£29m. of public money tied up in Condor deal after emergency decision

Tuesday 04 April 2023

Policy & Resources has loaned Condor £26m. and spent a further £3m after an emergency decision to help the ferry firm buy a boat.

Condor announced that it was buying a second roll-on, roll-off ferry on 8 March, and even got as far as choosing a name on the 17 March, the Islander.

Five days later, Policy & Resources president Peter Ferbrache told a scrutiny hearing that it was to invest £5m. from the Guernsey Investment Fund on the boat, but in the background the deal was in trouble.

Two days after that hearing the Civil Contingencies Authority, which deals with emergency situations, was convened and it also met on Monday 27 March to consider what Deputy Ferbrahce today said was a critical matter that was time-sensitive “and therefore required the use of the CCA's powers to ensure appropriate action was taken promptly to secure the purchase of the additional vessel recently announced by Condor, in order to mitigate potential critical risks to our supply chain".

“This is a commercially sensitive situation and we must respect that for all parties involved,” he said.

“However, the CCA's interest is in safeguarding critical supply lines for the long term benefit of the Bailiwick. We concluded that the purchase of this vessel at this time is essential and, after taking legal advice, satisfies the need to act to prevent a potential emergency occurring.

“The Authority therefore resolved to issue a direction to the Policy & Resources Committee to take the steps necessary to secure the vessel, working with Condor to do so.”

He did not fully outline what the exact risk to the supply chain was or why Jersey was not involved.

P&R Vice President Deputy Mark Helyar said: “‘As a result of the direction from the CCA, the committee decided to proceed urgently with a joint venture arrangement with Condor which will be self-financing, producing an investment return which will benefit Guernsey’s public finances. The committee believes that the arrangements will help to enhance services and secure the Bailiwick’s vital sea links for at least the next decade.”

The vessel, which is currently sailing in New Zealand as the MV Straitsman, will move to Europe over the summer, enter dry dock and then undertake berthing trials in Guernsey and Jersey later this year before entering service in the Autumn.

It was pictured this week with its new name.

John Napton, Condor’s CEO, said of the deal: “This is very good news for the islands as it supports the three strands of the local economies – lifeline freight, connectivity for Islanders and inbound tourism – and is an important step in showing our long-term commitment to improving sea links.

“In addition, through this agreement the States will receive a financial return from us over the next decade, after which Islander will become fully co-owned by the joint venture.”

Repayment terms of the loan have not been announced.

The money for that comes from the bond, which until this term had strict rules on how it could be spent - only on States capital projects that had an income stream.

That was relaxed by this States.

P&R has been questioned recently about what was happening with this bond money given its recent decision to suspend spending on all major capital projects until a States debate in July to decide what the new priorities were.

The CCA is formed of the presidents of P&R, Environment & Infrastructure, Health & Social Care and Home Affairs.