The troubled Spirit of Tasmania Berth 3 project is facing fresh cost blowouts, on top of its already quadrupled $375 million price tag – though just how much more it will cost remains unclear.
Tasmanian Public Finance Corporation chairman Tony Farrell told a parliamentary committee today that while more cost increases are expected, they “cannot be quantified” at this stage.
“An increase in TT-Line’s borrowing limit will be required, encompassing the East Devonport development and additional operating expenditure over the now extended construction period,” Farrell said.
The project was originally expected to cost $90 million four years ago, but that figure ballooned to $375 million last year.
It was meant to be completed by August 2024, in time for the arrival of the first new Spirit vessel, but has now been delayed by two and a half years.
As a result, TT-Line has fallen foul of its debt obligations, with its interest coverage ratio dropping to 0.15 times, well below the minimum required level of 1.0.
Farrell confirmed the company’s current borrowing limit will only carry it through to September 2025.
Labor’s finance spokesman Josh Willie questioned whether further government intervention would be necessary to keep the project afloat.
“We’re seeing TT-Line in a difficult position in terms of their finances to the point where they may not be able to request further borrowings to complete the Devonport project and the new ships,” he said.
“To the point where a bailout now is more likely than not. Where the state government, which is drowning in debt, will have to bail out TT-Line for the biggest infrastructure stuff-up in Tasmania’s history. This is a very concerning situation.”
