Bosses at beleaguered Fife firm BiFab have levelled an astonishing broadside at Scottish and UK ministers after they ruled out further financial support to the company.
Just days after the Scottish and UK Governments claimed they had left “no stone unturned” to secure work at the firm’s Methil and Burntisland yards, BiFab has now hit out at their handling of the situation after conceding the lucrative Neart na Gaoithe (NnG) offshore contract – and up to 500 jobs – is now all but lost.
Management have revealed parent company JV Driver – which led a rescue package to save BiFab three years ago – warned ministers financial backing would be needed more than a year ago, and even offered to transfer some or all of its shares in BiFab to Scottish ministers at no charge to the Scottish purse.
However, that offer was not pursued.
A statement issued on behalf of BiFab on Friday said the company is “perplexed and disappointed” by the Scottish and UK Government stance –and rubbished Holyrood’s insistence a lack of investment, guarantees and capital from JV Driver is to blame for the current woes.
“This cannot be further from the truth,” a BiFab spokesperson said.
“The final purchase discussions and agreements always envisaged that the Scottish Government would be the primary financier of the business as it recovered from the Beatrice project and pursued new contracts.
“In fact, Scottish ministers to date have provided less than 50% of the working capital financing requested by JV Driver in its pre-acquisition business plan.
“Scottish ministers also point to the lack of a long term business plan as a secondary causal factor to the current situation. Again, this is inaccurate.
“JV Driver prepared a long-form multi-phase business plan for Scottish Ministers prior to acquiring BiFab.”
BiFab added it told Scottish ministers back in September 2019, following an annual review by JV Driver’s surety, that full cash security would be required on all future bonds for BiFab, while open market globalisation and what it calls a “race-to-the-bottom” Contract for Difference (CfD) auction process created an “intense pricing pressure” on BiFab’s pursuits that “no level of domestic investment could overcome”.
“Many nations have local supply chain protections that limit the amount of international sourcing available to major energy infrastructure projects,” it added.
“No such legislation exists in Scotland or the wider UK.
“Therefore thousands of high-paying fabrication jobs are being lost to the Middle East and Asia.
“Only Scottish and UK Ministers have the ability to change this policy.”
BiFab also revealed its offer to transfer shares to Scottish ministers to facilitate ownership and further investment was made early in 2020 but not followed up, although it ultimately still stands.
And even though a letter of intent was signed in mid-September between NnG developer Saipem and BiFab to commence project activities, the plans were scuppered when Scottish ministers withdrew its £30m financial guarantee citing EU state aid rules.
“With reasonable assurance options unavailable, BiFab management proposed several project execution alternatives to keep the work at BiFab’s facilities in Scotland,” BiFab continued.
“This included an option to work alongside Saipem in the Fife yards with the full support of our union partners.
“BiFab management invited Scottish ministers to jointly present this option to Saipem and NnG developer EDF. Unfortunately this did not happen.”
A Scottish Government spokesperson said: “The Economy Secretary (Fiona Hyslop) was clear when she set out to Parliament earlier this month that State Aid rules make intervention impossible – a view shared by UK ministers – and we collectively remain bound by the rules.
“The situation at BiFab is a culmination of a number of issues, the main one being the unwillingness of the parent company and majority shareholder JV Driver to provide the working capital investment or guarantees for the company.
“As a minority shareholder, we have been exhaustive in our consideration of the options available to us to financially support BiFab. We have worked collaboratively with the UK Government to explore all options and we have not identified a legally compliant way to support the business.
“In addition to a £37.4 million equity stake that the Scottish Government assumed in this business to enable the delivery of the Beatrice project, since 2018 the Scottish Government has provided BiFab with 100% of its working capital requirements – totalling almost £15 million.
“JV Driver originally proposed that they would underwrite a portion of BiFab’s working capital facilities, however this never came to fruition.
“JV Driver also committed to provide BiFab with access to its corporate bonding facilities and also provide parent company guarantees for contract awards, ultimately this was also withdrawn.”