Cost of running Shetland/Orkney lifeline ferries: FOI release

Information request and response under the Freedom of Information (Scotland) Act 2002.

FOI reference: FOI/17/01484
Date received: 29 June 2017
Date responded: 18 August 2017

Information requested

The following information:-

  1. Is the PFI with RBS for the ferries for 25 or 30 years?

  2. Is there a mid-point review/escape clause built into the agreement?

  3. If PFI is for 25/30 years is there any provision for replacing current ferries (30 years is a very long life in modern shipping terms)?

  4. Are we correct that at the end of the PFI the ferries remain the property of RBS?

  5. How much does each ferry cost the Scottish run each year?

  6. Is amount paid in 5. above included in the annual figure put out by Scottish Govt?

  7. How much has been paid out in PFI charges to date?

  8. Who arranges/controls leasing with the operator and whaat part, if any, does the Scottish Govt. play in this?

On 24 July 2017 you clarified by e-mail exchange that you wish to know how much the Scottish Government pays out each year to run our life-line services and does that figure include the annual charge for the PFI or is that accounted for separately?


I thought it would be helpful if I explained the leasing arrangements for the ferries that operate on the Northern Isles ferry service. To be clear, it is not done under any Private Finance Initiative (PFI) arrangement.

The Northern Isles are serviced from mainland Scotland by two freight vessels and three ropax vessels.

Freight vessels

The two freight vessels are owned by Fortress Investment Group and are bareboat chartered to Caledonian Maritime Assets Ltd (CMAL) and then sub chartered to SERCO Northlink Ferries.

Ropax vessels

The three ropax vessels are owned by Northern Isles Ferries Limited which is a subsidiary of The Royal Bank of Scotland plc.

The existing lease agreements for the three Royal Bank of Scotland vessels started on 5 July 2012 and are due to expire on 25 April 2018.

There is no mid-point review built into the agreements. I can confirm that at the end of the leases, the vessels will remain the property of Northern Isles Ferries Limited.

The current public service contract for the Northern Isles Ferry service runs between 5 July 2012 and 25 April 2018.

All subsidies for ferry services supported by Transport Scotland are paid under Section 70 of the Transport (Scotland) Act 2001, and with exception of the financial year 2016/17 (this will be published shortly), can be found on the Transport Scotland website. The deficit grant in paid connection with leasing of vessels for the Northern Isles ferry service is clearly identifiable with the Section 70 Reports for each financial year from 2012. I now attach one PDF report for 2012-13 with links to the other published Section 70 reports.

Section 70 report for 2013/14

Section 70 report for 2014/15

Section 70 report for 2015/16

The Section 70 report for financial year 2016/17 will be published shortly on the Transport Scotland website.

To be helpful, I have collated the vessel leasing figures for the last 4 years which covers the current contract with Serco Northlink Ferries Ltd, which commenced on 5 July 2012, for the lease of all three vessels.

Vessel leasing figures

Financial Year (£)
2012/13 £7,060,207.23
2013/14 £8,668,641.42
2014/15 £9,417,106.68
2015/16 £9,598,337.13

Your email dated 24 July 2017 clarified that you are interested in how much the Scottish Government pays out each year to run life line ferry services. Again, to be helpful, I have collated the figures for the last 4 years for the Northern Isles Ferry services. This information can be found within the Section 70 Reports that are published each year.

Northern Isles Ferry services.

Financial Year (£)
2012/13 41,253,318.38
2013/14 37,507,195.70
2014/15 35,973,572.35
2015/16 32,084,993.88

(These figures include the leasing costs of the vessels)

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