Sunday, 27 August 2017

A strong case for the prosecution

DOUGLAS SHEPHERD examines the evidence in the Easter Langlee debacle

The completion of a two-and-a-half year investigation into the failed Scottish Borders waste treatment project has uncovered sufficient evidence to make a charge of gross maladministration stick against those in charge of the contract.

That is Not Just Sheep & Rugby's conclusion based on the contents of dozens of documents which had to be prised out of secret files at Scottish Borders Council via Freedom of Information requests and on the instructions of the Scottish Information Commissioner.

The refusal to accede to requests for information was maintained steadfastly on grounds of "commercial confidentiality" even after debt-ridden contractors New Earth Solutions [NES] collapsed into administration and its offshore funding partner New Earth Recycling & Renewables (NERR) fund was discovered to be insolvent. We maintain SBC indulged in a cover-up in a bid to protect themselves from scrutiny and embarrassment, not to mention responsibility.

It is impossible to mount a defence for SBC as the local authority has maintained a stony silence ever since they were forced to abandon their deeply flawed deal with NES in February 2015 at a cost of at least £2.4 million to council taxpayers.

Not a single elected member has offered a plausible explanation or offered an apology for the collapse of a £23 million construction project which left the Borders waste management strategy in complete disarray.

Now a second planning application has been lodged for the development of a £4 million waste transfer station [WST] on the former New Earth site where refuse collections can be centralised before being carted by road to a destination outwith the area for treatment. The first attempt by Borders council officials to secure permission was thwarted by er Borders councillors!

There is so much damning evidence now in the public domain that it is difficult to outline its impact within the confines of a single article. But here are the main revelations and questions which now hang over the SBC/NES contract:

*Apart from rubber stamping the original contract with NES in 2011 and nodding through a disastrous amendment to the deal in October 2012 there is no evidence of control or even involvement by elected councillors who were responsible for planned expenditure of £23 million at Easter Langlee. What was their actual role? The absence of written records suggests they left matters entirely in the hands of paid officials and extremely costly consultants.

* Had the contract not been varied the Borders should have had a conventional treatment plant capable of diverting 80% of waste from landfill up and running by 2013. Our region ended up with nothing with an end to landfill looming large.

*Councillors agreed in private in 2012 to include Advanced Thermal Treatment – a form of gas-engine incineration – in the project to convert refuse into electricity. Unfortunately the so-called NEAT technology had never been proven commercially at any location, and it never worked.

*NES told SBC at different stages of their relationship that funding for Easter Langlee would come from the firm’s offshore partners, then from one of eight named banks, and latterly from New York. Despite the string of promises and excuses, money for the plant was never in place.

*In late 2013 the NEAT research and development trials were going so badly that New Earth warned of a further two-year delay, taking completion to (hopefully) July 2017. Why did councillors not step in at that stage and order the contract to be abandoned forthwith instead of allowing the farce to continue for another 15 months at great public cost?

*At this point New Earth directors suggested abandoning the gas option and replacing it with a brand of steam technology. But to be viable the re-designed plant would require a 70,000 tonne capacity rather than the 40,000 tonne plant needed to deal with Borders waste. The answer would be to import garbage from other parts of the country.

*In a desperate bid to keep the project alive, NES proposed in 2014 that until the Galashiels centre was completed all of the rubbish from the Scottish Borders should be transported out of the region in fleets of lorries for treatment somewhere in North-east England. Ironically, that is the only environmentally unfriendly solution left to the council in 2017 as a direct result of catastrophic mismanagement of the contract.

*A large delegation of councillors and officials returned from a 'fact finding mission’ to south-west England in October 2014 and confirmed their waste treatment solution was on track and would be an asset to the Scottish Borders. But behind the scenes the project was on the verge of collapse, and four months later it had to be abandoned.

Despite all of these hard facts Scotland's public spending 'watchdog' Audit Scotland has stated repeatedly there was/is no need for an investigation into this mess of SBC's making. Apparently the council pulled the plug at the right time otherwise even more of our cash would have disappeared down a proverbial black hole.

Audit Scotland did concede the loss of £2.4 million was a "poor outcome" for the council. No it wasn't. It was a very poor outcome for taxpayers, but SBC simply wrote off the money and carried on as though nothing had happened.

We rest our case....

Friday, 25 August 2017

Running out of options and still no cash!

EWAN LAMB closes the lid on our damning expose of Borders waste contract

Waste management "specialists" New Earth Solutions did everything they could to keep their multi-million pound contract with Scottish Borders Council alive and kicking throughout 2014 even though the project had been suffering from dead duck syndrome long before that.

As we reported previously, the latest wheeze was a suggested switch from gas engine to steam technology which would fire the incinerators at Easter Langlee and deal with the region's 40,000 tonnes of municipal rubbish.

But unfortunately, to render the steam option viable the plant would require up to 70,000 tonnes of garbage, generating a need to import vast quantities of waste from outwith SBC's territory.

Meanwhile the ingenious head honchos at NESG were offering to export all of the Borders rubbish by road for treatment elsewhere until Easter Langlee was commissioned - hopefully although not definitely in 2017.

The evidence contained in recently released "secret" files from the vaults at SBC suggests an air of growing desperation and a clutching at straws mentality as the gas-based NEAT technology continued to misbehave and the only way of securing £23 million to build the Borders plant appeared to be via the National Lottery or the Euro Millions!

Here's what one member of the project team had to say about the steam solution and the prospect of taking local rubbish in fleets of lorries for treatment in North-east England:

I note the potential steam solution. A key issue looks as if it may be third party volumes - is it realistic that 70/80k tonnes RDF per annum could be sourced for a plant at Easter Langlee - there surely must be some doubt here.

"The interim residual waste treatment solution is potentially interesting. It is another matter, of course, whether whatever might be offered would save cost to the Council in the interim compared to continuing disposal to landfill. 

"Also, we should be mindful that the purpose of the moratorium (and its hoped-for outcome) is to see if a clear way forward can be found for the final residual waste treatment solution and within what timescale, 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."

But steam treatment for Borders waste was firmly knocked back by SBC's technical consultant who wrote: "In summary, we feel that the adoption of a steam-based solution would be a retrograde step. The steam solution could be costlier, require additional merchant capacity to be affordable, necessitate changes to planning and permitting and would not be capable of retro-fit to gas engines should this be shown to be technically feasible in the future."

There were warnings too that continuing delays could completely derail the council's waste treatment strategy.

A senior officer expressed concern in an email dated August 2014: "Overall, to me, there are positives but we need to be careful that the re-financing news and the possible steam option is not masking the poor performance of Canford (R&D centre for NEAT technology) and NES’ appetite to continuing to pursue gas to engine technology.

"Ultimately we need to bear in mind that we are on a relatively short timeline for delivering a project to meet the first Zero Waste target in 2021, if NES fail to deliver. The latest SBC would need  to start is April 2017. Therefore we need to make sure that between now and October (2014) NES are focusing on a viable option to deliver the project and not stalling for additional time."

The method of paying for the major scheme at Galashiels had also shifted yet again. None of the range of banks and finance houses named in previous correspondence had been persuaded to sign up, and now eyes were turning to bigger fish and across the pond to New York.

An August 2014 email showed just how wide NES were casting their net. In it the managing director himself told SBC: "Pairing up with a larger fund – We are currently speaking to both EY (Ernst & Young) and PWC (Price Waterhouse Cooper) about identifying larger funds who would co-invest alongside NERR to provide finance directly to future NESG projects. This review has identified a number of funding partners and a first line of due diligence is being undertaken to identify the most suitable.

"Funding directly into the project – During the Avonmouth refinancing process the senior debt provider has been asking us if they can now 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 because they have now got themselves comfortable with the proven nature of this technology. 

"We have also now received approaches from a number of other funders who have been watching the operability test and have indicated that they would now be comfortable lending directly into this technology.
Sale of non-core business – In September we are on target to complete the sale of one of our non-core green / food waste processing businesses. This is highly confidential at the moment and we would appreciate you not forwarding this information onto any of your advisers. 

"We will be making a press announcement at the appropriate stage. Some of the proceeds of this will repay the senior debt attached to the contracts, however, the majority will be returned to NERR (the Isle of Man fund which repeatedly failed to come up with cash for Easter Langlee)."

Despite the reticence of their own experts on the issue of a steam system for Easter Langlee, and the complete lack of funding as of August 2014, a delegation of councillors and lead officers from the council returned from a "fact finding mission" to the NES Avonmouth plant two months later declaring their ideal solution for dealing with Borders rubbish was on track.

How wrong could they be?


Thursday, 24 August 2017

The Age of Steam?

DOUG COLLIE reports on a radical move to solve the deepening Borders waste crisis

The repeated failure of the so-called NEAT system of incineration at the research and development stage meant that by early 2014 the planned £23 million waste treatment facility for Scottish Borders to deal with up to 40,000 tonnes of municipal rubbish was already years behind schedule.

A newly released file of around 80 documents linked to the disastrous contract between Scottish Borders Council and waste management company New Earth Solutions Group has provided detailed information concerning the test failures which frustrated the Borders project throughout its existence.

Our recent series of articles has attempted to give readers an idea of how far NESG engineers were from perfecting the Advanced Thermal Treatment (ATT) system which was to be installed in the plant at Easter Langlee, Galashiels.

Yet another failed test is chronicled in a report from July 2014. Those involved in the project had already been given the devastating news of a further two year delay thanks to the technological hitches coupled with a lack of financial backing for the gas-based pyrolysis method of converting refuse into electricity.

The technical report on the July event says: "An extended trial began in the evening of 6th July. Unfortunately the trial had to be stopped in the afternoon of 7th July due to a significant pressure drop across the pyrolyser. Initial investigations suggest that a problem has occurred with the char (ash) extraction.

"The fuel used in the trial was a 60/40 blend of oversize and biofines and the feed rate was 1 tonne/hour. This is a different mix to that previously used but very comparable to the fuel specification for Easter Langlee. It is considered that a greater quantity of char is produced from this fuel specification and coupled with a high feed rate this has led to a build-up of char in the pyrolyser and consequently the pressure drop experienced. Further investigations are being carried out to confirm if this is the case."

A leading member of the project team commented in an email:“This again is worrying.  It has taken 1 year and 8 months since the DoV (the fateful Deed of Variation signed by councillors in October 2012 and implemented in December 2012) to run fuel representative of Easter Langlee and it caused problems!”

However, help was at hand. Within a month NESG, which had provided a long string of reasons and excuses for delays with technology and funding, suddenly came up with another massive contract revision to solve Easter Langlee's woes.

An email from top brass at New Earth HQ to SBC set out the solution in detail. The message explained: "As you are aware the Easter Langlee project has always been based on small scale energy generation using gas to engine technology. 

"With the experience we have gained at Avonmouth (the NESG plant near Bristol) we now consider a steam based project to be potentially viable. In part this has been aided because the original regulatory permit requirements of SEPA preferred a gas to engine solution to a steam solution. During the intervening period SEPA has relaxed these regulations to the point that a steam solution like that in use at Avonmouth appears more possible. To this end, the NESG team are doing a review of the viability of delivering a steam solution to Scottish Borders."

Such a major switch in technology would require a wide-reaching project review, and some of the points for discussion are set out in the document. We reproduce the text in full:

 Scale – Because of the inclusion of the boiler and other ancillary equipment the steam system takes up more space so we need to identify if we can accommodate it / what additional space would be needed and the implications on planning and permitting.

 Affordability – Again because of the boiler the capital cost of this solution is higher. We are looking to see if the solution can be tailored to meet the requirements of the Scottish Borders volumes.

 Third party volumes – It may be that a steam solution is only viable at a minimum of 9-10 units which equates to 70-80 thousand tonnes of RDF per annum (double the volume of rubbish generated in Scottish Borders). 

For this reason we will need to discuss with you any issues arising from bringing other parties material into the site. We also need to understand if this material is available. Clearly if we can provide a steam solution it would enable us to speed up the project because we would no longer be waiting on the Canford R&D development timetable and the funding for this solution would be more readily available.

And with the Borders scheme so far behind schedule, NESG even had a short-term sweetener on offer to deal with household rubbish until the steam engine arrived in the Easter Langlee "siding".

The email continued: " Interim residual waste treatment solution – In recognition that the project has been delayed, NESG is currently reviewing the availability of emerging treatment capacity in the North East of England. 

"This could result in New Earth 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, pending the development of the Easter Langlee treatment facility. Clearly we would appreciate your early feedback to this concept as we understand that you will have engineered void at Easter Langlee landfill and also landfill gas generation income. However, this potential opportunity may offer the Council an interim recycling and landfill diversion benefit."

How ironic: a proposal hatched in 2014 to transport local refuse in fleets of lorries for treatment elsewhere turns out to be the preferred option in 2017...if planning permission can be secured for a waste transfer station on the same site where a conventional treatment facility should have been functioning FOUR years ago. A glittering example of bungling incompetence?


Wednesday, 23 August 2017

Spluttering into 2014...

DOUG COLLIE on yet more setbacks for Easter Langlee

The damning evidence which Scottish Borders Council wanted to keep from public scrutiny shows 2013 had been a veritable annus horribilis for the project team aiming to provide the region with a fit for purpose waste management facility costing £23 million.

Council contractors New Earth Solutions were warning of another two-year delay to the project at Easter Langlee, Galashiels as engineers struggled unsuccessfully to get the chosen gas incineration technology - inappropriately dubbed NEAT - to work. Only Borders councillors had been impressed...they approved the untested system in October 2012.

And newly released files from a debacle which cost taxpayers, shareholders and investors many millions of pounds have revealed that the money needed to build the plant simply had not been sourced.

Not Just Sheep & Rugby has brought much of the evidence from 2013 into the public domain after SBC was ordered to end its concerted attempts to surround their disastrous liaison with NESG with secrecy. But the collection of some 80 reports, emails and other correspondence show progress on Project Easter Langlee would also be non-existent throughout 2014.

One of the litmus tests for the NEAT Advanced Thermal Treatment (ATT) appears to have been to get it to function non-stop for 120 hours at New Earth's R&D centre in Canford, Kent. This would be a watershed if banks and other investors were going to commit.

We have already reported on several failed tests during the course of 2013, and 2014 would prove to be little different. The documentation may be technical but the outcome is there for all to see.

This report followed an attempted 120-hour test in January 2014:

"A 120hr trial began at 9pm Sunday 12th January 2014. The whole system was run – pyrolyser, gas clean-up, engine – and the trial progressed well for 64 hours. Whilst operating, the engine produced c.310KWe. At two points within this 64hr run, operations had to cease (for 14 hours in total) due to failures of ancillary equipment: Diesel burner problems (used to heat the pyrolysis tube). The fuel feed pipeline to the diesel burner was restricting the flow. The pipeline was replaced.

"Unfortunately the trial was stopped after 64 hours due to a pressure drop across the ceramic filter indicating a broken filter element. Investigations confirmed that an element had broken. The cause of the breakage is thought to be differential thermal expansion of the cleaning mechanism (as per previous breakages). This will be remedied through increasing the tolerances further."

The following month's test produced this documentation:

"It was proposed to carry-out a 120hr trial in w/c 17th February. The trial commenced on 18th February and initial progress was good with a consistent fuel gas being produced.
However, the trial had to be halted after seven hours of operation as the gas booster fan tripped.  The plant was shut down in a controlled manner as required to prevent escape of gas and uncontrolled combustion.

"On investigation it was found that the electrical motor for the fan had collected water within the casing.  The site had been experiencing inclement weather for some time and despite the weatherproofing of the fan, rainwater had penetrated the casing. Unfortunately the rain had also penetrated the building containing the combustion chamber and soaked the ceramic fibre insulation which subsequently collapsed into the chamber."

Third time lucky? Not exactly: there were a number of issues to be addressed following a further test in early April 2014:

"On Sunday 6th April a 120hr trial commenced on the plant at Canford. RDF (Refuse Derived Fuel) had been dried prior to this to ensure sufficient fuel was available. The trial was stopped after approximately 36hrs as the pressure drop across the ceramic had increased indicating a breakage of one (or more) of the filter elements. 

"This is being investigated. From an initial review of the data, the syngas quality was as expected and the fuel feed system worked well at a feed rate of c.500kg per hour. Despite the assumed breakage of filter elements, the quench system did not show signs of particulate indicating that there has been no carry-over from the filters. During the trial the char extract system jammed a couple of times due to large foreign objects – temporary fencing clamps, metal wall ties, metal sweet tins, etc. but these were dealt with without interrupting the process. Further upstream removal of metals may be required to alleviate this."

Ceramic filter breakages continued during further trials over the summer.


Tuesday, 22 August 2017

A disturbing new discovery....


An investigation by Not Just Sheep & Rugby has uncovered another mysterious chapter in the story of the Scottish Borders' failed £23 million waste treatment project following the release of 'commercially confidential' files on the orders of the Scottish Information Commissioner.

As we have reported over the last few days, the recently published paperwork showed Scottish Borders Council's deal with waste management contractors New Earth Solutions Group (NESG) was in deep trouble during the second half of 2013.

Project reports and emails from senior officers confirmed troubling issues had been encountered on two fronts - technology and finance.

There was even mention of the scheme to construct an Advanced Thermal Treatment (ATT) facility at Easter Langlee, Galashiels incorporating New Earth's self-styled NEAT technology having to be cancelled altogether.

The development of the NEAT system was proving troublesome while potential funders New Earth Recycling & Renewables Ltd (NERR) - managed by Premier Group (Isle of Man) - could not bridge the cash gap.

As an email written by a project team member warned: "NERR's cash balances stood at £5.484 million on August 20 (2013), down from £7.968 million on July 19 ---- the gap between the cash funds at NERR's disposal and the amount actually required to deliver the (Borders) project (£23 million) has widened over the past month".

By November 2013 NESG had advised there would be another two-year delay at Easter Langlee with construction of the ATT facility unable to start until June 2016.

A 120-hour technology trial of the NEAT system which started on November 17 had to be stopped after just five hours, and the plant had to be shut down to prevent significant damage. This event prompted a council appointed consultant to comment: "This may have been the final incident that convinced NES to come clean and admit that there was no chance of implementing NEAT on a commercial scale in 2014".

However, those engaged in the procurement of Project Easter Langlee appear to have been living in a parallel universe to that inhabited by directors and managers of the NERR fund, and by the top brass at NESG, our investigations have found.

A lengthy press statement issued on the Isle of Man by Premier, and dated November 28 2013, boasted that net assets of NERR "are now around £200 million". But that was not the only claim being made by those at the helm.

According to the news release NEAT was "patented and fully operational", and the company's 'stat-of-the-art' energy recovery facility in Avonmouth, Bristol could process 120,000 tonnes of waste derived fuel each year and exported enough electricity for around 25,000 homes.

The highly positive spin on the performance of NERR and of NEAT was part of a strategy leading to a "possible Initial Public Offering [IPO] on the London stock exchange to support ambitious UK and overseas growth plans".

These must have been staggering claims in light of what was happening with the Scottish Borders venture. But there is no indication that these fanciful plans were challenged or questioned by those in charge at SBC.

 Premier's statement declared: "Launched just over 5 years ago amidst the worst global financial crisis this century, the New Earth fund range have seen strong demand both in the UK and internationally such that net assets of New Earth Renewables & Recycling (Infrastructure) plc, the master holding fund, are now around £200 million.

"The fund’s investors have seen the value of their shares increase by nearly 84% in the original Sterling Sub-Fund of the Premier Investment Opportunities Fund Protected Cell Company plc, with very little volatility along the way, whilst even the more recent investors are looking at good returns over 6 months of nearly +6% in the same share class."

NERR investors were barred from making withdrawals from the fund from 2013 onward and the investment entity became totally insolvent in 2016 with more than 3,200 individuals warned they could expect to lose everything. And in 2013 NESG was already heavily in debt to banks and to NERR itself.

None of that prevented NERR director David Whitaker telling potential investors: "The successful conclusion of this project (IPO) will help New Earth make the step change required to take it on to the next level and, very importantly for the shareholders, should lead to a successful outcome for them too."

And Head of Premier, Mike Richardson provided this quotation:“We are really pleased that New Earth feel that the time is now right to make their move. Given the recent performance of the UK economy and stock markets, including a very successful high profile IPO, we are fully behind the decision and hope it will be as beneficial for investors in the funds as it will be for the New Earth themselves.”

A number of publications appear to have taken company statements at face value, and a clutch of positive articles were published, including a feature in the Financial Times.

Commenting on the future of New Earth to online trade magazine Let's Recycle, company chairman Bill Riddle said: New Earth started life as a composting business but is now firmly focused on residual waste treatment, thermal technology development and renewable energy generation. The NEAT technology offers scope for us to become not just a national company, but an international one."

Unfortunately the Stock Market flotation never happened, the finance to develop Easter Langlee was never in place and the NEAT technology continues to cause problems at Avonmouth to this day.

Monday, 21 August 2017

Not so NEAT: Borders project in intensive care!

DOUGLAS SHEPHERD shows why Scottish Borders Council were so keen to hide evidence...

If the lack of progress on the Scottish Borders' £23 million waste management facility at Galashiels was concerning the group of council staff and their advisers attempting to procure and deliver the scheme then their frustrations must have been magnified many times when the contractors warned of a further two year delay because of serious technical issues.

Newly released top secret documents from the Scottish Borders Council/New Earth Solutions files include stark warnings from consultants in December 2013 that:

*Development of the Easter Langlee Advanced Thermal Treatment [ATT] plant could be cancelled altogether.
* There was a risk that SBC would have no solution for dealing with the region's residual waste.
*New Earth Solutions could have decided to put the Scottish Borders project "on hold".

Our previous revelations have provided strong evidence of the repeated technical issues which were preventing any meaningful progress on the development of the so-called NEAT pyrolysis and gasification system needed to incinerate rubbish in the Borders.

And funding for the multi-million pound Easter Langlee job was dependent on the refinancing of New Earth's recently completed Avonmouth Energy from Waste project near Bristol. That particular plant would develop major problems in the months and years ahead, and it is currently closed down completely to facilitate radical modifications involving major additional investment by new owners.

The 'investment house' regarded as the most likely to bankroll the Borders venture was New Earth's partners New Earth Recycling & Renewables [Infrastructure] Ltd (NERR).

Reports and emails from two firms of consultants working for SBC - Nevin Associates and SLR Consulting - reveal the extent of the growing crisis which was threatening to envelop the project well over a year before SBC decided enough was enough and abandoned the scheme at a cost to local taxpayers of at least £2.4 million.

The SLR report, written after visits to Canford, the New Earth R&D centre in Kent, and to the Scottish Borders, coincided with NES's bombshell letter indicating a potential two years delay to the project whilst a demonstrator facility was built at Canford and was proven, leading to a re-jigged construction programme at Easter Langlee with commissioning now pushed back to July 2017.

The somewhat technical explanation states: "The justification given for the delay is the financing requirement to demonstrate a significant operation through from front-end to final engine exhaust as an integrated facility demonstrating utilisation of heat recovery and efficiencies of operation throughout".

This followed on from an unsuccessful attempt to reinstate a 120-hour testing programme when a new issue was determined and explained as being in connection with over-drying of feedstock and loss of sealing plug in the feed system which in turn led to a safety issue for the process.

According to SLR's expert: "As a part of the justification the implication is that NERR financing is more risk averse due to issues emanating from the Avonmouth facility's failure to meet targets and some scepticism perhaps with regards to anticipated outputs.

"Indirectly it was reported that the facility at Avonmouth operates at up to 75% of targeted performance and perhaps reading between the lines this may also be at the sacrifice of availability although this was not officially confirmed by NES."

SLR's report also reveals that between Oct 2015  and Feb 2016 the revised target was now for 2000 to 4000 operational hours leading to an ability to commit to financial close for the Scottish project in early 2016.  

"It was pointed out that plant operation indicated as July 2017 could jeopardise Renewables Obligation certification and NES indicated that they would look to bring this to March 2017 for operations to commence. Overall the programme seems to be very loose and SLR should question its accuracy and the ability for NES to be able to firmly guarantee anything with respect to meeting the proposed targets – especially in light of an inability to demonstrate 120-hours operation on the simplistic test facility within the past 6 months plus."

NES were unable to provide any confirmation with regards to conditions imposed by their own test facility finance which might be required before their project commencement date of April 2014 although this might link to demonstration of 120 hour test with the current test rig. 

SLR's report concludes: "In summary it is difficult for SLR to understand whether there is a reticence to try to develop because; data attained does not show the process favourably; if operational issues at Avonmouth are taking priority or are showing some fundamental issues with the technology; if the technical team are capable of addressing and managing the problems to an expedient solution."

The bottom line was that NES would not be in a position to commence work on the ATT facility at Easter Langlee until June 2016 although even that date - more than two years behind schedule - appeared optimistic.

In a separate contribution to the debate Nevin Associates wrote: "The 120 hour technology trial for NEAT starting on November 17 stopped after five hours when 'the fuel that forms the plug preventing air ingress into the pyrolysis tube failed, and in order to prevent significant damage to the plant, the plant was shut down.' This may have been the final incident that convinced NES to come clean and admit that there was no chance of implementing NEAT on a commercial scale in 2014 ."

Yet again Not Just Sheep & Rugby believes it must point out that Borders councillors had sanctioned the use of NEAT technology in OCTOBER 2012. It is therefore extremely surprising, and perhaps concerning, that the new files contain not a single contribution from elected members of the local authority.

There is no mention of councillors who should have been supervising planned expenditure of £23 million asking questions about potentially fatal blows for a vitally important environmental facility. If meetings were held and minutes were taken then they certainly have not been produced so we can only conclude they do not exist. 

The public's elected representatives must therefore shoulder responsibility for the decision to allow work on the project to continue unhindered beyond 2013 despite the evidence from documents now publicly available for the first time.

Nevin's report pointed out the revised programme meant that the detailed design of the Canford project would be completed by April 2014, and construction of the Canford demonstration facility would commence in July 2014.

"The facility itself will, on this programme, only become operational in July 2015, and revised schedule for the Easter Langlee facility – i.e. start on site in June 2016 – implicitly assumes that there will be no significant problems at Canford. If there are, then one could anticipate further delays, or even cancellation, of the Easter Langlee ATT facility.

"This could leave us hanging on the outcome of the Canford trials, over which we have no control, and if those were to fail or (more likely) take longer than anticipated to succeed, then we would still potentially be exposed to the risk of having no treatment solution in place for the Council’s residual waste."

In a separate comment, the consultant declared: "The paucity of information on the progress of the project suggests that NES have in effect put the Scottish Borders project on hold,".


Sunday, 20 August 2017

Council "in the dark" over waste project start date


A start date for construction of the £23 million waste treatment facility to deal with household rubbish in the Scottish Borders had still not been fixed some two and a half years after local councillors awarded a potentially lucrative contract to debt-ridden 'specialists' New Earth Solutions.

The uncertainty which prevailed in late 2013 as to when building work would get underway at Easter Langlee, Galashiels is outlined in some detail in reports and emails made public for the first time via Freedom of Information requests.

And while apparently insurmountable issues continued to bedevil technology trials for the so-called NEAT Advanced Thermal Treatment system planned for the Borders site, New Earth bosses were becoming more and more frustrated over the "attitude" of the Scottish Environment Protection Agency [SEPA] towards the granting of an operating certificate for the incinerator.

Not Just Sheep & Rugby has reported in the past on attempts by the contractors to pressurise SEPA into sanctioning the paperwork for Easter Langlee. Now correspondence between NES and Scottish Borders Council confirms SBC was deeply unhappy with the attempts to steamroller the independent Scottish watchdog.

A report from September 2013 which was written by NES sets out their position. It states: "As SBC is aware, we disagree with SEPA in a number of areas relating to their need for certain data in order to process the certificate.  Now we are through the “difficult” part of the project (i.e. the planning application), as discussed at the previous meeting, we may need SBC’s assistance with lobbying through Scottish Government to bring pressure to bear on SEPA. .

"We  met with Zero Waste Scotland (at an event) and expressed frustration with SEPA’s approach and we will be following up on this initial contact."

The council was less than pleased with NES's attempt to hector SEPA. A response made public with the rest of the 2013 file reads: "In relation to your soundings to ZWS  regarding SEPA's performance, can you please refrain from further discussions until the situation has been discussed with the Council. 

"We do not believe that representations to another government body (Quango) on the performance of a regulatory body reflects well on us (NES are effectively representing the Council to deliver the project) and could cause the Council future (wider) issue with SEPA, if they take exception to the complaint route that has been taken.

"As discussed at the last contracts meeting, if NES feel that SEPA's performance needs to be challenged then a meeting is to be convened with the Council to discuss the issue, the risks, the approach and who is best place to take it forward."

The floundering contract was hit by another wave of misfortune the following month, according to a document attributed to a consultant who also had membership of the Easter Langlee project team.

The report makes it clear it appears likely that the start on site for the advanced thermal treatment facility will be later than anticipated, because of delays in technology testing, and the knock-on effect this will have in securing the permit.from SEPA.

"The All Reasonable Endeavours (ARE) report indicates further slippage in technology trials, with the second 120 hour trial delayed until the week commencing October 28th 2013.", added the report.
"From a non-technical viewpoint, one's impression reading the report is that there are still some significant technical issues to be overcome before NES could be confident enough to finalise design of the ATT facility, let alone start building it."
And the consultant added to the growing negativity surrounding the project by writing: "Rather ominously, but not surprisingly in the light of the technology trial delay, page eight of the October ARE states that NES are currently carrying out an internal review of the delivery timetable, and 'then wishes to discuss the timetable with SBC. It is anticipated that additional time will be required to deliver the integrated facility.' .

"So we're still in the dark as to the likely start date on site, or commissioning date for the integrated for treatment facility, although in the October ARE NES state that they are targeting financial close for March 2014, commencing construction in April 2014 and service commencement in July 2015. It is in NES's financial interest to get the facilities up and running as early as possible so that they start becoming cash generative, but on the facts as presented this timetable looks optimistic."

As things turned out the new "timetable" outlined by NES proved to be remarkably optimistic. As we will report next SBC would soon receive a letter from New Earth warning of a potential two year delay to the entire scheme.

However, even faced with that devastating setback there is no evidence in the newly released files that SBC even contemplated pulling the plug on the contract in November 2013.

Saturday, 19 August 2017

Tensions grows as waste project stalls

DOUG COLLIE dissects another batch of damning evidence from council files

The growing sense of frustration among members of Scottish Borders Council's £23 million waste treatment project team following the technological and funding problems encountered during 2013 can be revealed in detail for the first time thanks to the release of highly sensitive documents.

More than two years after the original 2011 deal with waste management contractors New Earth Solutions [NES] the money needed to build the "state of the art" gasification and pyrolysis facility at Easter Langlee, Galashiels had still not been sourced.

And as our series of articles on new material obtained under Freedom of Information shows the so-called NEAT Advanced Thermal Treatment (ATT) incineration system remained a long way from proving itself to be commercially viable despite receiving a green light from Borders councillors.

So far as funding was concerned everything seems to have depended on the successful re-financing of the NES treatment plant at Avonmouth, Bristol so that cash could be returned to NES's offshore investment partner, Isle of Man based New Earth Recycling & Renewables [NERR]. But as we have already reported the re-financing had hit snags and was threatening to derail Easter Langlee completely.

This link between Avonmouth re-financing and Galashiels was highlighted in an email from a senior official at SBC to NES in September 2013.

He wrote: "The (project) Risk Register gives a “1” (very low) risk rating to the possibility of NERR not having sufficient funds to meet the development costs of the project.  Such a low risk rating does not seem to be supported by the evidence provided.

"NERR’s cash balances stood at £5.484 million on August 20th down from £7.968 million on July 19th – i.e. the gap between the cash funds at NERR’s disposal and the amount actually required to deliver the project (£23 million) has widened over the past month.  NES refer to "gross subscriptions of £56.9 million in the last 10 months at a rate of £5.7 million per month", but make no reference to withdrawals from the fund, and hence the rate of net subscriptions, which is the relevant consideration with regard to funding availability for Easter Langlee. 

"The conclusion would seem to be that the Avonmouth refinancing may be crucial to securing the finance for the Scottish Borders project."

Project Easter Langlee was faring no better on the technological front as yet another report demonstrates. Although aspects of the document are technically specific we have deliberately not edited the following passages so that a complete picture can be conveyed to readers.

"The trial was started with a feed rate of 30Hz, but the gas pressure within the drum became unstable and the feed rate was reduced to 15Hz.

"Ceramic filter panel lost power due to heating element shorting causing a protective trip to isolate the panel.  At this point the plant was shut down normally and safely without the cleaning elements operating for 2 minutes whilst the trip was reset.

"The plant was re-started at 15Hz, this was stable and the feed rate was increased to 17.5Hz. Despite the temperatures rising they were still within acceptable limits. The feed rate was increased to 22.5Hz and allowed to stabilize.  At this feed rate the gas pressure fluctuations in the pyrolysis drum were significant.  The flare temperature was also noted to be falling."

Not Just Sheep & Rugby has also decided to publish a commentary on the August/September 2013 technical hitches in full. It was prepared for SBC by a consultant.

It reads as follows: 

"The crux of the matter is that the engines have so far not operated at full capacity, and only time will tell if the engines can indeed operate at 100%.  The engine management system is currently limiting output to 25%, achieving 100% output is a large step up given the issues NES have previously faced. 

"For example, the ARE (All Reasonable Endeavours) report states the purpose of the 120hr run is to confirm the operation of the complete system over a prolonged period of time. The system can currently be run and has successfully been run on 3rd and 4th September 2013.

"However, NES acknowledge that upon examining the data and physical results of the trials to date, areas have been identified that require modification to enable successful long runs to be completed. It should be noted that a specialist engineer from the engine is not available until 1 October 2013 to make the required modifications.  However, there does not appear to be any mention of what this modification is or what it entails.  Are NES in a position to confirm the modifications will allow the engines to operate at 100% for 120 hours?"

So what were the potential implications of these latest setbacks at the company's research and development establishment in faraway Kent?

Another member of the project team pulled no punches when providing his assessment. He wrote:
"Potentially it leaves us in a limbo not knowing exactly what the extent of any delay might be, and  what the operational implications are for the Easter Langlee landfill site or on what basis budgets from 2014/15 onwards should be prepared – i.e. will the Council need to continue to landfill through to mid-2016?

"On the facts as now known, it seems to me quite possible that the technology development may delay commissioning and the start of operations from June 2015 to June 2016; - this may not be a deal breaker, but to keep our own principal properly informed we need to know.

"NES must come clean with us regarding the exact nature of the technological issues that they are seeking to overcome, and a realistic methodology and timetable to address them. I just feel at the moment that we are suffering a little from the "mushroom syndrome", with NES being somewhat disingenuous in seeking to apportion blame for the delay to SEPA [Scottish Environment Protection Agency]. 

"This may be a defensive mechanism on their part, to avoid the risk that we can refer to the legal provisions of the contract to claim damages from them in the event of a significant delay. In which case, a pragmatic way forward might be to assure them that this is not our intention, provided that we are kept fully informed of what progress is being made, and given a realistic date for the commencement and commissioning of the ATT facility."

On this evidence the entire venture was in serious difficulty in September 2013. But the non-productive saga would be allowed to continue consuming public funds for another 17 months before contract termination.


Friday, 18 August 2017

£6 million profit for Borders PPP operators


The Luxembourg controlled partnership which provides services under a Private Public Partnership (PPP) agreement for three Borders secondary schools has achieved operating profits of more than £6 million since the properties in Eyemouth, Duns and Earlston became fully operational in 2009.

Meanwhile Scottish Borders Council, the so-called finance debtors in the controversial 30-year project, currently pays more than £6 million per year in liability and service charges plus £2.6 million in interest in an annual bill for the schools of more than £8.6 million.

According to the local authority's latest set of accounts total payments to be made for the PPP on the three educational establishments will be £238.5 million by 2038. This includes a bill for interest of £34.7 million.

Newly published financial statements covering 2016 for the so-called Scottish Borders Education Partnership [SBEP] - part of the giant Bilfinger Berger organisation - reveal an operating profit of £769,000. SBEP is registered at an address in Maidenhead, Berkshire.

It follows healthy six figure profits for the previous seven years ranging from £619,000 in 2009 to £911,000 in 2014. The yearly surplus averages out at £755,000, and following the 2016 result the overall operating profit breaks the £6 million barrier at £6.041 million.

As the statement explains the principal activity of the company is the provision of operational and maintenance services including "related financial arrangements" for the Borders schools. SBEP will continue to operate the properties for the 30 years covered by the agreement they have with SBC.

The firm is provided with a regular income stream which is subject to deductions for service shortfalls and the unavailability of facilities. Interest on the finance debtor is charged at 5.47%.

According to the report: "Financial penalties are levied by the authority in the event of performance standards not being achieved. In 2016 deductions of £115,000 have been levied (2015 £25,000) representing 3.24% of turnover.

"The project continues to perform generally in line with expectations and management of the scheme both logistically and financially remains under control".

The corporate structure of the partnership is set out in the accounts statement. It explains that SBEP is a wholly owned subsidiary of Scottish Borders Education Partnership [Holdings] Ltd. One hundred per cent of the share capital of this organisation is held by BBGI Investments SCA which in turn is an indirect and wholly owned subsidiary of BBGI CAV SA, a Luxembourg investment company.

Details are also provided of a so-called Bond Loan relating to senior secured funding totalling £68,33 million of which £15 million is held by Prudential Annuities Ltd and £53.33 million by Prudential Retirement Income Ltd with a 2.604% index linked coupon.

NAMED: EIGHT potential funders for New Earth

DOUGLAS SHEPHERD continues our story of the troubled Borders waste project

Waste management contractors New Earth Solutions identified eight separate banks and financial institutions "in strictest confidence" as likely backers for re-financing to release money for a £21 million incineration plant to serve the Scottish Borders after members of the project team expressed doubts about the company's ability to secure funding.

A series of top secret reports and email exchanges from mid 2013, released by Scottish Borders Council (SBC) on the instructions of the Scottish Information Commissioner, give an indication that representatives of the local authority were losing patience with New Earth over the crucial issue of funding.

The money for the Advanced Thermal Treatment [ATT] plant at Easter Langlee was supposed to be channelled through the Isle of Man-based New Earth Recycling & Renewables Fund (NERR}. But a lack of progress prompted SBC to ask for a schedule showing NERR's monthly subscriptions and disbursements as the re-financing of another plant at Avonmouth, Bristol stalled.

According to a contribution from a financial consultant commissioned by SBC in June 2013: "NES’s statement that they cannot supply us with a schedule showing NERR’s predicted monthly subscriptions and disbursement as it is "potentially price sensitive information" is disingenuous. They have provided such forecasts in the past, and we have always treated them as commercially confidential, not in the public domain, and released to us purely to provide assurance regarding the availability of funding for the Easter Langlee project, in which we have a legitimate interest.

"No member of the Council's in-house or advisory team would release this information to any third party, and we would only use it generically in reports to Council, to confirm that NES have provided reasonable assurances that funding for the project will be in place when the necessary permits and consents have been secured. Without this, we cannot provide such assurances to our principals.

"One possible inference from NES’s response is that NERR’s subscriptions have fallen behind earlier forecasts  (which is suggested by their cash balance of £7.7 million) and therefore there is a risk that NES may not have sufficient funds to meet the capital costs of Easter Langlee by early 2014.

The question is then what we do about it. I believe that the only thing we can do is flag it up to our principals (Elected Members) that funding availability remains a risk factor, notwithstanding NES's discussions with potential alternative fund providers (including the Green Investment Bank), although obviously we hope that they will ultimately bear fruit."

The following month NES sent the council a report in an apparent attempt to allay fears over the financing of the multi-million pound project.

Their document states: "We are currently in a refinancing process, the participants of which are commercially sensitive.  In May 2013, we presented to 11 parties. We then decided to proceed to an Avonmouth ERF site visit with eight of these 11 parties. On the understanding that the Council treats this information in the strictest confidence, we can disclose that the eight parties as being UK Green Investment Bank, Siemens, Macquarie, Santander, Investec, Star Capital, Amber and Ecofin. "

And for good measure the report added: " Based on discussions held to-date, we are confident of receiving three or more term sheets and achieving refinancing proceeds to NERR of circa £25m (as opposed to the £20m previously indicated)."

If the funding of Easter Langlee was "up in the air", the same was certainly true on the technology front with more negative reports emanating from the NEAT technology R&D chambers in Canford, Kent.

Here is an extract from a "progress report" assembled in July 2013.

"The 120 hour trial commenced at 23:15 on 15 July 2013. The system was run for a continuous period of 54 hours. At this point, a failure of a roller bearing supporting the pyrolysis drum occurred. The bearing was replaced and the trial continued. For the majority of the trial (to date), the gas has been flared, although the gas engine has been run for short periods. This is due to analysis of the gas leaving the engine showing that the temperature is too high, such that it may cause damage to the engine. The high temperature is due to the compression ratio of the engine."

At this stage it should be borne in mind that members of SBC had sanctioned the inclusion of the completely unproven NEAT system in the Easter Langlee facility nine months before that gloomy report was written.


Thursday, 17 August 2017

Staggering towards inevitable death!

EWAN LAMB charts the continuing woes of SBC's waste treatment project

Members of the project team working to procure a £21 million waste treatment facility for the Scottish Borders were expressing concerns over delays, technology issues and problems with funding within weeks of a revised deal being signed to incorporate a form of incineration into the plant.

Readers who have been following our coverage of attempts to get behind the wall of secrecy surrounding the disastrous Easter Langlee venture will be aware that more than 80 additional documents have just been released by Scottish Borders Council on the orders of Scotland's information commissioner.

Now Not Just Sheep & Rugby is attempting to publish as much of the information as possible so that taxpayers who lost at least £2.4 million thanks to council incompetence and the contractor's inability to deliver the project can see the drain down which their money went.

Our last instalment covered the trials and tribulations of the venture during early 2013 when the pioneering research and development gasification and pyrolysis system earmarked for the Galashiels centre appeared to be misfiring on most if not all cylinders. The R&D kit had to be shut down and modified several times but was still refusing to behave.

We take up the story in early May as delays to the start (never mind the completion) of the urgently required facility were causing increasing concern at SBC.

In a letter to contractors New Earth Solutions (NES) a senior officer at the council wrote: "The ATT [Advanced Thermal Treatment] development work timetable has slipped and continues to slip and the delays to that development work do not appear to be being mitigated.

"It is concerning that there is a further delay in this process and that it appears inevitable that a further request for extension of time will require to be submitted to the Council”.

A key element for delivery of the project was the provision of a grid connection to the site at Easter Langlee. The papers show Scottish Power estimated the cost of the connection to be in excess of £1 million, and a £200,000 deposit was required before work commenced. But NES were refusing to pay the deposit.

A consultant who was also a project team member outlined his concerns in an email to others involved in the project. He wrote: "I am concerned that NES have still not paid the initial £200,000 deposit required to secure the connection, and their reasons for not doing so appear spurious.

" SPEN’s [Scottish Power Energy Networks] requirement for an upfront deposit of £200,000 is standard – they’ve asked for exactly the same deposit for another project in which I’m involved (where it has been paid).

" If it is paid, it will not compromise NES's ability to continue to negotiate with SPEN with regard to the costs and terms on which SPEN would undertake non-contestable works, or NES’s ability to secure alternative suppliers for contestable works. By not paying the deposit, NES are taking a wholly unnecessary gamble on the grid connection.

" Therefore there is little if any risk to NES in paying the deposit, but they are exposing the project to considerable potential risk by failing to pay it. This appears to be another example of NES’s penny-pinching and myopic approach to project implementation."

The same consultant (in the same email) expresses concerns over the funding of the job. NES's partner funder was New Earth Recycling and Renewables Fund (NERR). He states:
"The news that the Co-op Bank does not have funds available to complete the Avonmouth refinancing is not entirely surprising, but it is of concern:  It means that NERR will secure £20 million less in funding than anticipated in the last [monthly] report and funding update.

"It throws further doubt on NES’s confident prediction that 'we can introduce senior debt into the Eastern Langlee project from the outset if it is beneficial to do so'and therefore raises a question of whether they will have sufficient funding to complete the finance plan on time."

An email from SBC to NES dated April 2013 says: "The delay to the refinancing of Avonmouth, despite the continued NERR investment is worrying for SBC."

It goes on to ask the company: Who are the back-up debt providers; What is the predicted level of Subscriptions into NERR between May 2013 to March 2014 (Start of Construction) - What is the current level of available funding within NERR.

And: "Based on the events with Co-op Bank and the lack of certainty that refinancing will be complete by the start of the Easter Langlee project, we would like to see the quarterly financial updates increased to monthly."

NES's response was less than convincing. The firm told SBC: "Following the late withdrawal of the Co-op, we are presently in discussions with around a dozen other potential funders for the refinancing of the Avonmouth energy recovery facility (ERF).  

"Among the parties that we are talking to is the UK Green Investment Bank (GIB), who has shown a significant interest in being a co-funder to the project".

But in a terse riposte the council declared: "You have not answered the question.  The financing is a significant area of concern for SBC now that the Coop refinancing has fallen through.  NES are not providing sufficient information to alleviate these fears which is unsatisfactory."

The follow-up unspecific answer from New Earth did not go down well either.

To this SBC replied: "Again this is unacceptable. NES have to demonstrate that either SBC’s plant is a priority over Blaise [another NES project] or NERR can cope with parallel builds.  Just to highlight that as the Co-op refinancing fell through and NES were already committed to the next phase of the Avonmouth building, SBC have concerns that NERR are overstretched."

Does all of this point to a project proceeding with confidence and trust?


Wednesday, 16 August 2017

Was It Only An Excuse?

DOUG COLLIE on more escapees from the secrecy vaults at SBC

An examination of newly released confidential reports and emails shows there was a different negative issue bedevilling the £21 million Scottish Borders waste treatment project virtually every month during 2013 and 2014.

But despite failures and setbacks as engineers from New Earth Solutions attempted unsuccessfully to perfect the gasification and pyrolysis system to be installed in Galashiels, accompanied by an endless catalogue of obfuscation on the funding front, the doomed project was allowed to limp on into 2015 before being axed.

And as we will confirm later in a series of articles outlining the new disclosures, the completion of the Advanced Thermal Treatment (ATT) plant at Easter Langlee would be hit by a two year delay at the end of 2013. Yet Scottish Borders Council still continued with a fiasco that was to cost taxpayers at least £2.4 million.

As early as January 2013 - barely a month after the ATT contract variation was finalised - the regular report from contractors New Earth Solutions was bearing news of problematic issues which had been encountered the previous month. At this stage the so-called NEAT technology was being tested at Canford, Kent, but Borders councillors had already agreed to have it in Galashiels even though it did not work. Issues would still be dogging the project when it was abandoned over two years later.

According to the January 2013 All Reasonable Endeavours (ARE) report from New Earth: 

"From the week commencing 10th December a second endurance operation was planned. The operation was started on Sunday 9th December. When the plant reached temperature, the syn-gas was directed to the ceramic filter. Despite the modifications to the plant the syngas was below the optimum temperature range required by the filter. The trail was again cut short to enable other engineering solutions to be considered and evaluated."

The venture may well have been in its infancy, but proposals were already being touted for an ambitious District Heating System aimed at keeping hundreds of homes, industrial buildings and council properties warm in the area surrounding the rubbish-to-electricity facility. Surplus power generated by the NEAT system would be a real money spinner.

This is an extract from the February ARE report:

District Heating Scheme - New Earth is proposing to establish a shell company registered in Scotland – the Energy Supply Company (ESCo) - and wishes to discuss share ownership with SBC. The next workload on the district heating scheme after submission of the planning and PPC applications will be the commercial model and preparation for procurement of an ESCo partner.

No doubt considerable sums of public money were squandered on this white elephant too.

By April 2013 the emphasis had returned to technical and financial issues, as the newly released monthly ARE shows.

It says: "The first of two continuous 120 hour runs was planned to commence on 8 April 2013. In previous shorter trials, pressure drops had been noted across the ceramic filter. Investigation had shown that this was due to the build-up of char in the ceramic filter due to the char extraction screw not working as designed and the char being finer than anticipated. 

"Modifications were made to the screw, however it was again noted that the char was not being extracted correctly. The screw was consequently modified for a second time in week commencing 2 April 2013. Due to the delay in carrying out the first continuous 120 hour trial, it is anticipated that this task will be delayed by the same period of five days and should now commence on 29 April 2013."

The developments on funding were equally depressing. The £21 million needed to build Easter Langlee was dependent on [a] the re-financing of New Earth's Avonmouth Energy from Waste plant which was yet to produce its first kilowatt of power; and/or [b] the ability of Isle of Man based New Earth Recycling & Renewables Fund (NERR) to provide the lion's share of the cash.

The April 2013 ARE report told SBC:

Funding and Financial Close

"The Avonmouth refinancing has been delayed until Q4 2013 owing to the intended funder, The Co-operative Bank plc (Co-op), having announced that it is unable to progress to Financial Close on the timescales that had been envisaged – i.e. within a month of first power generation, which would have meant Financial Close in Spring 2013. 

"This has come as a significant surprise and disappointment to New Earth. Co-op recently published weaker than expected 2012 financial results for their banking division; these results have restricted their UK lending capacity during Q2 and Q3 this year, although we note that Co-op is considering certain disposals within its broader business to raise additional capital. NERR will continue to finance the remainder of the Avonmouth energy recovery facility and whilst we remain positive over closing the transaction with Co-op later this year, we have commenced discussions with back-up debt providers. 

"Refinancing proceeds of £25m are envisaged in Q4 2013, of which circa £20m is expected to be returned to NERR with the remainder used to finance transaction costs and final retention sums.
Whilst it is disappointing that the refinancing of Avonmouth has been delayed, NERR remains the default funder for the Easter Langlee project and continues to accumulate funds as anticipated. We also remain confident that we can introduce senior debt into the Easter Langlee project from the outset if it is beneficial to do so."

This was just one of many setbacks in the bid to bankroll the Borders waste treatment facility.


Tuesday, 15 August 2017

Council fund targeted by claims firm


Financial advisers who steered unsuspecting investors into the worthless New Earth Recycling & Renewables [Infrastructure] fund (NERR) are potential targets for a No Win No Fee claims company offering to help people recover their lost cash..

Thousands of individuals have lost millions of pounds following the collapse of NERR, that Isle of Man fund which was supposed to finance a £21 million waste treatment facility for the Scottish Borders.

NERR also had a controlling interest in New Earth Solutions Group (NESG), the now bankrupt contractors handed a £80 million waste management contract by Borders councillors in 2011. The deal between Scottish Borders Council and NESG suffered a spectacular collapse in 2015 when it became clear the debt-ridden firm could not deliver the waste treatment project.

Now the Manx-based investment fund and its controllers Premier Group (Isle of Man) Ltd., also in liquidation, are the subject of investigations by financial regulators and insolvency experts.

Get Claims Advice Ltd. [GCA], the Manchester outfit offering to help out disgruntled NERR shareholders, appears to be following in the footsteps of firms which pursued claims on behalf of accident victims or those who were wrongly charged thousands of pounds by banks for PPI cover.

Although the initial assessment of a potential claim against financial advisers is free, clients who are successful will have to pay a 'Success Fee' amounting to 20 per cent + VAT of any settlement achieved on their behalf.

As Not Just Sheep & Rugby has reported previously, a significant number of NERR's former customers have won sizeable claims against advisers after lodging complaints (free of charge) with the Financial Services Ombudsman. Successful cases are well documented on the Ombudsman's website.

GCA's blurb promoting their NERR service claims creditors are owed £9 million, including SIPP investors "who thought the New Earth fund was a good bet to help them on their way to retirement".

'Should you have been advised to invest in New Earth Solutions in the first place?' asks the advertisement.. "The simple truth of the matter is New Earth as a recycling investment was always high risk: a non-standard asset not regulated by the Financial Conduct Authority in the UK meaning the risk for UK investors could have been unsuitable'.

Scottish Borders Council please note!

GCA add: "Now the firm that was in charge of New Earth Solutions - Premier Group - is in liquidation too. If it looks as though you have a claim against your IFA we can pursue it for you on a No Win No fee basis, leaving you with nothing to lose".

Many of those who lost money as a result of the collapse of NERR may be tempted to enlist GCA's services. Unfortunately it seems the 20% commission (plus VAT) involved is even larger than the management and promotion fees collected by Premier Group's directors for running the worthless investment entity.

Monday, 14 August 2017

Easter Langlee documents released on Commissioner's orders


A collection of more than 80 reports and emails linked to the Scottish Borders Council waste management contract disaster have been released under Freedom of Information rules despite the local authority's best efforts to keep the documents from public view.

The latest disclosures, made after a ruling by acting Scottish Information Commissioner Margaret Keyse, provide strong evidence that the £80 million deal with contractors New Earth Solutions should have been ditched long before SBC dumped the firm in February 2015.

Details have emerged in this collection of files that NES notified the council in November 2013 of a two-year delay in the proposed construction of a £21 million facility at Easter Langlee, Galashiels, to treat and convert the region's household refuse into electricity.

A catalogue of hitches and hold-ups involving misfiring technology being developed for the Easter Langlee project in the south of England, and a list of excuses over the non-appearance of cash to bankroll the job from offshore funders have been laid bare.

Not Just Sheep & Rugby will be attempting to sort through the confidential files and publish relevant tracts in a series of articles over the coming days and weeks. It may help readers to better understand how a local authority managed to squander at least £2.4 million of other people's money pursuing an impossible dream of becoming Scotland's best at waste disposal and ending up close to the bottom of the rubbish recycling league.

Meanwhile council taxpayers across the Borders have yet to be told how landfill deadlines and other policies introduced by the Scottish Government to dramatically increase recycling targets can be implemented locally in the absence of a local strategy. The only decision taken by councillors since the failure of their New Earth venture has been to withdraw collections of garden refuse - hardly a vote winner or an aide to recycling.

Top brass at the council together with a clutch of expensive consultants commissioned in a bid to solve a waste treatment crisis were warning seven years ago that to 'do nothing' was not an option. But that is precisely what has happened up to now as the date for ending landfill looms ever larger.

Those who have kept up to speed with our revelations over the past two years will know that members of SBC were persuaded to radically vary the council's contract with New Earth in October 2012.

The so-called Deed of Variation (DoV) allowed for the inclusion of advanced thermal treatment (ATT) at Easter Langlee even though the so-called NEAT system of incineration had not been trialled and tested. The gamble would prove to be financially disastrous as the technology remained flawed while no-one was prepared to put up the money to install it in the Borders.

It is our intention to examine the new batch of evidence in chronological order, beginning in December 2012 - the month when the DoV between SBC and NES officials was signed.

According to a monthly report from NES in December 2012 there were issues with the fledgling technology system being developed at the company's research and development centre at Canford in the south of England.

That report states: "From the week commencing 12th November an endurance operation of 120 hours was planned. Unfortunately, when this operation started on Sunday 11th November it became apparent that there were technical issues that necessitated a shut-down of the plant.

"The plant was stripped down and investigations showed that where the plant had been shut-down on the previous run this had led to damage. Modifications to the plant were made to ensure that the syngas presented to the filter is at the correct temperature. This has caused a delay to the programme of approximately two weeks"

There were to be many similar negative results over the coming two years, as the files released last week show. In subsequent articles we will also demonstrate how different financiers for the multi-million pound Easter Langlee facility were being touted by New Earth on a month by month basis.

Potential bankers included The Co-op Bank, the Green Investment Bank, the Isle of Man based Premier New Earth Recycling & Renewables [Infrastructure] Fund (NERR), a New York fund and several other finance houses.

But there is not a shred of evidence that any of these parties, some of which had "shown great interest in the Scottish Borders project", according to the contractors, ever had any intention of bankrolling the Galashiels treatment centre.

In the wake of the catastrophe New Earth Solutions sank without trace, burdened by over £150 million worth of debt while NERR - the "funder of last resort" - is in the hands of liquidators. So far as the Easter Langlee contract is concerned the council looks pretty bankrupt too!

Little wonder those responsible for the fiasco at SBC repeatedly played the "commercially confidential" card in a bid to hide the evidence. Thankfully the country's information commissioner accepted there was widespread public interest in having the facts made public.


Wednesday, 9 August 2017

New Earth "survivors" chalk up more losses


The first set of financial results for five New Earth Solutions businesses since they were sold last year by administrators has revealed combined comprehensive losses of more than £25 million for the period up to July last year.

According to separate sets of accounts posted with Companies House, the quintet of firms now in the ownership of Irish-based Pandagreen have shareholder deficits running into many millions of pounds while two of the waste treatment plants transferred as part of the deal are currently closed.

Immediately after the takeover Pandagreen waived many millions of pounds of debt acquired via the purchase of the businesses rescued from the wreckage of the New Earth Solutions Group's (NESG) spectacular plunge into insolvency.

At the time of the crash in 2016 NESG owed some £150 million to banks.and other institutions together with a host of unsecured creditors. Those unprotected creditors recently received a dividend of 1.5 pence in the pound.

The New Earth group and another of its subsidiaries - New Earth Solutions (Scottish Borders) Ltd - , was the waste treatment 'specialist' handed a £80 million contract by elected members of Scottish Borders Council in 2011 in a bid to solve the area's refuse disposal issues.

However, the deal had to be abandoned four years later without any progress after it became clear the NES technology was useless and no-one was prepared to fund a £21 million treatment facility at Galashiels. By that time the project team assembled by the council had squandered over £2.4 million of public money, much of it on expensive firms of consultants and lawyers.

Here is a run down of the financial performance of the five entities which were purchased immediately after NESG was placed in the hands of administrators Duff & Phelphs in June 2016. The original buyer DM Opco Ltd later sold the business - all of them holding local authority waste disposal contracts - to Pandagreen.

NES Gloucestershire - Pandagreen waived all of the acquired debt of £1.526 million. In December 2016 a fire at the company's Sharpness facility resulted in its closure, and the directors are now considering options available with regards to its continued operation. Suffered a comprehensive loss of £897,000 during the latest accounting period. There is currently a shareholders' deficiency of £6.586 million.

NES Leicestershire - Suffered an operating loss of £5.957 million and a comprehensive loss of £8.024 million. New owners waived £5.062 million of acquired debt of £5.419 million. In March 2017 the firm's facility at Cotesbach was closed. Current shareholders' deficit £13.285 million.

NES West - Recorded an operating loss of £7.170 million and a comprehensive loss of £12.569 million. Pandagreen waived £12.592 million of the acquired debt of £14.732 million. The shareholders' deficit is stated as £26.212 million.

NES Canford - Sustained a comprehensive loss of £2.809 million. Its Irish owners waived £5.455 million of the acquired debt of £7.633 million following the deal with DM Opco. Shareholders' deficit is £4.806 million.

NES Kent - Made an operating profit, but a comprehensive loss of £1.775 million. Pandagreen waived £4.433 million of the acquired debt of £6.259 million. A shareholders' deficit of £9.327 million is recorded.

Each set of accounts contains the statement: "Under new ownership the directors are taking actions to enable the company to trade profitably going forward".

Friday, 4 August 2017

Premier fund liquidator liquidated!

EWAN LAMB reports on a potentially groundbreaking Manx court judgement

The provisional liquidator of a debt-ridden Isle of Man investment fund has been relieved of his duties by a judge who then replaced him with an insolvency practitioner nominated by a director of the Group which managed and promoted the bankrupt fund.

It is just the latest twist in the seemingly never ending saga of Premier Group (IOM) Ltd. (PGIOM), the offshore financiers picked out by Scottish Borders Council to bankroll a £21 million waste treatment facility via another of Premier's subsidiaries, New Earth Recycling & Renewables [Infrastructure] Ltd., now also penniless and in the liquidation process.

PGIOM itself has also gone bust while the fund at the centre of the latest controversy is the equally insolvent Eco Resources Fund (ERF) which persuaded investors to put their cash into bamboo plantations in faraway Nicaragua and South Africa.

While both funds were operational the directors of PGIOM, which controlled them collected generous management and promotional fees running into many millions of pounds. The Premier bosses included John Bourbon, a former head of the financial regulatory authority on the Isle of Man.

Last year the current Financial Services Authority (FSA) appointed Gordon Wilson, of CW Consulting, as the controller, then provisional liquidator of ERF which has around 190 investors and was valued at $61 million. It was later revealed that ERF had only £12,000 in the kitty while carrying debts of £2.7 million.

Mr Wilson, in an interim report, raised concerns on a number of fronts and suggested ERF should be dissolved as quickly as possible. He applied to the High Court on the Isle of Man for an order confirming who should be liquidator and deemed official receiver of Eco.

In a witness statement in support of his application, Mr Wilson said: ": "In my opinion, as can be seen from the evidence and the concerns that I set out in my Interim Report there are a number of matters that need to be addressed. It is imperative to objectively get to the bottom of what has happened. 

"I consider that I am best placed to do this and I have the support of the FSA who brought the Claim to wind up [Eco]. I have been involved with [Eco] since June 2016 as Adviser, Controller and Provisional Liquidator and I am in a position to move forward with the liquidation."

But in a separate application Mr Bourbon, who is described as a creditor of Eco, sought the appointment of Mr Michael Simpson of PricewaterhouseCoopers as liquidator.

Mr Bourbon alleged that  Mr Wilson's involvement with Eco had led to a deterioration of Eco's position and would continue to do so and the prospect of any meaningful recovery for Eco's members would almost certainly be lost if Mr Wilson continued to be involved.

Mr Simpson had the benefit of greater resources and capability at his disposal; the overwhelming majority of Eco's creditors and 100% of those members with voting powers were against the appointment of Mr Wilson as liquidator and would welcome the appointment of Mr Simpson.

Counsel for Mr Wilson warned the court that the "rescue package", which appeared central to the application of Mr Bourbon was virtually identical to that which was on the table in 2016 when Mr Wilson stood down as controller of Eco but remained as adviser. 

There were continuing concerns over the involvement of Sustainable Asset Lending Limited ("SAL") - an American finance company involved with the operators of the bamboo plantations - and there was a significant conflict for those making the application (in particular Mr Bourbon) to appoint Mr Simpson and those supporting him.

Mr Wilson had the full backing of the FSA. Their counsel told Deemster David Doyle (the judge) "The FSA continues to have confidence in Mr Wilson's capabilities and his ability to wind up Eco; The evidence has failed to explain how there would be a return for investors by a possible refinancing. The FSA shares Mr Wilson's concerns in respect of the proposed refinancing both in terms of its credibility and also the extent to which it will benefit investors rather than those behind SAL".

Chiva Arthurs, the lawyer representing Mr Bourbon called for Mr Simpson's appointment as liquidator. She said: "The interests of the investors should be considered and a liquidator should consider all options. SAL (the entity which has foreclosed on the plantation companies) is not prepared to deal with any entity associated with Mr Wilson.

"Mr Simpson will have the co-operation of and an untarnished relationship with Troy Wiseman [founder of EcoPlanet Bamboo, the plantation operators] and will have the option of a restructuring or refinancing exercise and creditors could be paid off immediately. A speedy liquidation, as envisaged by the FSA, would mean that the Isle of Man would find itself the focus of a failed investment scheme which would do little for its reputation."

Of course readers should remember that Premier's NERR fund can only be regarded as a "failed investment scheme" with more than 3,250 'shareholders' plus Scottish Borders Council ending up as losers after liquidators Deloitte confirmed there would be no return for NERR's creditors.

Ms Arthurs made a number of claims regarding Mr Wilson's involvement with Eco before stating:"Mr Wilson has aligned himself too closely with the FSA and the FSA's approach to the liquidation and he shares the FSA's lack of appetite to consider, with an open mind, any refinancing/restructuring proposals which may benefit creditors and investors; Mr Simpson has no previous involvement in Eco and will start from a blank canvas".

Deemster Doyle then issued an order that Mr Simpson and not Mr Wilson should be confirmed as liquidator of Eco.

The judge said: "I am concerned over Mr Wilson's previous dealings with, and experience of, Eco and those associated with it such as Mr Bourbon and Mr Wiseman.

Mr Wilson plainly has some significant "baggage" in respect of his previous dealings with the FSA in respect of Eco and those connected with Eco. . I am not persuaded that the appointment of Mr Simpson will incur unnecessary additional costs or unjustifiable further delay."

According to the Deemster the fact that Mr Simpson was Mr Bourbon's choice did not lead the judge to conclude it was inappropriate to appoint Mr Simpson. He was not persuaded that there was a reasonable perception of bias in respect of Mr Simpson."There is no suggestion that Mr Simpson will simply be Mr Bourbon's puppet."

And Deemster Doyle concluded: "It may well be that the liquidator will conclude that it is not realistic to proceed by way of restructuring/refinancing and that the liquidation should be concluded swiftly, but these are essentially matters for the liquidator. The conduct of a liquidation (even a liquidation in the public interest) is not a matter for the FSA, it is a matter for the liquidator.

"He who pays the piper does not call the tune in liquidations, including public interest liquidations. Mr Simpson is an extremely experienced liquidator and I am sure he will waste little time and costs in reacting speedily and robustly if he thinks the offers of assistance are not credible or worth proceeding with."