The amount of harbour dues owed by Emeraude Lines

1240/5(1975)

QUESTION TO BE ASKED OF THE PRESIDENT OF THE HARBOURS AND AIRPORT COMMITTEE ON TUESDAY 21st OCTOBER 2003, BY SENATOR E.P. VIBERT

Question

Would the President inform members -

1. o f the exactamountofduesdue to the Island byEmeraudeLineswhen the ordre provisoire was served, how long the variousamountsmakingup the wholeamount had been outstanding, and the normal trading terms applying to commercial operators at the Harbour?
2. o f the totalamount of outstanding duesbeyondnormal credit termsdue to the States byothercommercial operators at the time of the serving oftheordreprovisoire, the namesof those debtors and the amounts concerned, aswellasthelengthof time eachamountwas overdue beyondnormalcreditterms?
3. o f  the  total amount of outstanding  dues  beyond normal credit  terms due to  the States by Airport commercialoperatorsasattheendof the lastmonthly accounting period, the names of thosedebtorsand the amountsconcerned,as well as the length of time eachamountwasoverduebeyondnormal credit terms?
4. w h ether the reason forgrantingCondor a licence on the Jersey St. Malo route was because the Committee feared that Emeraudemightbe in financial difficulties and it wanted toensure that the St. Malo-Jersey run was notleft without a service; if so, would the President explain how that could have been possible, considering the presenceofCondorontheChannel Island routes; if the answer is in thenegative,would the President inform memberswhy a licence was granted toCondorwhenitwasknown that Emeraude's position  was financially  unsound and that  the  granting of  such  licence  would further  weaken that company'sposition?

Answer

1. T h e total amountofduesowedto the Island byEmeraudewhen the ordre provisoire was served was £319,640.11, excludingthemovementsdeclaredfor the period 28th Septemberto6thOctober 2003.

T h i s had been reduced by a cheque in the sum of £20,000, but unfortunately we were notified last

Thursday that this cheque had been returned unpaid.

O f th e above mentioned sum £85,639.33 relates to July 2003, £151,029.67 relates to August 2003, and

£80,917.11 relates to September 2003.

N o r m al trading terms applying to shipping operators at the harbour is 60 days from date of invoice.

2. T h isquestionrequestscommercially sensitive information which I hopememberswill understand that I am notat liberty to disclose.

H o w  ever, at 30th September 2003, the largest other overdue debt was less than £27,000 and was cleared

on 6th October 2003.

3. T h isquestionalsoseekscommercially sensitive information.However, I can say that at 30th September 2003, less than £50,000 was overduein total, mostofwhichwascleared within five days.
4. T h e Committee did notgrantCondor a licence on the Jersey/StMaloroute as Condorwere already in possession of a ramp permit, andindeed have been operating the route since1964.

C o n d or's ramp permit simply precluded them from carrying accompanied private vehicles on the direct

route to St Malo. Members may be aware that Condor were, quite properly, carrying accompanied private vehicles from St Helier to St Malo via St Peter Port.

In t h e autumn of 2002, an application was received from Condor requesting that the permit be varied to

allow them to provide a direct service.

T h e C  ommittee was advised that it could not refuse to give proper consideration to the application. A p u blic hearing was held to hear Condor's application on 17th October 2002.

R e p r esentatives of Emeraude were present at that hearing and were given the opportunity to raise

objections.

A f te r the hearing, the Harbours and Airport Committee decided to defer a decision on the application in an

attempt to acquire additional information.

T h e Committee agreed that it required additional information in order to make a reasoned and valued

judgement. Mindful that the Fisher Associates' Sea Access Strategy remained incomplete due to the fact that Emeraude had not provided data as requested, the Committee agreed that it would wish for further in- depth analysis to be undertaken to determine whether the route could sustain competition and if this would prove advantageous to users in the long term.

T h e C ommittee decided to ask the Jersey Competition Regulatory Authority, (JCRA), under the auspices

of the Industries Committee, to undertake further research in order to establish whether or not a variation of Condor's ramp permit would have adverse long term implications for the Island. It was agreed that Emeraude's full co-operation with the JCRA in this research would be conditional.

T h e C  ommittee considered the matter again on 18th March 2003, and I quote from the relevant Act:

" T h e  Committee, with reference to its Act No. B7 of 5th March 2003, discussed the background to the report, dated 10th March 2003, which had been prepared by the Commercial Director and the Director of Strategic Development, Economic Development Department, designated Committee Paper HAC/6/03 regarding the application by Condor Ferries Limited to vary the terms of its current ramp licence.

T h e C ommittee recalled that the licence held by the company permitted the carriage of vehicles between

Jersey and St. Malo but was restricted to the carriage of bona fide freight and did not permit the carriage of cars accompanied by their drivers. It further recalled that, following a public hearing on 17th October 2002, a study had been prepared by the Jersey Competition Regulatory Authority (JCRA), on behalf of the former Industries Committee, in order to establish whether a variation of Condor's ramp permit to operate a car ferry service would have adverse long-term implications for the Island, bearing in mind that Emeraude Lines operated a service on the route, on the back of which it had invested heavily.

T h e Committee recognised that the JCRA report had failed to address the terms of reference "to make clear recommendations to the Harbours and Airport and Economic Development Committees concerning

the granting of permits to car ferry operators" and also "to ensure that the interests of users of the service were best served". However, whilst the recommendations were inconclusive, the JCRA was of the view that the presumption should be in favour of competition on the route and had stated that it was for the incumbent operator, both north and south, to present compelling evidence to defend the status quo of protected routes. The Committee was mindful that Emeraude Ferries had breached a number of terms of its Service Level Agreement, particularly with regard to making regular payments in respect of harbour dues. The Committee noted that, based on Condor's proposed schedule for 2003, there was only the potential for an increase of some 20 per cent on the overall number of passenger/cars which Condor would be able to carry without alteration to its schedules. In reality, it was anticipated that this would arise from a growth in the current market and should not be expected to harm competition between the two companies. The Committee was also conscious that increased opportunities for the tourist sector

could be provided by an increase in capacity on the route and was mindful that a decision on the Condor

application last autumn was still outstanding.

T h e C ommittee, having noted that the recommendations proposed in the report, dated 10th March 2003,

had been supported by the Economic Development Committee at its meeting on 12th March 2003, accordingly agreed to vary the conditions of the ramp permit held by Condor Ferries Limited to allow formally the carriage of accompanied cars between Jersey and St. Malo for 2003 and 2004, on the existing route and schedules agreed with the Harbour Master for 2003. It was further agreed that the schedules would be renegotiated at the end of 2003 and that discussions should be held with the Economic Development Committee with regard to the award of ramp permits for all ferry operators and ferry routes after 2004."

I a m unable to state whether or not Emeraude was financially unsound. However, the issue, which is self-

evident, is that its financial management was.