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Key part of £350m harbour expansion ‘may not be viable’ as bosses reveal they have received no Covid-19 support

A key part of Aberdeen’s £350 million harbour has been left hanging in the balance after bosses revealed they had received no funding to deal with the effects of Covid-19.

More than £230 million has so far been spent on the new South Harbour at Nigg Bay, which will allow larger vessels to dock in the city.

Aberdeen City Council plans to develop an energy transition zone (ETZ) at the site as part of radical proposals to reduce the north-east’s reliance on oil and gas.

The expanded harbour is set to include green infrastructure, such as clean fuels and electrified quays.

But, because of Aberdeen Harbour Board’s status as a trust port – meaning it is not private, but is operated by an independent body – it has been required to remain open throughout the pandemic.

As a result, it has been unable to access the financial support available to other businesses such as ferry operators.

Green infrastructure ‘impossible without support’

In a letter to stakeholders, including senior city councillors, the board’s chairman Alistair Mackenzie revealed the coronavirus outbreak had “eroded funds” set aside for the expansion.

Mr Mackenzie said without external funding, it will “no longer be possible” for the development to include green infrastructure.

And he admitted that unless the harbour board gets financial assistance, it may not be able to fully deliver the project.

“To date our £350m expansion project has been largely self-funded but without assistance it will no longer be possible to introduce much needed green infrastructure, such as service trenches for clean fuels and quayside electrification, or to carry out hydrogen feasibility studies,” he said.

“Such infrastructure would play a critical role in realising the north-east’s energy transition vision.

Harbour bosses say they are “increasingly concerned” about the project.

“Without financial support, we are growing increasingly concerned that realising the project’s full potential will no longer be viable.”

Mr Mackenzie said directors at the harbour board “remain hopeful that a solution can be found” and said they would now look to the UK Government for backing.

The warning comes almost a year to the day since Dragados UK, the main contractor, ended its involvement in the development with nearly two-thirds of the work still to be completed.

Wider project ‘not in jeopardy’

Harbour board chief executive Michelle Handforth insisted the wider project, which is due to begin a phased opening later this year, “is not in jeopardy”.

“The fully completed Aberdeen Harbour expansion project will play a crucial role in the Scottish and UK Governments’ energy transition ambitions for the north-east,” she said.

“Unfortunately, as a trust port, we have not been able to access any of the current Covid-19 financial support schemes. Along with many other businesses the pandemic has negatively impacted our revenue.

“I must stress that while the project is not in jeopardy overall, we remain concerned that without green infrastructure development support we will not be able to fully realise the expansion project’s green port potential.

“We are continuing to engage with Scottish and UK Governments and remain hopeful that a solution will be found soon.”

Government has ‘duty’ to support harbour

Ryan Houghton, convener of Aberdeen City Council’s city growth and resources committee, urged the Scottish Government to be “creative” in order to find a way to provide the required funding.

“From the council’s point of view this is something the Scottish Government themselves have recognised as a huge strategic asset,” he said.

“The duty is upon them to step forward with funding to help out.

Councillor Ryan Houghton is expected to be named co-leader of Aberdeen City Council in the coming week
City growth and resources convener Ryan Houghton.

“Aberdeen Harbour Board is trying to take forward proposals the Scottish Government supports, such as green ports. It wants to be part of the transition here in the north-east.

“Aberdeen Harbour plays a fundamental role in the city and we are continuously looking forward because we want it to be part of the future of the north-east.

“It beggars belief that the Scottish Government is not willing to support it. Questions need to be asked around why, and they cannot hide behind procedural vagueness.

“We have seen them step forward in the past and that is what they need to do here.”

Harbour is ‘key project’

The harbour expansion is being support by Scottish Enterprise, which regards it as a “key infrastructure project” and vital to the north-east economy in the long term.

A spokeswoman said: “The north-east is a key area of focus in our business plan as we work on economic recovery and Scottish Enterprise is continuing to support Aberdeen Harbour Board to achieve a successful completion of the South Harbour.

“This is a key infrastructure project for Scotland and one of a number Scottish Enterprise is supporting around Aberdeen Harbour, such as the ambition to reduce the carbon impact of the port and the development of the energy transition zone that builds on the new South Harbour investment.”

Support application was ‘carefully considered’

Transport Scotland, the Scottish Government agency which is also responsible for net zero and energy, said it had “carefully considered” the harbour board’s application for financial support.

A spokesman said: “Aberdeen Harbour contributes significantly to the economic prosperity locally, regionally and nationally, and we look forward to continuing to work closely with the harbour during this challenging time for the sector.

“We recognise the South Harbour project has regional and national significance and its expansion will strengthen Aberdeen Harbour’s key role in supporting the economy in the north-east.

“We have been talking extensively to Aberdeen Harbour Board (AHB) over the last year about the impact of Covid-19 on its business and South Harbour project in particular.

“We are continuing to discuss with them their Green Port Strategy and decarbonising the port’s activities.

“Like many businesses in Scotland, AHB has had to contend with a reduction in revenues and its request for Covid-19 support was very carefully considered.

“As part of that process, we have been reassured in discussions with AHB that its South Harbour project will be completed and operational next year.

“Its recent awarding of a major tender to complete the important South Breakwater is another welcome step.”