The Spirit of Tasmania ferry replacement program has incurred cost overruns of $717 million compared to the original business case, according to testimony at a parliamentary inquiry.
The Public Accounts Committee held a hearing on the status of the delayed and over-budget project, which began in 2018. The majority of the overrun is attributed to new berth facilities at Devonport. TT-Line chairman Ken Kanofski stated the total overrun for vessel replacement and two berths is about $717 million.
Cost Breakdown
Devonport Terminal 3
- Original estimate: $90 million
- Revised budget: $493 million
- Cost overrun: $403 million (includes $9 million for hull strengthening and fender remediation)
Ferry Replacement (Spirit 4 and Spirit 5, built in Finland by RMC)
- Change of shipbuilder: €82 million
- Contract adjustment: €25 million
- Russia-Ukraine war adjustment: €8 million
- Shipbuilder support: €50 million
- Cost overrun: €166 million (approximately $AU280 million)
Geelong Terminal
- Scope changes: $34 million
Total cost overrun: $717 million (capital costs only)
Additional Costs Not Included
The $717 million figure does not include berthing costs for both vessels in Scotland and Victoria while Devonport facilities are being constructed. Monthly berthing costs range from $600,000 in Scotland to $900,000 at Geelong; total cost not provided.
Project Status and Financial Position
Both ships are on track to begin carrying passengers and freight across Bass Strait from the end of October. Two existing ships (book value about $50 million each) have been listed for sale.
TT-Line has been given a $75 million equity injection and its debt capacity increased from $990 million to $1.4 billion. Kanofski described the company's financial position as "very challenging" due to running four vessels (two non-revenue generating) and carrying substantial debt with high interest payments.
Kanofski stated TT-Line has always been able to pay debts as they fall due. He declined to detail support requested from the government ahead of the state budget, citing cabinet confidentiality. The budget is expected on May 21.