Govt grants new 35-year dockyard lease with promise of greener shiprepair
The Gibraltar Government has granted a 35-year lease over the dockyard to UK company Balaena Propco Limited, imposing new requirements to ensure the yard is operated “in sync with Gibraltar’s modern day environmental obligations”.
The Chief Minister, Fabian Picardo, told the House the lease includes “environmental, operational and financial key performance indicators”.
In addition, works at the dockyard will take place between 8am to 8pm and will only go on outside that timeframe under “extenuating circumstances” or for repairs for Royal Navy vessels.
Balaena Propco Limited is part of the Balaena Limited group of companies, which forms part of an offshore utilities business in the United Kingdom.
The ultimate beneficial owner of these companies is Simon Gillett, a British UK-based entrepreneur, the Chief Minister said.
Change of control protections are included in the new lease, which were not provided for in the old lease, Mr Picardo said.
The new lease terms meet three of the GSLP/Liberal Government’s 2019 Manifesto Commitments, he told Parliament.
These commitments were to renegotiate the lease so that the dockyard is operated in a manner that does not pose a health risk to the surrounding areas. This is now specifically provided for in the lease as a Key Performance Indicator.
Secondly, that the Government is able to ensure that the shipyard is operated in full and proper compliance with the highest environmental standards.
This now also provided for by the inclusion of another KPI requiring adherence to three defined ISO certificates and the application of relevant Gibraltar law on pollution and environmental protection.
Additionally there is also a KPI commitment to best industry practice and the introduction of best available technology.
Thirdly, there is a transition to shore power, also known as “cold ironing”, which will have to be provided under the lease obligations within three years.
“The new lease follows months of collaborative discussions between Balaena and Government,” the Chief Minister said.
“There are also various other Government objectives that have been hardwired into the new lease, representing a significant improvement over the previous lease.”
“In this respect, the lease includes environmental, operational and financial key performance indicators, some of which are entirely new and some of which have been carried over and updated from the previous lease, such as the minimum number of resident employees required.”
“Residents of the area will, in particular, be very pleased to hear that any noisy works will no longer be allowed outside of the hours of 8am to 8pm.”
“Under the current lease, works can continue throughout with no specific reference to noise being curtailed.”
“Works now outside of those hours will now only be permitted on the basis of an enxtenuating works licence which will only be granted for works for Royal Navy vessels or for works which the Government accepts are urgent.”
“Noise will therefore become an unwelcome exception rather than a constant, unwelcome norm.”
There are also various other lease terms that are also sensitive to Balaena's growth plans, with the Government keen to give the company the greatest prospect of success, Mr Picardo said.
The Lease and the Lease Commercial Agreement were laid in Parliament on Wednesday by the Chief Minister.
“The Government has also felt that it was important, at this challenging time in our political and economic development as a result of Brexit, to keep the dockyard operational as a shipyard and provide a continued element of diversification to Gibraltar’s economy at this time,” Mr Picardo added.
“The Government considered this issue with the benefit of the advice of the Minister for Economic Development, whose relationship with the dockyard goes back at least half a century – the same half a century he has been an elected representative of the people of Gibraltar, some part of which he also spent as a trade union leader, spending many days and hours in the dockyard as a result.”
“In this respect, we will all be happy to hear also that the Lease now beds in the continuation of an apprenticeship scheme going forward.”
“As a result of these arrangements, the Government will immediately start to work closely with Balaena to explore the feasibility of constructing an access lane through the shipyard that would connect Queensway Road and Rosia Road.”
Further details of this will be announced as soon as possible.
The Minister for the Environment, Dr John Cortes, said: “The dockyard has been in need of an update to its lease to align with current requirements.”
“Today we have delivered one that is in sync with Gibraltar's modern day environmental obligations.”
“The terms of the new lease that have been negotiated are highly positive for Gibraltar.”
“As the Government, we have been ready to help out and play our part.”
“I am excited to see what the future bring for Gibdock and its new owners.”
Mr Picardo took the opportunity to congratulate the new owners on their acquisition of GibDock.
He said the terms of the new lease that have been negotiated are “highly positive” for Gibraltar.
“I welcome them to Gibraltar and I wish them great success in their operations,” Mr Picardo said.
“Their commercial success as a company will be our economic success as a nation.”
“This is good news for Gibraltar.”
“The dockyard represents a key part of Gibraltar's real estate.”
“I am encouraged to see the drive and energy shown by the new owners who seek to grow the Gibdock business from strength to strength whilst reducing the negative impact that the previous operations have had had on the surrounding area.”
“I consider the acquisition to be more than simply an acquisition of Gibdock; this as an investment in Gibdock and in Gibraltar.”
“Yet another vote of confidence in our economy at a sensitive time in our history.”
“The conclusion of this deal at this time, with other competing priorities, is also proof of the Government's relentless desire to continue to grow Gibraltar's economy and our success in attracting quality investment.”
The announcement was welcomed by Opposition members.
The GSD’s Elliott Phillips asked the Government how it would monitor compliance with the environmental commitments, adding that this will be a key question for many.
Mr Picardo said there were “owner’s obligations” under the lease to comply with Gibraltar’s wider obligations.
The agencies of the Government of Gibraltar, particularly the Environmental Agency, “will be how compliance is monitored”.
“This is a considerable improvement for the people of Gibraltar and for those who are running the yard as well and who have acquired it,” Mr Picardo said.
“We have found a new symbiosis between Gibraltar and the yard, which we think is the modern symbiosis that we think is right to find at this time, but it could also have been found earlier.”
The dockyard was used some 40 years ago for the conversion of two commercial vessels into vessels that could sail to the Falklands as part of the task force, Mr Picardo said.
“As we look back we remember what it is that has been done in this yard and what it is that may need to be done at this yard at any time, although we always hope it is in times of peace and not for times of war,” Mr Picardo added.
“The Royal Naval exception for work that has to be done is one that everyone in Gibraltar will understand, it goes beyond the commercial.”
“Because it is about the Royal Navy, it runs in our veins and we all understand that exception.”
Asked on what would classify urgent or extenuating works on vessels, Mr Picardo said that just because a job is “commercially urgent, it will not automatically trigger a permit”, adding that these will be “few and far between”.
“We will be very careful to continue the work that we have been doing and have now seen materialise in this lease to protect to do all those who live around the yard, while at the same time as we protect the yard, its viability and its commerciality to be a success for all those that work in it and the Gibraltar economy which includes all of us,” he said.
The GSD’s Roy Clinton welcomed “any form of inward investment into Gibraltar” and asked whether there was any premium paid to the Government in cash, other than the first instalment for the first year’s rent worth £50,000.
Mr Picardo said this was a “much better deal” for Gibraltar than the previous leaseholders, adding that the “premium for the people of Gibraltar is not just in the much higher rent that is payable, but also in the obligation in the number of local resident employees” which is fixed into the terms of the lease itself, as well as the environmental benefits.
Mr Picardo added the lease also includes the cost of the “cold ironing” and the 60 Hertz generator which the leaseholders have to comply with within 70 days.
“We have shifted obligations with big financial consequences and that is a premium for the Government because we no longer have to put out for those costs, they are costs that are being taken by the lease holder,” Mr Picardo added.