The council has shelved the idea of a drydock for repair and maintenance work on larger vessels in Shetland because it would fall foul of state aid regulations.
The proposal had been to build a drydock for vessels up to the size of the Yell Sound superferries at an undecided location.
The capital cost of the venture was estimated as being between £25 million and £35 million. Once built it would have been run by private interests.
To operate commercially the drydock would have had to attract work from outwith Shetland, as there would not have been enough business purely from the local fleet. The economic development unit judged that in order to pay for itself the drydock would have had to be used by 50 ships a year.
It would have been difficult to assess demand, however, as vessels operating in Shetland, such as the ferries, have existing relationships with drydocks in Aberdeen and Fraserburgh. On the other hand Shetland’s location would have made it attractive for the oil and gas industry, and project manager Tommy Coutts said there would be “plenty” of that sort of traffic.
Mr Coutts said: “We are not pursuing the options any further at the moment. There is nothing the council can do.” However the council would be happy to work with a private operator which could benefit from its research.
State aid rules exist to ensure that public money is not used to create a competitive advantage between member states in Europe.