by EWAN LAMB
The unresolved mystery surrounding the decision by Borders councillors to sign a £86 million contract with a company whose energy from waste technology was not commercially viable has taken a new twist with confirmation that the only plant using the unproven form of conversion has been sold off by its owners to stem their growing financial losses.
Earlier this year Scottish Borders Council abandoned their "ground-breaking" deal with New Earth Solutions (NES), including the proposal to construct a waste treatment plant at Easter Langlee, Galashiels which was designed to divert 80% of household refuse from expensive and environmentally damaging landfill.
The willingness of SBC to act as guinea pigs for the "pioneering" NEAT technology resulted in the loss of millions of pounds of public money which was written off without any detailed explanation after the local authority severed its links with NES. Taxpayers were merely told there had been technological and funding issues which could not be overcome.
According to correspondence seen by Not Just Sheep & Rugby senior officers at SBC recommended termination of the contract because while the technology intended for use at Easter Langlee had been developed, tested and evaluated by NES, it had not proved to be commercially viable or to work effectively. It was also claimed that NES had been unable to attract a financial backer for the Borders project after councillors decided to amend the deal to incorporate the unproven conversion methods.
As reported here previously, a 16-member delegation from SBC which visited the NES waste treatment complex at Avonmouth, Bristol in October 2014 were totally convinced that the technology's performance and potential would make the Borders the leading waste disposal authority in Scotland.
We now understand that the directors of the Isle of Man based Premier Group, which controls the various NES entities, have concluded the de-merger and sale of the stand-alone energy business at Avonmouth on which the Borders plant was to have been modelled.
Shareholders and investors will be given detailed information concerning the sale "imminently", but Premier Group has already warned the sale to an Australian bank and an as yet unnamed institution will result in a loss for those involved.
In a recent communication, Premier stated:"In April, New Earth engaged an external engineering consultancy to
carry out a further technical and financial review on the future
potential for the ERF plant [Avonmouth]. Unfortunately, the level of performance has consistently fallen well short of targeted levels. The programme of
works communicated in March, whilst undertaken, has proven to be
unsuccessful. Operational, manpower, maintenance and repair costs have
consistently proved to be much higher than originally planned.
"The consequence of this review is that further essential and
significant capital expenditure has been identified in order to
potentially improve the plant’s performance. Based on history, this programme will still carry substantial technical risk. In addition, the continued underperformance of ERF still
requires further working capital to support operational losses until
capital modifications are made over the next 18 months."
Premier's New Earth infrastructure fund was named by SBC as the financial backer for the original Mechanical Biological Treatment (MBT) plant at Galashiels, a project which would have been up and running in 2012 had councillors not insisted in meddling with the arrangements in a bid to be 'pioneers'.
As a result, SBC has faced landfill tax costs of £2.32 million in 2011/12, £2.65 million in 2012/13, £2.95 million in 2013/14, and "approximately" £2.5 million in 2014/15, according to a response to a question posed at this week's council meeting. The MBT could have cut those sums by up to 80%. In cash terms...well you do-the-math!
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