Primary school building suspended

The building project was being backed by a now-collapsed Icelandic bank

Building work on three Aberdeen primary schools has been suspended following a funding gap caused by the collapse of an Icelandic bank.

The £120m 3Rs scheme to redevelop and build the schools had been backed by Landsbanki, which was seized by the Icelandic government in October.

Construction will continue on four other schools after city councillors agreed to a £5m bridging loan.

The consortium behind the project is trying to find alternative finances.

Corporate director for resources management Gordon Edwards said: "We have worked hard to come up with a compromise to help safeguard the integrity of this project.

"We will ensure appropriate conditions are put in place to protect the loan."

Short-term solution

Councillor Kevin Stewart, chairman of the 3Rs project, said: "I am grateful that the commitment agreed to this unanimously and I hope the long-term financial situation can be resolved sooner rather than later."

He said the council had been consulting with the Scottish Government which was happy with the agreement.

The 3Rs project involves the building or redevelopment of eight primary and two city secondary schools.

Work had commenced on all but three, but the Danish-based construction company Pihl issued a suspension notice on work after its September invoice was not paid.

An interim deal was reached with the new Landsbanki, which agreed to release £1.25m for the next six months. But this was not enough to keep the school building work on track.

The consortium behind the project requested an emergency meeting with the local authority to ask councillors to consider a bridging loan.

It was thought the Urgent Business Committee would be asked to provide anything between £3m and £17.5m.

The council said construction on the two academies, Bucksburn and Cults, plus Airyhall and Heathryburn primaries would continue and was expected to be completed on schedule.

But completion of the three of the primaries where work was suspended is expected to be delayed by six months.