BiFab faces uncertainty after contract negotiations collapse

In: ConvertersFoundationsSubstationsWindfarms
22/10/2020
The future of Burntisland Fabrications (BiFab) and its three yards is unclear following the collapse of negotiations between BiFab and EDF for the manufacture of foundations for the Neart na Gaoithe offshore wind project.

Bifab was negotiating a contract for the manufacture of eight turbine foundations for the project. Issues reportedly stemmed from the Scottish Government's decision to not provide 'financial guarantees' for the work.

The Scottish Government previously provided support to BiFab back in
2017. This included an investment of £37.4 million through a combination of equity and loan facilities – this was converted to a 32.4% equity stake in BiFab. It also provided a £15 million loan facility to support working capital. The government maintains that without majority shareholders investment, it cannot provide support under state aid restrictions.

The secretaries of Unite Scotland and GMB Scotland launched criticism Scottish Government over the collapse of the deal. GMB Scotland Secretary Gary Smith and Unite Scotland Secretary Pat Rafferty said: “It looks like the Scottish Government Ministers have walked away from our best chance of building a meaningful offshore wind manufacturing sector, and in doing so has extinguished the hopes of communities in Fife and Lewis who were banking their future prosperity on it".


“It’s a scandalous end to a decade which started with promises of a “Saudi Arabia of Renewables” supporting 28,000 full-time jobs in offshore wind and now finishes in mothballed fabrication yards and no prospect of any contracts or jobs on the horizon.


“Both the First Minister and the Prime Minister promised a green jobs revolution but they didn’t tell anyone it would be exported, and it all amounts to broken promises to workers who needed these yards to be thriving instead of dying.


“The fabrication contracts for NnG, just like those on the Seagreen project, will be manufactured by the rest of the world. Two projects worth a total of £5 billion, requiring 168 turbine jackets to power our future, and not even one will be built in Scotland – everyone needs to let that sink in.


“This is what political failure looks like and people are right to be absolutely furious.”


Last month GMB London called for a halt on new offshore wind farms until a local supply chain, as is the case for nuclear, is in place. This followed criticism from GMB Scotland of foundation contracts being issued to fabrication yards outside Scotland for the Seagreen offshore wind farm.

BiFab's operations cover three yards in Arnish, Methil and Burntisland. Troubles started for the yards in 2017, with the threat of closure looming as a result of cash flow problems. This stemmed from a dispute over payments between regarding a contract for the manufacture of jacket foundations for the
Beatrice offshore wind farm.

The company received a financial package to temporarily lift the threat of administration and allow it to complete its contract for the £2.6bn offshore wind farm project. The financial support saw BiFab receive payments to alleviate immediate cash flow issues enabling the threat of administration to be lifted and ensuring the full funding of the Beatrice contract.


It was then bought by Canadian company JV Driver, through its subsidiary DF Barnes, in 2018. It was purchased as part of an agreement brokered by the Scottish government to support new opportunities at these yards for fabrication and construction in the marine, renewables and energy sector.


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