.

A buyer normally only does this when there's a real risk the shipyard might not be able to finish the job in the usual way.

If the Cemre yard runs into serious financial trouble, its half-built ships could get caught up with the claims of its other creditors.

By taking ownership now, CMAL ring-fences these three vessels as its own property.

They can't be seized if the yard hits difficulty, and — in the worst case — they could be towed somewhere else to be completed.

But there's a risk in paying months before delivery.

If the yard were to fail, and CMAL have to take the ferries elsewhere to be finished, we could see extra cost for Scottish taxpayers to bear.

Economy, Tourism and Transport Secretary Stephen Flynn said the Scottish government - which owns CMAL - backed the decision.

He said: "CMAL are working at pace to set out the next steps to ensure the ships are available in the CalMac fleet as soon as possible."

CMAL procures and owns the ships used on the west coast ferry network and leases them to CalMac, which is also entirely-owned by Scottish ministers.

BBC Scotland understands that CalMac has raised about 150 warranty claims against Cemre since MV Isle of Islay was delivered in February.

Despite this, CalMac's chief executive Duncan Mackison said he was satisfied with the new vessel.

He said: "She has proven to be a valuable and highly regarded addition to the fleet and we will continue to support CMAL and our partners as we move towards completion of her sister ships."

The Turkish-built ships are smaller and have a more conventional propulsion system than the two dual-fuel ships which CMAL ordered from the Ferguson Marine shipyard in Port Glasgow in 2015.

MV Glen Sannox and MV Glen Rosa, which is still under construction, are capable of running on liquefied natural gas (LNG) - although CalMac has decided to run Glen Sannox solely on diesel since last July.