The Isle of Man Steam Packet Company expects to spend between £100m and £120m on a replacement for fast craft Manannan within the next five years.

The figure was set out in a company statement responding to Chief Minister Alfred Cannan’s recent comments on ferry pricing and investment.

Speaking on Manx Radio’s Perspective programme, Mr Cannan said the government-owned operator faced difficult choices in balancing affordability for passengers with the need to fund vessels and repairs.

During the interview, the presenter put it to Mr Cannan: ‘Lots of people would say, we’ve given it a monopoly. It’s ours. It should be contributing more to helping grow the Manx economy.’

Mr Cannan replied: ‘As a concept, I agree with that general statement. But running it not for profit - what does that actually mean?’

He said: ‘Ships cost a lot of money. Repairs cost a lot of money. There’s not always clarity about the breakdown of a ship or the costs that are going to be incurred at its next repairs.

‘But you also have to factor in that you are going to have to spend £40m, £50m, £60m or £70m more for new ships in the future.

‘People say “cut the freight costs” but the problem is, if they [Steam Packet] were to cut the freight costs, is that going to be passed on to the consumer, or is the profit going to be pocketed by the business and are they still going to price the goods at the same price as you can get them across in at the UK?

‘And I don't think it's a simplistic issue. I think it is more nuanced than that.’

In its statement, the Steam Packet said it welcomed the Chief Minister’s recognition of the progress made in relations between the board and government.

The company said it had engaged with Treasury, residents and other stakeholders over the past year ‘to ensure it is working to offer best value for money to all users, and to its ultimate owners, the Isle of Man taxpayer’.

It added that it had introduced changes to fares following last year’s government conference, including free travel for children.

The Steam Packet acknowledged the Chief Minister’s point about the balance between pricing and long-term investment.

It said: ‘Over the course of the next five years, the board of the Isle of Man Steam Packet Company is expecting to have to invest approximately £100m to £120m on a replacement for HSC Manannan, whilst maintaining its operational fleet at an annual expenditure of around £12.7m.

‘As with Manxman, it is expected this will be funded by a combination of the group’s profits and additional debt, at zero cost to the Isle of Man taxpayer. Furthermore, the group continues to repay its annual debt and interest obligations of £7.5m per year to Treasury, again funded by operating cashflows.’

The company said it would continue to work with stakeholders and government to provide a service offering ‘the best value to our Island’.

A further update is expected at the Isle of Man Government Conference on 23 September.