Indaver offers to take over Poolbeg project
INDAVER IRELAND has offered to take over the controversial Poolbeg incinerator project from US waste management company Covanta, at no cost to its principal promoter, Dublin City Council.
John Ahern, Belgian-owned Indaver’s Irish managing director, said the offer, made last week in a letter to the council, would involve scaling down the proposed “waste-to-energy” plant from a capacity of 600,000 tonnes per year to 400,000 tonnes.
He told a press briefing yesterday that Indaver would finance the project from its own resources – at an estimated cost of €300 million – and would also drop any obligation on the Dublin local authorities to supply a minimum of 320,000 tonnes of waste per annum.
Under its contract with Covanta, the council would face substantial “put or pay” penalties if it failed to meet this condition.
“Our proposal would remove this risk for taxpayers,” Mr Ahern said, adding that Indaver would rely on the market to supply Poolbeg.
Describing the Poolbeg project as “the longest running story in the history of waste management”, he said nothing had been built on the site even though the contract was signed in September 2007 with the Dublin Waste to Energy Ltd consortium.
Covanta had bought a 51 per cent stake from Danish-owned Dong Energy. But despite at least two extensions of time on the contract, which had in effect expired in September 2010, only limited site development work had been carried out.
Although council management said last week that it was “confident” agreement would be reached by the latest deadline of February 29th, Mr Ahern said Covanta had found it “difficult if not impossible” to raise funds due to Ireland’s “sovereign [debt] risk”.
A spokesman for Covanta would only say that it was working “very closely with Dublin City Council to resolve outstanding issues to facilitate the resumption of the Poolbeg project as soon as possible”.
He had no comment to make on the funding issue cited by Indaver.
Indaver was now offering to buy out Covanta’s and Elsam’s shares in Dublin Waste to Energy Ltd, which would allow both companies to recoup their investment in Poolbeg while also avoiding any need to retender the project under EU procurement rules.
If Covanta failed to meet the latest deadline, Mr Ahern warned the company would “walk away with nothing”.
However, if it entered into negotiations with Indaver, he said it could recoup its investment in a “win-win situation for everybody involved”.
He also said Dublin City Council could recoup its own substantial investment in Poolbeg – believed to be at least €80 million so far, mainly for land acquisition – if it was prepared to work with Indaver on getting it “up and running”.
The council said any discussions between Indaver and Covanta were a matter for them. And while the council and Covanta
were “free to walk away from the contract”, this was “not without significant financial implications” for whoever pulled the plug.
According to Mr Ahern, Covanta is “aware” of Indaver’s interest in taking over the project, but he declined to be drawn on whether this was the result of a direct approach or indirectly from a Sunday newspaper report last weekend.
Based on Indaver’s experience of operating its 200,000-tonne municipal waste incinerator at Carranstown near Duleek, Co Meath, which was commissioned last September, waste would not need to be “directed” to Poolbeg to make it commercially viable.
“We wouldn’t need to change anything – let the market decide how it works,” Mr Ahern said, adding that a revised planning permission would not be required; Indaver would simply install two rather than three 200,000-tonne incineration lines in Poolbeg.
He also warned that any attempt to change the way waste management in Ireland operated from market competition to “franchise bidding” would run the risk of delaying the project for five to seven years because of legal actions by waste companies.
POOLBEG INCINERATOR: THE STORY SO FAR
Dublin City Council adopts a regional waste management plan that includes a municipal waste incinerator.
Poolbeg peninsula is identified by consultants as the preferred site.
City councillors vote to block the plan by 32 to five. But council management says this is out of order because it conflicts with the approved waste plan.
Elsam Ireland, a subsidiary of a Danish power firm, is selected to design, build and operate the plant under a public-private partnership deal.
Council management seeks planning permission from An Bord Pleanála for a 600,000-tonne capacity incinerator.
More than 2,000 objections are lodged, including from then tánaiste Michael McDowell, Labour’s Ruairí Quinn and the Green Party’s John Gormley.
Elsam is taken over by another Danish firm, Dong Energy, which queries the project’s viability and seeks to introduce US-owned Covanta as a partner.
John Gormley becomes minister for the environment and immediately begins reviewing what options are available to him to halt the Poolbeg project.
In advance of An Bord Pleanála’s decision, the council signs a contract with Dublin Waste to Energy Ltd, a consortium formed by Dong and Covanta.
An Bord Pleanála approves the project. A “very disappointed” Gormley says he intends to change waste policy.
The Environmental Protection Agency grants a waste licence for the plant.
Covanta announces that construction has started, but it turns out that this consists entirely of site clearance works.
Gormley proposes waste disposal levies of up to €120 per tonne for incineration and landfill.
Work is suspended due to the lack of response from the Department of the Environment on an application for a foreshore licence.
The council secures a compulsory purchase order for the proposed infill, which makes the foreshore licence unnecessary.
Minister for the Environment Phil Hogan drops the proposed levy on incineration, and Covanta declares that the political situation here has “changed totally”.
Review of the contract between the council sets a new deadline of February 2012 for Covanta to confirm the project will proceed.
Indaver Ireland makes its offer to take over the Poolbeg project.