Scottish economy secretary ‘cautiously optimistic’ over future BiFab contracts

Finance Secretary Derek Mackay
Finance Secretary Derek Mackay

Scotland’s Economy Secretary has said he is “cautiously optimistic” about securing contracts for BiFab manufacturing, which he hopes will benefit the renewable energy industry.

Giving evidence to Holyrood’s Economy Committee, Derek Mackay told MSPs that waiting for companies “to do the right thing” has not been successful but the Scottish Government was working on incentives for the industry.

The Burntisland Fabrications (BiFab) yards in Methil and Burntisland, which produce large-scale equipment for the offshore oil and gas industry, have struggled following contracts lost to overseas firms.

The Scottish Government has “tried to be as supportive as possible” since the site was taken over by a Canadian firm last year, according to Mr Mackay, and was “trying to ensure a sustainable future for the company”.

Mr Mackay said: “I do remain cautiously optimistic that contracts will be secured for BiFab but of course we need to ensure that the benefits need to reach the wider supply chain of renewables in Scotland.”

He said he hoped to see “companies taking the lead and getting on with giving UK and Scottish companies the best possible chance to secure that onshore work for the offshore industry” to make Scottish fabrication and the manufacturing industries “as competitive as possible”.

“That’s why some of the direct interventions – for example, around the direct support to BiFab – is important.”

Despite additional devolved powers for managing leases of the Crown Estates – including much of seabeds off the Scottish coastline, Mr Mackay bemoaned the lack of control over the Contract for Difference subsidy (CfD ), which he described as “the main driver for these companies”.

“That subsidy will drive behaviour and it might make or break schemes, but that would be for the UK Government to determine,” he said.

He also argued the Scottish Government had “worked very hard with officials to turn over every stone to see how we can guarantee conditionality because frankly waiting on a voluntary basis for companies to do the right thing has not been successful”.

Mr Mackay also stressed he was proceeding cautiously with new devolved powers for offshore land to try to prevent potential lawsuits against the Scottish Government from conditions they may impose on firms receiving contracts or subsidies.

Asked by Green MSP Andy Wightman about what restrictions – such as including legally binding agreements with companies about emissions or supply chains – could be imposed, Mr Mackay said whatever the Government decides will be “proportionate and within the law”.

“Because we have that competence now over Crown Estate, we do decide what is the level of leasing that we would think would be acceptable, what are the conditions that we would allow activities to be undertaken”, Mr Mackay said.

He added: “We will have some flexibility but if I launch something that’s premature I’m only opening the government up to a legal challenge.

“What I’m trying to do is build a very strong and robust system to get the outcomes we want to get, using one of the few devices we’ve got, when the much easier solution to this is through CfD but I don’t control that.”

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