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?


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