A government Minister has issued an ultimatum to the Isle of Man Steam Packet Company - make us a ‘significantly enhanced’ offer or ferry services will be put out to competition.
Infrastructure Minister Phil Gawne told Tynwald that a bid to test the market had confirmed there were credible competitors.
He said either the Steam Packet could make an ‘exceptional offer’, or it could agree to relinquish the user agreement early allowing the government to put services out to tender, or the government could wait to 2022 to go to the market.
Steam Packet Company chief executive Mark Woodward said: ‘We are reviewing the Minister’s statement and will continue our ongoing dialogue with the Department of Infrastructure.’
In his statement on the future of sea services, Mr Gawne told Tynwald there had been 12 responses to a ‘prior information notice’ issued in December, of which five completed a questionnaire outlining their proposals, and three of these were very detailed.
Mr Gawne said a comprehensive public consultation would be carried out this summer.
He said there was no requirement for government to make any immediate decision regarding future ferry services as the current user agreement – which gives the Steam Packet preferential use of the Edward Pier linkspan in return for guaranteed minimum levels of service - can run until 2026.
There were now three options, he explained.
1. Do nothing until going to the market in the year 2022, a date proposed on the basis that any new potential operator of the service after 2026 can prepare to take over as soon as the user agreement expires.
2. Agree to a request from the Steam Packet to end the current user agreement early and go to the market. ‘Of course, the Steam Packet would have to accept the risk that it may not succeed in the procurement process,’ Mr Gawne said.
3. Invite the Steam Packet to make an ‘exceptional’ new offer. Mr Gawne said this would ‘allow Tynwald to confirm that an extended or new agreement with the current provider is in our people’s best interests’.
He added: ‘If the Steam Packet takes no action or makes no offer other than to continue to the end of the current agreement, then the department will in 2022 start procurement work to tender the provision of ferry services to and from the island.
‘This would allow the appointment of an operator and would give that operator sufficient time to purchase a newly built vessel ready to start services at the end of the current user agreement in 2026.
‘If on the other hand, the Steam Packet agrees either to end the user agreement and test the marketplace, or indeed, make government a significantly enhanced offer regarding an extended agreement then I will ensure that this Honourable Court will have a crucial role in considering and determining any future agreement.’
Mr Gawne said his preference would be for the Steam Packet to relinquish the user agreement early but he accepted that this was the least likely of the three options.
He told iomtoday: ‘We’ve been holding productive meetings with the Steam Packet and they understand what is needed if they wish to see a change in the current agreement. I’m very confident we can continue to work with the Steam Packet to deliver improved services for the Manx people and the Manx economy.’
The Minister said that while the user agreement had been criticised, it had played an important role in helping secure modern ships, market growth, competitive fares and improved services.