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.
NEXT: YET MORE DELAYS ON THE FUNDING FRONT AND NEAT MISFIRES AGAIN!