THE cost of Sark’s new boat is escalating and the project is beset with contractual difficulties. The long-awaited Shipping Committee report has finally been distributed to Chief Pleas members and it discloses that the vessel will not be ready before early 2006 and that the likely cost will be £2.385m. – an amount which will increase if more difficulties arise before contracts are signed.

The committee now says that the annual subsidy Chief Pleas will pay for the next 11 years – until the financing has been repaid – will rise by £10,000 each year.

This means that instead of finding £65,000 a year for that period, Sark taxpayers will start at that amount but be paying £165,000 a year by the time the financing deal ends.

The report, which is likely to dismay Chief Pleas members and residents, lists the difficulties the committee has faced over the last 19 months.

They have centred most recently on a demand by the Turkish shipyard’s bank that Sark provide a standby letter of credit to secure its payment obligations as the buyer, despite the fact that Sark’s deal is with ship designer Thorneycroft Maritime.

The island’s lawyers and bankers have advised against providing this letter. They have expressed fears that, as presently drafted at the shipyard’s bank’s request, it could be misused and result in the island incurring a debt to the bank but with no new vessel to service that debt.

Shipping president Geoff Gurden said that the delay was not of Sark’s making, adding that ‘we thought we had it all tied up’.

However, he also disclosed that

negotiations are continuing on a daily basis and pointed out that the report given to Chief Pleas members was ‘a snapshot’.

Deputy Gurden maintained that even with the current difficulties – which he was confident would be resolved – the project remained the best deal for the island.

‘The costs of alternatives are substantial,’ he said.

‘I do expect a rough ride when Chief Pleas meets next week but the committee and the Isle of Sark Shipping Company are at one on the choice of vessel [a combined passenger and cargo-carrying ship] and my committee is fully committed to the project.’