BiFab: intervention analysis

Economic Appraisal: Benefit Assessment – Strategic Location

Step 1: Strategic Benefit

At the point of the first intervention, it was highlighted that the strategic locations of BiFab’s yards were important for both current oil and gas investments, offshore wind developments and decommissioning work. It was therefore highlighted that it was important for these sites to remain operational to support these identified markets.

Step 2: Theory of Change

i. Strategic Driver

Were BiFab to go into administration, strategically important locations would be unused

ii. Intervention

Provide loan to BiFab to prevent firm going to administration

iii. Enabling Change

This ensures that strategic locations remain operational

iv. Outcome

BiFab wins contracts in these markets

v. Impacts

Domestic supply chain in these markets is protected through contracting with BiFab

Step 3: Achievement of benefit

• Intervention Point 1 kept BiFab solvent and maintained the yards for a period of circa five months. Future interventions maintained the yards for circa 2.5 years.
• Although BiFab did not secure decommissioning work, the yards were maintained until administration, when Harland & Wolff (H&W) purchased the Methil and Arnish yards.
• Intervention ensured that the assets and infrastructure were maintained and remained operational beyond the intervention period.

Approach to monetising benefit and counterfactual case

• It is not possible to quantify the importance of BiFab remaining in its strategic locations following the first intervention in 2017.
• To quantify this impact, more detailed information would be required on BiFab’s contracts to help assess their relative importance in these supply chains.
• A qualitative assessment is therefore required to assess the impact of the intervention on this benefit.

Step 4: Review the additionality of the intervention

• The intervention kept BiFab in operation until 2020 and therefore maintained the yards for circa 2.5 years.
• There appears to be limited evidence that BiFab was able to take advantage of these strategic locations and reach target markets that SG had identified in the initial strategic rationale for investment. It is difficult to ascertain what would have happened in the counterfactual cases. While the company that purchased the sites won the Neart Na Gaoithe (NnG) contract, it was unable to complete it.
• Limited decommissioning activity was delivered from the sites.
• Nevertheless, by keeping the sites open during the period of the intervention, SG did ensure that the assets and infrastructure of the sites were maintained and operational over the period between 2018 and 2020. This protected the assets for a future sale and, without the sites being operational, it is likely that alternative expenditure would have been required to maintain these value of the assets for a prospective sale.