Councillors in Orkney have been told that Scapa Flow Oil Port is in a budget deficit position of over £2 million this year.
Over half a million of that is down to taking in less through harbour dues than expected.
The council’s harbours authority sub-committee met this week.
One councillor, Graham Bevan was left wondering if Orkney was at risk of “subsidising an oil industry” with the current budgeting method.
Councillors were presented with a report that shows, between April and the end of December this year, Scapa Flow Oil Port had an overspend of £2,078,400 against its budget.
Budget woes include harbour launches and council tug engine failure
A number of factors contributed to this, including there being more harbour launches than anticipated and towage services costing £1.4 million more than expected mainly due to the engine failure of one of the council’s tug boats, the Harald.
However, less than anticipated harbour dues, to the tune of £536,000, also contributed to the situation. In the report, it is stated that this is because of fewer oil tankers visiting than predicted.
Councillors were told, when the budget is set, Flotta Oil Terminal tells the council how many oil tankers are expected in any given year and the council bases its budget on that.
The failure of three or four tankers to come to Scapa Flow can result in the budget deficit seen in the report given to councillors.
Upon asking, Mr Bevan was told the cost for each tanker that didn’t visit was around £150,000 or £160,000.
Mr Bevan noted that the income from tanker visits has been going down.
He said: “At what stage do we say ‘we have to run an oil port here. We can’t afford to subsidise it.’
‘Where do we draw the line?’
He asked how the council could get a better commitment from the oil industry. This, he said could prevent the council’s budgets from being shorter than expected.
Mr Bevan said: “That’s something we should continue to fight for. Otherwise, Orkney is subsidising an oil industry, which doesn’t sound too good to me.”
Sub-committee chairman David Dawson said the council is “very much at the mercy of external markets way beyond our control”.
But said he took Mr Bevan’s point about asking where the council draws the line.
Mr Bevan replied: “I take your point that there are markets out there. But there’s a pipeline that comes ashore to Orkney and it’s not going to go anywhere else anytime soon.
Mr Bevan added: “Let’s play whatever card we have. That’s my advice.”
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