The Nova Scotia government confirmed Friday that of the $21 million it has committed over seven years for a new international ferry service, $19 million has already been handed to the American operator.
The surprise announcement from Economic Development Minister Michel Samson came only two weeks after Nova Star Cruises carried its first paying passengers from Portland, Maine, to Yarmouth, N.S.
"Unfortunately, with establishing an international ferry service, there have been some challenges along the way," Samson told reporters. "We've had to adjust ... Year one is going to be a challenge."
Samson said total spending jumped to $19 million Thursday when the Liberal government agreed to advance $5 million after the State of Maine failed to deliver on a pledge to deliver a $5-million line of credit to the company.
The province's previous NDP government had already committed $12 million to the ferry service during its first year of operation, Samson said.
And the succeeding Liberal government agreed to hand over an extra $2 million in February when the company said it had to post a bond required by the U.S. Federal Maritime Commission, he said.
When asked if the province was willing to spend more than the $21 million already set aside, Samson declined to rule it out, saying: "We're very cognizant of the fact that we need to respect Nova Scotia taxpayers."
The minister said the company, based in Portland, is still holding negotiations about financing with state officials. Meanwhile, he said, the company needed the $5 million to cover operating costs, including bills for fuel and supplies.
"We felt we had no choice but to advance those funds," the minister said.
Line of credit
Samson said Maine Gov. Paul LePage committed to the line of credit in a letter to former NDP premier Darrell Dexter.
However, a spokesman for LePage said the state had only agreed to help the company find private financing.
"Our pledge was not to provide the line of credit, but to assist the company in securing it," said Peter Steele, the governor's director of communications. "These efforts are ongoing.
Steve Durrell, Nova Star's chief operating officer, said he expects to secure the line of credit before the end of the summer through the Financial Authority of Maine, which is the state's business financing agency.
As well, he said the company plans to repay the province by the end of the summer for the $2-million bond required by U.S. maritime authorities.
Durrell said ticket sales for the ferry service were slow at first but are picking up.
"We are behind where we anticipated," Durrell said in an interview, adding there was a delay in getting the bond, which kept the company from taking bookings or promoting the service for two months.
He said the company has also faced challenges with planning, noting that 60 per cent of bookings are being made less than two weeks from departure dates.
Still, Durrell said the company experienced an upswing after fares were slashed in May.
He declined to release any financial data or passenger figures, but he conceded that the company's 1,200 passenger, Nova Star, has yet to be full.
The 161-metre ferry is scheduled to make daily round-trip crossings until Nov. 2. It was taken out of service between Tuesday and Thursday of this week for a safety refit.