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.

COMING SOON: INTO MAY 2013 AND BEYOND AND THERE'S MORE BAD NEWS