Work on the project at the Outer Hebrides’ main port is expected to start in the coming weeks. Initial work to develop the new facility will include piling activity, blasting of 750,000 tonnes of rock and dredging.

The terminal will provide facilities for a variety of sectors, including the energy and transport industries, and its design will enable it to be adapted for a wide range of future uses.

As well as being able to accommodate on and offshore wind farm vessels and support other energy-sector activity, its main berth will be suitable for the largest cruise liners, which will help boost the islands’ tourism industry.

Development of the terminal will also increase the capabilities and flexibility of the Arnish fabrication yard at Stornoway.

Stornoway Port Authority has worked closely with the Scottish government, the Scottish Futures Trust (SFT), Highlands and Islands Enterprise (HIE), and Comhairle Nan Eilean Siar (CnES) over the past four years to advance the project.

Deputy first minister John Swinney: “The development of the Stornoway Deep Water Terminal will be a game changer for the local economy and for Scotland’s aspirations to grow our renewables and cruise sectors. The Scottish government has long been supportive of this project, which will create jobs and multiple economic benefits for the Hebrides. The terminal is a key element of the Islands Growth Deal and will enable cruise traffic and expansion of the offshore renewables supply chain in the wake of the ScotWind offshore wind leasing round, as well as providing infrastructure for a range of other potential activities. As chair of the Stornoway Deep Water Terminal Advisory Board I am pleased to see work now getting under way and this important project taking a significant step forward.”

David McIntosh, associate director at the SFT, added: “We have supported Stornoway Port Authority and the Scottish government in the innovative funding mechanism for this flagship project where our infrastructure expertise and economic advice has helped unlock substantial inclusive economic growth.”

Stornoway Port Authority chair, Murdo Murray, said the signing of this contract signalled the imminent start of “an historic project which has the potential to truly transform the economy of the Outer Hebrides”. He added: “The Deep Water Terminal will open a new gateway to the islands for a wide range of sectors and become a catalyst for significant further development here. It is already attracting high levels of interest from potential customers. A huge amount of work has already gone into turning this vital development into a reality and we are very grateful to all our partners for their continuing support. McLaughlin and Harvey are highly experienced in this kind of work and we look forward to working with them on this project. The award coincides with my retirement after 10 years as a board member and I cannot imagine a more satisfying end to my time at the Port Authority.”

CnES is providing significant loan funding for the Deep Water Port development. Roddie Mackay, leader of CnES, said: “This is a significant milestone in this major project for the Western Isles and it will be tremendous to see the works progressing. The project has the potential to drive new economic activity, sectoral innovation and the creation of new jobs in Stornoway, Lewis and across the Islands. The Comhairle is delighted to have played a critical role in securing the bulk of funding for the development and looks forward to working with the SPA and other local partners to maximise the economic return for our communities.”

Funding was also secured from regional development agency HIE. Joanna Peteranna, HIE area manager in the Outer Hebrides, said: “The Deep Water Port is an integral part of the Stornoway Port masterplan. It’s a really exciting project that will have positive impacts well beyond Stornoway, helping to diversify and strengthen the wider economy of the Outer Hebrides. The cruise market is one important aspect. However, this investment will also put the port in a strong position to compete for future opportunities in other sectors, including renewable energy fabrication and aquaculture. When all these elements are taken together, we believe this has the potential to be a genuinely transformational project for the islands.”

McLaughlin & Harvey contracts director (civil engineering) John Mariner said: “McLaughlin & Harvey is delighted to have been selected by Stornoway Port Authority to deliver the construction of the new Deep Water Terminal at Stornoway. We bring the experience from our ever-expanding expertise in marine works and look forward to commencing works in the near future.”

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