Taxpayer 'unlikely' to see all of £16.4m tied up in BiFab despite legal action taken by Scottish ministers

Ministers have commenced legal action in an attempt to wrestle back £16.4 million from the Scottish Government’s doomed investment into BiFab.

A progress report from the company’s administrators states, however, the prospect of the taxpayer being repaid in full is “unlikely”.

The firm, which had plants in Fife and Lewis, received £52m from the Scottish Government, including a £16.4m loan, which remains unpaid and was viewed as the best option for the manufacturing of offshore wind turbines within Scotland.

However, BiFab collapsed into administration in late 2020, three years after it was rescued by the Government in 2017, stating it was unable to compete with government subsidised fabrication yards within and outside the European Union.

Work for turbine jackets at its yard in Methil for the Neart na Gaoithe project collapsed just prior to the administration, with both the UK and Scottish governments stating they could do no more to save the yard.

However, Scottish ministers continue to try to recoup some of its losses from the doomed investment and have funded a legal action as part of a £18m claim as part of the administration process, a recent progress update issued by the firm’s administrators states.

The update states: “Royal Bank of Scotland Plc may be paid in full depending on the level of its contingent claim which materialises (if any). The Scottish ministers are unlikely to be repaid in full.”

Legal firm Taylor Wessing LLP have been instructed to aid with the £18m claim. However, the Government refused to state how much the legal action was costing and how long it could take before a result.

The BiFab site in Methil should be busy with orders to build offshore wind turbines (Picture: Jeff J Mitchell/Getty Images)

The update confirms the administration of BiFab was extended to now end on or before December 13 this year, a further extension of more than a year.

The £17.8m commercial claim is linked to the firm’s appointment as a subcontractor in 2019 to help construct wind turbine ‘pin piles’ for use as part of the Moray East Offshore Wind Farm in the Moray Firth.

The original contract by GeoSea was reported to have been worth £26.5m to manufacture 100 pin piles, something the-then minister for energy, Paul Wheelhouse, said represented “great news for BiFab”.

The potential additional £17.8m comes from changes to the agreed scope of work during that contract, with BiFab claiming that led to additional costs, something disputed by the contractor.

Administrators state discussions had taken place prior to the collapse of the company, but no settlement had been reached.

This comes as the Government has paid around £65,000 to consultancy giants, Ernst and Young, to undertake a “lessons learned” review of the Scottish Government’s involvement in BiFab.

This is in response to recommendations from Audit Scotland the Government “learn lessons” from its interventions in private companies.

A Scottish Government spokesperson said: “Scottish ministers are aware that a progress report on the BiFab administration has been filed to Companies House as is legally required during any administration. The Scottish Government will continue to work the administrators to obtain the maximum possible recovery of public funds. It would not be appropriate to comment further while the administration continues.”

BiFab’s administrators are the consultancy giants Teneo, which have also been contracted by the Government for due diligence and financial advisory services in the past such as the Lochaber Smelter and Liberty Steel Dalzell.

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