Leaked document sheds new light on Borders waste disaster

EXCLUSIVE by DOUGLAS SHEPHERD

The £14 million waste treatment facility which Scottish Borders Council intended building at Galashiels had encountered significant funding issues only nine months after the original contract was signed, according to a leaked confidential document.

Contents of a private minute from a full council meeting in October 2012 have been mailed anonymously to Bill Chisholm, the retired Borders journalist who has been investigating the loss of £2.4 million resulting from the local authority's disastrous liaison with waste management 'specialists' New Earth Solutions.

It seems the unauthorised leak is designed to show the council in a good light as selected passages from the minute are highlighted with a marker pen. But Borders taxpayers who are picking up the tab for the unmitigated failure by their elected representatives may be more interested in the story the two-page document has to tell.

Apparently the decision to abandon the project in February 2015 and tear up the £65 million 24-year contract with NES was only taken after a three-year period in which the two parties to the deal were desperately trying to attract and pin down a financial backer.

The contents of the secret minute are crucial in the entire saga as they reveal why councillors sanctioned a so-called Deed of Variation in the contract to include a form of incineration known as Advanced Thermal Technology (ATT) capable of generating heat and power, as well as a conventional Mechanical Biological Treatment (MBT) facility - as originally envisaged - at Easter Langlee.

It is now clear that SBC had to tweak the terms of their waste management contract solely for the benefit of a private company which simply could not come up with the cash to develop a vital environmental facility for the Scottish Borders. But should NES have been given a three-year breathing space or would it have been better for all concerned if the council had taken a hard line and kicked the contract into touch in 2012?

Efforts to uncover detailed reasons for the failure of the entire project have been ongoing for more than 12 months with SBC steadfastly refusing to release any significant information via the Freedom of Information route. The council maintains its dealings with NES - the company has also refused to comment when asked questions - must remain confidential until 2021 thanks to a special clause in their discredited and now defunct contract.

The loss of millions of pounds of public money, spent by SBC on costly consultants, high earning lawyers and other expensive specialist companies seems to be a matter of no consequence to Audit Scotland, the public expenditure watchdog, which has declined to conduct an investigation into the fiasco.

The leaked minute is based on a detailed report to councillors dated 25 October 2012, and which was compiled by Director of Environment & Infrastructure Rob Dickson. But the report itself remains confidential.

A previous report, also considered by the full council in private on 24 March 2011, resulted in elected members approving proposals for the MBT facility which was designed to divert 80% of Borders rubbish from landfill by transforming the garbage into a compost-like material. This tried and tested form of treatment has already been deployed successfully in many parts of the United Kingdom.

The 2011 document identifies the financial backer for the Borders project as New Earth Recycling & Renewables (Infrastructure) PLC, (NERR) a fund controlled and administered off-shore by Premier Group (Isle of Man) which in turn had links to a company in the British Virgin Islands. At that stage all of the arrangements for the MBT were in place with construction work due to commence later in the year.

But the October 2012 council record reveals: "The report[from Mr. Dickson] outlined the background to the contract and advised that New Earth Solutions had indicated in January 2012 that a MBT facility from service commencement without ATT meant that the project could no longer get bank funding and therefore to allow project delivery the existing contract required to be changed".

It is surely vital to know whether councillors were made aware of the funding crisis in January 2012 or whether they were kept in the dark for ten months until the October meeting.

The next section of the leaked minute reads: "The project team had been negotiating a solution to resolve this situation with NES since 12 January 2012. It was believed that a best value agreement had now been reached whereby NES would now deliver Mechanical Treatment and Advanced Thermal Treatment (integrated facility) from service commencement.

"There was no additional revenue cost associated with this proposed Deed of Variation, but timescales were elongated and the capital programme associated with the project required to be re-phased".

However, there is no indication given in the minute as to why the funding from NERR was no longer available for a MBT-only development.

A specialist contacted by Not Just Sheep & Rugby commented: " It is ironic that NERR, who only lend to New Earth projects and technology, would not fund an MBT only project when they do this all the time with other NES facilities."

And despite the radical contract amendment nodded through by councillors there was still no guarantee of funding without further changes to the deal.

For the minute states: "New Earth Solutions believed that these contract amendments would allow the contract to reach financial close for the delivery of the MBT and ATT facility, but funders still needed to complete their due diligence review of the existing contract and these proposed changes, so further contract changes might be required."

The report to councillors went on: "The proposed changes to the project still represented best value for the council to meet the legislative and financial drivers. The new integrated facility would actually deliver added benefits and reduce risk to the council".

Again, the minute does not go into detail about these alleged benefits. It has been suggested  that such a radical change to the contract means consideration should have been given to going back to square one and inviting fresh tenders for the project.

The very informative minute claims the delay in delivery of the new Borders waste facility actually benefitted the council as there was no increase to operational costs and delivery coincided closer to the point at which it became cheaper to treat waste than landfilling it [2017/18].

One of the innovations among many, which elected members believed would turn Scottish Borders Council into national leaders in the waste management sector. was the fact that the incinerator would produce heat and power for a district heating scheme in and around Galashiels. The formation of a business reveling in the name Scottish Borders District Heating Company Ltd in April 2013 was to have been the vehicle to bring cheap energy to hundreds of homes, public buildings and commercial premises.

But in October 2012, six months before the new company was launched, the SBC minute records: "Members noted that there were no arrangements for any housing developer to use the heat produced by the new facility and asked that they be kept updated on any developments in this area".

Not Just Sheep & Rugby can update councillors on that aspect of their botched waste strategy. Scottish Borders District Heating Company Ltd. is currently in the process of being struck off the Register of Companies never having traded. The total value of the company was £100, and all of the shares were owned by New Earth Solutions Group.