TT-Line’s planned ropax vessel replacement contract with Finnish shipbuilder Rauma Marine Constructions (RMC) has been cancelled.
The ferry line’s management was advised that the Tasmanian Government, the line’s ultimate owner, would not proceed with the contract, due to the virus and its economic implications for the state.
TT-Line Chairman, Michael Grainger, said the Government indicated that, given current and emerging economic problems caused by COVID-19, there needed to be more consideration taken to local content and manufacturing jobs in Tasmania and Australia, as part of the overall vessel replacement project.
“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,” Grainger explained. “It is simply a matter of timing and the unprecedented impact COVID-19 is having and will have on state and national economies.
“The Government and TT-Line still believe it is essential that the vessels are replaced in coming years to support the growing passenger and freight transport needs of the state.
“We therefore look forward to working with the government on the next proposal and business case for its consideration that will further maximise local economic benefits,” he said.
Grainger also said that the government’s decision did not impact the company’s decision to move its Victoria state port operations from Station Pier, Port Melbourne, to Corio Quay, north of Geelong.
“The company will still relocate by the end of 2022 when the Station Pier lease expires,” he stressed.
The Tasmanian government supported the company’s original vessel replacement business case presented in 2017, and a subsequent recommendation in 2018 to sign a contract with German shipbuilder Flensburger Schiffbau-Gesellschaft (FSG).
However, when it was mutually agreed between TT-Line and FSG that the German shipbuilder would not build the new vessels, TT-Line signed a Memorandum of Understanding (MoU) with RMC and started contract negotiations and agreed final design specifications.
TT-Line’s Board submitted an updated business case following a unanimous recommendation that TT-Line sign a new ship construction contract with RMC.
That recommendation was considered and subsequently not endorsed by the shareholder Minsters, the company explained.
Jyrki Heinimaa, RMC CEO, said; “Regretfully TT-Line Company has informed us, that they have decided to withdraw from the MOU and postpone signing any shipbuilding contracts with reference to the present economic outlook, due to the COVID19 pandemic. The situation is naturally unfortunate for RMC, but we are pleased to say that the withdrawal does not cause any immediate re-structuring at RMC.
“We are always ready to continue the negotiations with TT-Line Company when the shipbuilding project is topical again,” he said.
RMC is currently building the ropax ‘Aurora Botnia’ for Wasaline, which will operate between Vaasa, Finland and Umeå, Sweden.
In addition, the construction of the shuttle ferry ‘MyStar’ for Tallink Grupp, Estonia, started at the Rauma shipyard in April. Furthermore, last autumn, RMC signed a contract with the Finnish Navy to build four multi-role corvettes.
“The execution of the projects under construction and the planning of the four multi-role corvettes will continue at Rauma shipyard as planned. RMC will also focus on new and alternative prospects with attractive delivery slots,” Heinimaa confirmed.