A CONTROVERSIAL oil rig project will cost £110m more to build in Singapore than the North-East – and a part-nationalised British bank will help fund the cost, The Northern Echo can reveal.

There were calls for a Government inquiry last night into how a bank rescued by taxpayers could help finance a deal that will cost hundreds of UK jobs.

The calls came after The Northern Echo revealed how the SeaDragon consortium will have to pay more than £110m in extra fees and penalties to have the oil platform built in south-east Asia, rather than on Teesside as originally planned.

And, as the project’s financier, part-nationalised bank Lloyds TSB is expected to provide the loans that will make the overseas project possible.

Last night, unions and Tyne Tees Rigs (TTR) – the joint venture formed to try to keep the project in the North- East along with the 1,000 jobs it would create – pledged to push for a Parliamentary inquiry into the project.

They said MPs owed it to North-East workers to ask “tough questions” of Sea- Dragon, Lloyds TSB – 43 per cent owned by the taxpayer – and the Government for its apparent failure to intervene to help in preserving UK investment and jobs.

Business Secretary Lord Mandelson has faced criticism for refusing to get directly involved. Officials at the Department for Business, Enterprise and Regulatory Reform claimed his hands were tied because a government cannot interfere in commercial decisions.

But critics say ministers should have put more pressure on Lloyds TSB, which prompted the decision to switch the contract abroad by refusing to finance work in the UK.

Jon Dale, director of TTR, issued a final plea to the Government for help, saying: “It is the eleventh hour, 59 minutes and 59 seconds – but the Government could step in and rescue this.

“Our bid is on life support, and the prospect of 1,000 North-East jobs and millions of pounds of investment remaining in the UK instead of being exported overseas grows bleaker by the day.”

Cayman Islands-based SeaDragon has previously confirmed that Lloyds TSB was the reason for terminating its initial contract to construct the rig on Teesside, having initially awarded the deal to the Tees Alliance Group (TAG) in November 2006.

The bank deemed the investment too risky and said it would support the project only in a shipyard that had experience of making similar rigs.

The collapse of the original contract prompted a second bid by Darlington-based Cleveland Bridge and McNulty Offshore, from South Shields, South Tyneside.

But in preparing a salvage contract, the North-East team discovered that to make the rig in the Jurong shipyard, in Singapore, will cost an extra £50m.

The three-month time delay incurred as a result of transferring work to the Far East will account for at least another £50m, with the rig being chartered at £500,000 per day.

Another £10m at least is predicted in penalties for not meeting its schedule of being ready to be in service in the Gulf of Mexico by January, with yet more set to be paid to TAG, which is pursuing a settlement for breach of agreement against SeaDragon, the cost of which could also have to be met by Lloyds TSB.

The topside of the rig, being built at the Haverton Hill shipyard, Teesside, is already a quarter complete.

The hull was due to be delivered in January, when the contract was pulled, and is now understood to be on its way to Singapore.

Lloyds TSB said it could not comment on individual commercial decisions.

But last night, Paul Kenny, GMB union general secretary, said he would join with TTR in pressing for an investigation.

He said: “This beggars belief.

I can scarcely believe this.

This project could have been carried out in the North-East.

“There is no reason why it could not have been, but millions of pounds of taxpayers’ money are now being used to finance this in Singapore.

“This is absolutely scandalous.

“I will be getting in touch with GMB and MPs to raise this matter in Parliament so we can try and get something done about this absolute scandal.”

Susie Squire, campaign manager with the Taxpayers’ Alliance, said: “Despite being majority public owned, Lloyds TSB simply is not doing what is right for Britain and its taxpayers.

“The bottom line is not only are they not creating muchneeded jobs in the North-East, they are paying much more money for this project elsewhere.

“This cannot be right.”

As well as the potential for 1,000 North-East jobs being lost through the SeaDragon contract being pulled, TAG members have also suffered as a knock-on effect.

Darlington-based Cleveland Bridge, which had invested about £18m in the project, was forced to make 140 redundancies as a result of the termination of the project.

To try to preserve its future, the company joined with Mc- Nulty Offshore to form TTR, which put a bid together in two weeks to rival SeaDragon’s preferred option of moving the project to Singapore.

The Northern Echo exclusively revealed, only five days before the bid was officially rejected, how the executive chairman of SeaDragon had circulated an email around his fellow board members recommending the proposal be turned down – but sent it in error to Mr Dale.