Bungled Spirits ferry replacement project cost $717m more than forecast

The bulk of the project's total cost overrun relates to the new berth facilities at Devonport. (Supplied: Rauma Marine Constructions) A parliamentary inquiry has heard TT-Line's ferry replacement program has cost $717 million more than was forecast when it began 2018. The figure only relates to capital costs and does not include the millions spent on berthing the ships in Scotland and Victoria while port facilities are built in Devonport. TT-Line says its current financial position is "very challenging" but won't reveal what kind of support it has requested from the government ahead of next week's state budget. Link copiedShareShare articleThe bungled Spirit of Tasmania ferry replacement program has cost $717 million more than was forecast in the original business case, a parliamentary inquiry has heard. The Public Accounts Committee on Tuesday held its latest hearing into the status of the delayed and over-budget project, which began in 2018. The bulk of the total cost overrun relates to the new berth facilities at Devonport. The final piece of the new gantry has officially been put into place at the Berth 3 facility in Devonport. (Supplied: Tasmanian government) Originally estimated at $90 million, the new facilities have a revised budget of $493 million — an increase of $403 million. This includes $9 million spent on hull strengthening and fender remediation. The cost overrun also includes about $280 million extra on the two new vessels — Spirit 4 and Spirit 5 — which were built in Finland by RMC. Berth 3 is under construction in Devonport, to home the new Spirit of Tasmania ships. (Supplied: Tasmanian government) The additional costs are associated with a change in shipbuilder, a contract adjustment, a Russia-Ukraine war adjustment and support for the shipbuilder. "We believe the total vessel replacement and the two berths have an overrun of about $717 million," the chairman of ferry operator TT-Line, Ken Kanofski, said. The $717 million figure only relates to capital costs. It does not include the cost of berthing both vessels for many months in Scotland and Victoria while their Devonport facility are constructed. The fitout of the new gantry at Devonport port is currently underway. (Supplied: Tasmanian government) Mr Kanofski said monthly berthing costs ranged from $600,000 in Scotland to $900,000 at Geelong, but he did not provide the committee with the total cost incurred. He said both ships were on track to begin carrying passengers and freight across Bass Strait from the end of October. The two existing ships, which have a book value of about $50 million each, have been listed for sale. TT-Line's finances have been the subject of ongoing scrutiny after the state's auditor-general last year formed the view the government-owned company had become insolvent in July. In last year's state budget, the company was given a $75 million equity injection and had its debt capacity increased from $990 million to $1.4 billion. The company disputes that it was ever insolvent. The delivery of the new ships has been hampered by delays and cost blowouts. (Supplied: David Wallace) At Tuesday's hearing, Mr Kanofski was asked by Labor's Treasury spokesman Dean Winter to describe the company's financial position. "Obviously, we've inherited a position where because of delays in the berthing project in particular, we're in a situation where we're running four vessels. "And … it's a lot in terms of the cost of running four vessels when only two of them are revenue-generating." Mr Kanofski noted the company was carrying a "substantial" amount of debt and that its interest repayments were "quite high". "That has always been the case, and it remains the case today." The new ships are expected to start operating in October. (ABC News: Monty Jacka) Mr Winter asked him to outline what kind of support TT-Line had requested from the government ahead of next week's state budget. Mr Kanofski declined to reveal the details, citing cabinet confidentiality. "What I can say to you is we've put forward a set of financials and a set of recommendations to the government that would see the business operating in a sustainable way," he said. The details are expected to be outlined when the budget is delivered on May 21.

Bungled Spirits ferry replacement project cost $717m more than forecast

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