The owner of a stricken Italian cruise ship towed to the Seychelles after a fire on board knocked out its engines and power said passengers would be fully refunded and compensated.

Costa Cruises said in a statement that around 70 per cent of the 627 passengers on board had taken up its offer to continue their holiday in the Seychelles for one or two weeks in hotels on some of the archipelago’s islands.

All the passengers will get their ticket, travel costs and on board expenses refunded and will receive “an indemnity equivalent to the amount of the fare paid for the cruise and associated travel expenses”, Costa Cruises said.

The 30 per cent who are not staying on will also receive a voucher for the same value as their unfinished cruise for a free trip on any Costa cruise.

Costa Cruises thanked the captain of the Costa Allegra, Nicolo Alba, as well as the crew of the French deep sea fishing boat Trevignon that towed the luxury ship to safety through pirate-infested waters of the Indian Ocean.