Councillors met in private this afternoon to discuss a possible seven-figure out of court settlement with Lerwick Port Authority relating to a dispute over the SIC’s abandoned Bressay Bridge project.
The port authority has a long-standing £5.9 million compensation claim against the council for losses incurred after the SIC obtained an interdict forcing it to temporarily abandon its planned dredging of the north mouth of Lerwick harbour in August 2005.
Around three quarters of the 22 councillors were present in Lerwick Town Hall for a behind closed doors session. It is understood a settlement offer is now to be made to the LPA, with both organisations hoping to make public statements following the port authority’s monthly meeting tomorrow afternoon.
In his most recent online blog, SIC chief executive Alistair Buchan mentioned having paid a “long overdue visit” to the LPA for “very constructive discussions” with its chief executive, Sandra Laurenson.
Following today’s meeting, Mr Buchan said he felt councillors had also had “very positive” discussions. He said negotiations with the LPA are at a “very sensitive” stage over figures, and he hopes the council will be able to say more shortly.
If the LPA accepts an out of court payment it would avert the need for Shetland’s reputation to be dragged through the mud nationally. An eight-day stint at the Court of Session in Edinburgh has been pencilled in for this October.
But the expected confirmation of a substantial hit to the public purse will come at a bad time for the council, which has just agreed to make £15.2 million of spending cuts in the next 12 months.
Relations between the two organisations broke down after the LPA strongly resisted the SIC’s plans for a £22 million bridge across the harbour to Bressay in the middle of the last decade. The port authority feared the bridge would hamper its own business activities.
After awarding the dredging contract to Belgian firm Jan de Nul in 2004, the dispute with the council forced the LPA to scrap that deal, pay the company an abandonment fee and then re-award the contract at a higher cost.
In early 2007 the Court of Session ruled in the LPA’s favour, giving it the green light to resume dredging. The port authority said deepening and widening the channel was vital to attract many of the bigger vessels which have subsequently begun using Lerwick Harbour.
Over the past two years, sources have consistently suggested the local authority was confident of limiting the settlement to some way below the full £5.9 million sum.
In addition to the payout, nearly £2 million of SIC cash was spent on the aborted project before the council decided that pursuing a tunnel was a better option. European grants of up to £4.7 million also fell by the wayside.