Killybegs supertrawler owner Mr Kevin McHugh has angered Donegal's mackerel fleet owners who believe he is taking advantage of his dominant market position after the Atlantic Dawn deal.

Owners of up to 12 new pelagic (mackerel/herring) vessels who hoped to buy tonnage from Mr McHugh under fleet size regulations have been told that the price has risen to €10,000 a tonne from €6,850.

But Mr McHugh told The Irish Times that "no final decision" had been made on price and attributed the development to the impact of the Government's new licensing policy which seemed to have deprived him of almost 1,000 tonnes. Mr McHugh said he was seeking an early meeting with Marine officials on the policy.

Mr McHugh is the only Irish vessel owner with pelagic tonnage to sell as a result of the EU/Government deal which allowed the 144-metre €63 million Atlantic Dawn onto the EU and Irish register. The tonnage has no kilowatts or engine power attached to it, but is required for vessel owners seeking to rebuild or modernise vessels under EU/Irish licensing arrangements.

The Atlantic Dawn deal was concluded by the Government with the EU on Mr McHugh's behalf in early 2002, some 18 months after an appeal to the EU Agriculture and Fisheries Commissioner, Dr Franz Fischler, by the Taoiseach, Mr Ahern, and the then Minister for the Marine, Mr Fahey. As part of the arrangement Mr McHugh agreed to take his second supertrawler, Veronica, off the EU register.

But he was allowed to retain the 5,200 tonnes attached to the Veronica on the understanding that this would be sold to regulate any over-capacity in the Irish pelagic sector.

Mr McHugh was originally understood to be seeking up to €12,000 a tonne, but a verbal agreement with the Killybegs Fishermen's Organisation(KFO) fixed a price of €6,850 a tonne. Mr McHugh's firm would then have netted more than €35 million. But a new licensing policy from Minister for the Marine Mr Ahern last month appears to have recalculated the Veronica gross tonnage at 4,400 tonnes, rather than 5,200 tonnes.

Owners of up to 12 new pelagic vessels have been told the Veronica tonnage price has risen to €10,000 a tonne - and had to be bought before end November to avoid further increase. It is understood several purchasers are committed to buying at least 40 per cent of the Veronica tonnage, but there is anger over the price hike.

The KFO declined to comment but industry sources said Mr McHugh was abusing a dominant market position. "He broke all the rules by building the Atlantic Dawn in the first place when EU restrictions were being imposed. He gets EU and Government sanction, he gets to fish in Irish waters, and he now stands to gain financially - and wants as much as he can get," one source said.

The licensing policy aims to satisfy EU requirements on fleet size and capacity, and depoliticise the vessel licensing procedure by removing responsibility for it from the Minister. A spokesman for the Minister said Mr McHugh could make his case before an appeals procedure under the legislation setting up the new authority, but there was "no question of [him] meeting the Minister" on the issue.

The new policy has been broadly welcomed by sections of the industry, but two fishermen in the south-west who had ordered new multi-purpose vessels valued at €16 million in total are not covered. As a result, their representative organisation, the Irish South and West Fishermen's Organisation (IS&WFO) is seeking legal advice.

The KFO is also seeking legal advice on the policy, but for different reasons. The licensing policy seeks to deal with some seven pelagic vessels in the north-west which had been given short-term licences due to tonnage over-capacity. The KFO maintains this is essential safety tonnage and should not need equivalent replacement. But the policy will require these owners to produce polyvalent or whitefish tonnage as replacement, at a ratio of 2.2:1.

This will mean a significant cash transfer from the wealthy pelagic sector to the struggling whitefish sector, and is perceived as a form of unofficial decommissioning. Ironically, the price of whitefish tonnage has already increased from €3,500 a tonne to €4,500 a tonne. Industry sources say the value has been set by Mr McHugh's price on comparative pelagic tonnage.