Thursday, 30 July 2015

Fall out from Avonmouth fire sale


The controllers of the offshore fund which would have financed a "state of the art" waste treatment plant for the Borders are refusing to release details of the numerous technical issues which have forced them to sell off the £60 million prototype for the Galashiels facility.

Earlier this week Not Just Sheep & Rugby revealed that New Earth Solutions had failed to solve a range of technological problems at their Avonmouth ERF (Energy Recovery Facility) near Bristol - problems which do not appear to have bothered Scottish Borders Council whose members signed a multi-million deal for an identical project long before the "groundbreaking" incinerator was even operational.

Angry investors from all over the world who lodged many millions of pounds in the Isle of Man-based New Earth Premier Fund are now attempting to recover their cash as the Group negotiates the sale of the troubled Avonmouth plant to an Australian bank and an anonymous institution. Shareholders and investors have been warned the terms of any sale are likely to be unfavourable.

The continuing poor performance of Avonmouth ERF and the need for further significant capital expenditure which still carries significant risk as to its ultimate success, according to Premier director Michael Richardson.

An agent campaigning for overseas investors told us: "Given that Borders councillors unanimously ripped up New Earth's 24-year contract on February 19th 2015, it seems to me that the Borders' termination precipitated the Fund's suspension in a matter of days."

Asked how much the SBC/NES fiasco might have cost, he said: "The council fesses up to £2.4 million of which at least £2 million is to be written off without investigation. For New Earth 'a significant sum - significant enough to generate suspension of the Fund. But I doubt we'll ever know the true cost."

He said although he was unimpressed with Premier's track record of suspended funds, it was his opinion that the burden of responsibility for the investors' problems lay with Scottish Borders Council and not Premier/New Earth.

"The original 2011 contract was for the construction of a mechanical biological treatment (MBT) facility to pre-treat Borders domestic and residual waste - a proven process. However, the contract was amended the following year to include combined heat and energy recovery involving construction of a gasification facility.

"At the time the gasification process was operational on a small scale but nowhere near proven on a commercial scale. I can imagine that New Earth would have taken on the technological challenge with explicit caveats, not wishing to scupper things at that point.

"What I find difficult to understand is why the council was so keen to force the time frame to include the second stage technology which was still in development. Where are the minutes of the various meetings relating to all of this? The taxpayer deserves to know."

Premier Group was asked how much money from the fund had been used to unsuccessfully tackle the problems at Avonmouth, what was the nature of the technological issues and how much New Earth expected to receive from the sale of the failing plant.

The response was less than useful. They said: "The group of companies have decided that specific information on the finances of the businesses is commercially sensitive and not available for release at this stage.

"There have been a variety of technical issues but essentially the technology is not performing as intended and significant additional working capital is essential in order to improve the levels of electricity generation, while also supporting operational losses."

Yet this vastly expensive assemblage of "cutting edge" technology which clearly is not and has not been functioning properly from day one was deemed to be worth a gamble by Borders councillors who planned to use millions of pounds of taxpayers' money on a virtually identical project at Easter Langlee. It should be remembered that this revolutionary incinerator was meant to provide a reliable source of heat and power for hundreds of homes and businesses in Galashiels. It looks as though local residents had a lucky escape!

Premier Group added: "There is no benefit in providing detail of the numerous technical issues (at Avonmouth) as these are based on high-level engineering terms and would not necessarily be useful.

"The negotiations for the sale of the energy business are at an advanced stage; specific details on the transaction will be released once concluded so we cannot release the name of the institution due to reasons of confidentiality at this stage".

It seems New Earth are keeping as tight lipped as SBC, their former partners in a misadventure with worldwide repercussions.

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