Tuesday, 26 July 2016

A desperate throw of the dice


Details of a desperate ploy by contractors commissioned to build a £21 million waste management centre for Scottish Borders Council which would have involved transporting all of the region's household refuse to facilities in North-east England for treatment are outlined in documents newly released under Freedom of Information.

It has also been disclosed that because so-called gas-to-engine technology, which councillors sanctioned for the plant in 2012 before it had even proved itself commercially, was proving so risky to potential project funders in 2014 that a switch to a steam-based system for converting garbage to energy was suggested as a last-ditch way of salvaging the crumbling venture.

In this chapter of the unmitigated tragedy for Borders taxpayers we deal with the remaining months of a contract moratorium, waved through by elected members so that their useless contractors New Earth Solutions Group [NESG] could continue to address long-term technological and financial issues which had dogged the Easter Langlee scheme from the outset.

Exchanges of emails between NESG, now being dissolved with debts estimated at £159 million, the council, and its legal advisers Brodies WS reveal the strained nature of the relationship between the parties during July and August 2014. Yet it would be another six months before the catastrophic contract was ripped up and the entire idea of building the treatment centre abandoned. SBC's recklessness and poor decision making cost millions of pounds.

A censored email from SBC Major Projects to NESG dated July 24 2014 warns: "The lack of information that is being provided by NES in relation to progress with the future funding of the Easter Langlee project and the role that NERR (Isle of Man-based New Earth Recycling & Renewables Fund) will play within the future project is concerning.

"We are five months into the moratorium process and no demonstrable progress has been made with this fundamental part of the moratorium".

However, it has since transpired that NERR was incapable of funding the job by that stage as the Fund's directors had suspended its activities months earlier with NESG owing NERR £102 million.

The council's strident message to New Earth management continues: "Without an evidence trail to support the work you are undertaking it is putting the project team in a very difficult position when briefing senior officers and members. It is essential that you are able to demonstrate work undertaken and a clear set of proposals for next steps at the meeting on August 22.

"It was extremely disappointing and a surprise to learn today that despite confirmation by NES on 23/5/2014 that the gasifier order would be committed to by NES (to allow the gasifier to be built by mid-August 2014) the order has not been placed and you are unable to confirm when the order will be placed.

"This decision by NES puts at risk the current operating permit process, as it has been indicated previously by SEPA that they will no longer elongate permit application processes, and it means that NES will almost certainly not be able to meet the outputs of the moratorium programme".

There had been ample evidence in other private correspondence between the parties that NES and its "funder" NERR were stringing SBC along even though the gasifier and pyrolysis technology planned for use at Galashiels remained unfit for purpose. With every day the contract remained in place the directors of NERR were able to continue collecting fees for promoting and administering the suspended Fund.

NES would spin another book of fables in a response to the council marked CONFIDENTIAL & COMMERCIALLY SENSITIVE on August 6 2014.

According to the near insolvent contractors: "The senior debt provider wants to invest directly at the start of our next projects. Scottish Borders has featured prominently in this conversation. However the existing funder would probably expect that the solution is a steam-based energy project as they have now got themselves comfortable with the proven nature of this technology.

"We now consider a steam-based project to be financially viable. The NES Group team are doing a review of the viability of delivering a steam solution to Scottish Borders".

Up to that point the gas-to-engine technology was preferred for the project although it had been continually misfiring and under-performing at a research and development site in the south of England.

A switch to steam at this late state in the day would have involved a further contract variation. But councillors had already shown their willingness to change horses in midstream in October 2012, abandoning a highly efficient conventional facility capable of diverting 80% of waste from landfill in favour of a total gamble with a form of treatment which did not work. It proved to be a fatal error of judgement.

This latest wheeze from NES even came with a sweetener in a bid to persuade the local authority to plump for the steam option.

NES wrote: "In recognition that the project has been delayed, NESG is currently reviewing the availability of emerging treatment capacity in North-east England. This could result in NES offering the council an interim treatment solution for all or part of its residual waste which could be transferred from the council's transfer stations to a third party treatment facility".

This latest special offer drew the following response on August 13 2014 from Edinburgh law firm Brodies - paid more than £670,000 by SBC for advice during the lifetime of the contract: "It is another matter, of course, whether whatever might be offered would save costs to the council in the interim compared to continuing disposal to landfill.

"We should be mindful that the purpose of the moratorium is to see if a clear way forward can be found for the final waste treatment solution. So we might not wish to pursue any interim solution unless and until satisfied following the moratorium that the final residual waste treatment solution is judged to be technically viable, fundable and likely to be implemented within a satisfactory timescale".

Two months after that was written a delegation from SBC returned from a two-day jaunt to the NES plant near Bristol convinced they were still on the right track after a "valuable and illuminating trip".

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