September 18, 2004

BC Ferries orders Super C's in Germany

The Board of British Columbia Ferries yesterday approved contracts worth Euros 206.4 million (about US $251 million) for construction of three Super C Class ferries at Germany's Flensburger Schiffbau Gesellschaft.

The Euro denominated contract equates to Canadian $325 million, however the board approved a total project budget of Canadian $542 million, to include "Canadian taxes, financing and project management costs that would have been incurred regardless of where the the vessels were built" and a "contingency for federal duty."

The new Super C-class vessels are planned to operate on BC Ferries' Horseshoe Bay---Departure Bay and Swartz Bay--Tsawwassen routes. The specifications are for 160 meter vessels that can accommodate 370 vehicles and 1,650 passengers. The existing C-class vessels that operate on the Horseshoe Bay--Nanaimo route are 139.5 meters and can accommodate 330 vehicles and 1,466 passengers.

The first new Super C-class vessel is scheduled to arrive in British Columbia in December 2007, the second scheduled to arrive in March 2008 and the third in June 2008. The new vessels are among the first in a Newbuild program that will see an additional 19 vessels built over the next decade and a half.

According to BC Ferries CEO David Hahn, the contracts with Flensburger are "design-build, fixed-price contracts that provide BC Ferries with substantial guarantees related to delivery dates, performance criteria, cost certainty and quality construction." He said that "extremely favorable" payment terms meant that 80 percent of the contract price is not due until completion of the vessel.

BC Ferries EVP Business Development, Mike Corrigan, who was lead negotiator on the contract, said the price was some 40 percent, or Canadian $130 million below the Candian price received in the early part of the bidding process. He said the "excellent Flensburger payment schedule" saves BC Ferries another Canadian $30 million in interest. "

Even assuming Canadian $81 million in federal import duties "there is still an $80 million advantage with the chosen contractor," he said.


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