No-deal ferries in doubt as Irish firm pulls out of deal
THE Department for Transport (DFT) has pulled the plug on a controversial contract to provide contingency ferries in the event of a no-deal Brexit after Seaborne Freight lost major financial backing from Ireland’s biggest shipping firm.
The Daily Telegraph has learnt that Chris Grayling, the Transport Secretary, who had faced criticism for awarding the contract to a start-up company with no ferries, has axed t he deal amid suggestions that the Irish government may have intervened.
The DFT had been accused of a lack of transparency after it announced on Christmas Eve it had awarded £103million-worth of contracts to Brittany Ferries, DFDS and Seaborne Freight to provide roll-on, roll-off ferries.
Now The Telegraph can reveal that Mr Grayling awarded a £13million slice of the contract because Seaborne Freight had the backing of Arklow Shipping, one of the EU’S biggest shipping firms, based in County Wicklow, south of Dublin.
A DFT source said Arklow, which operates more than 50 ferries, sent a letter two weeks ago guaranteeing it would be Seaborne Freight’s major equity partner, but requesting that its backing was not made public for “commercially sensitive reasons” as it was in the process of acquiring new ferries.
Without warning yesterday, Arklow withdrew its support from Seaborne Freight, throwing the start-up into crisis.
A DFT spokesman said: “Following the decision of Seaborne Freight’s backer, Arklow Shipping, to step back from the deal, it became clear Seaborne would not reach its contractual requirements with the Government. We have therefore decided to terminate our agreement.
“The Government is already in advanced talks with a number of companies to secure additional freight capacity – including through the Port of Ramsgate – in the event of a no-deal Brexit.” A DFT insider said the “difficult” decision was taken “to protect the taxpayer”.
Last night, Jacob Rees-mogg called on the Irish government to make a statement confirming it had not intervened. He said: “One has to hope that the Irish government has not leant on or put any pressure on Arklow to persuade it to pull out. That would be a very unfriendly act of a neighbour to obstruct no-deal preparations and one has to hope very sincerely that this is genuinely a corporate decision.”
Seaborne’s contract represented about 10 per cent of the overall ferry contracts awarded by DFT. No taxpayer money has been transferred to Seaborne and the DFT is continuing to work towards the prospect of reopen- ing ferry services at the Port of Ramsgate. Thanet Council has postponed a decision on whether to ditch £500,000 of funding to prepare the port for a ferry operation and axe a further £130,000 from its 2019/20 budget after Mr Grayling agreed to hold talks.
There is no threat to the contracts with DFDS or Brittany, which will be providing around 90 per cent of additional capacity in the event of a no-deal Brexit.
Denying accusations of a lack of transparency, a source close to Mr Grayling said “robust due diligence” was carried out on Seaborne Freight, including its backers, by the DFT, Deloitte, Mott Macdonald, and Slaughter and May.
The source added: “For commercial reasons we have not been able to name Arklow Shipping’s involvement to date. But it was Arklow Shipping’s backing of Seaborne Freight from the outset, and the assurances we received directly from them, that gave us confidence in the viability of this deal.
“As recently as a fortnight ago Arklow wrote to DFT pledging its continued support and that it had been working with Seaborne for a year to support the provision of ferries on the Ramsgate-ostend route. It has now withdrawn its support.”
Arklow’s principal role was to provide equity investment and to secure vessels. The company had already investigated the availability of suitable vessels from the Continent and the formal steps which they had taken to purchase them.
The information was not previously shared for fear of pushing up the price of the vessels in a market where supply is scarce.