Wednesday, 18 November 2015

"Revolutionary" energy-from-waste plant lost £37 million in a year


The latest financial performance of the 'pioneering' energy from waste plant seen as the template for an identical facility at Easter Langlee on the outskirts of Galashiels may prove to be extremely embarrassing for senior elected members and leading officers at Scottish Borders Council.

A set of seemingly devastating accounts, newly published by the owners of the thermal treatment plant at Avonmouth, near Bristol, shows a staggering operational loss of more than £37.8 million in 2014/15 compared to a deficit of £645,000 in the previous accounting period. The plant now has financial liabilities totalling £59.2 million, up from £51.5 million in 2014.

The multi-million pound losses - largely due to defective technology which has still not been rectified - were being clocked up before, during and after a sizable delegation from the Borders local authority toured the Avonmouth site last October and returned highly impressed by what they saw.

However, SBC has rejected Freedom of Information requests for details of the visit and for copies of documents and minutes of meetings related to the two-day trip, claiming the information is exempt because it is classed as "commercially sensitive". It now seems clear the journey south to carry out "due diligence" completely failed to detect a raft of technical shortcomings and heavy financial losses being experienced at Avonmouth.

As far back as 2012, Borders councillors unanimously approved proposals for an Avonmouth-style  Energy From Waste (ERF) facility to handle up to 60,000 tonnes of local household waste each year even though the technological processes being experimented with were not ready to be marketed.

And in February this year more than £2 million of council taxpayers' money had to be written off (without any detailed explanation) when the council suddenly abandoned the disastrous contract with waste management company New Earth Solutions (NES). Many calls for an investigation and full disclosure have gone unheeded.

Since the contract's termination NES has offloaded the poorly performing plant in south-west England to a consortium led by an Australian bank, Avonmouth's main financial backer with a £20 million stake in the ERF. The deal, concluded in July, did not involve any money changing hands.

The newly published accounts confirms that the technology which SBC signed up for three years ago is still not fully developed.

The report says: "It is the opinion of the Directors that the plant remains within an extended commissioning and developmental stage, being a revolutionary design for generating energy from waste material.

"A sustained programme of capital expenditure has been developed which is targeted at eliminating weaknesses in the current operational performance, improving plant availability that will deliver a substantially improved financial performance from the end of 2015".

That statement provides further damning evidence that SBC failed to take adequate precautions in 2012 before deciding to gamble on a similar solution for the Borders' considerable waste disposal issues. There is an overwhelming public interest argument for all documents and correspondence surrounding that multi-million pound gamble to be released for public consumption.

New Earth Energy (West) Operations Ltd, the former operators of the Avonmouth plant, have been replaced by a new company called Avonmouth Bio Power Energy Ltd complete with an entirely new board, including representatives from the Australian Bank.

The recently installed directors explain that until recently the vast majority of UK generated Refuse Derived Fuel (RDF) has been exported, generally to the EU. Their report continues: "However, this practice is coming under increasing scrutiny where the costs and environmental impact of transporting waste combined with the risks associated with storage and transport mean there is increasing focus on retaining RDF for the domestic market".

So how does that declaration fit with New Earth Solutions' message to shareholders and investors only last month?

According to directors of the Premier New Earth fund which was supposed to but could not come up with the money for the Borders project: "Changes to the European RDF export market suggest that a major opportunity was developing in those markets which would enable New Earth to refocus as a waste only, major RDF exporter.

"The combination of high recycling rates and significant waste to energy capacity in Northern Europe has led to a structural shortage of RDF supply, which in turn has led to a significant demand for RDF from the UK in the last three years".

And these were the organisations selected by SBC to run the region's crucial waste management services for 22 years. It seems the move to cancel the contract only four years in is one of the very few decisions the council got right throughout the entire six year saga.

Surely the Borders public has a right to know how and why their money was squandered on a catastrophic liaison with firms which could not deliver financially or technically.

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