Poolbeg incinerator funding coming from Luxembourg
Company backing project similar in structure to Luxleaks firms
Computer generated image of proposal: US company Covanta is to spend €500m on the Poolbeg incinerator, with another €100m coming from the four Dublin local authorities
Funding for the building of the waste to energy incinerator in Poolbeg, Dublin, is coming from a company in Luxembourg with a structure similar to the ones that featured in last year’s Luxleaks controversy over aggressive tax planning.
The Dublin Waste to Energy project is a public-private partnership (PPP) between the four Dublin local authorities and the US company Covanta.
Covanta is due to spend approximately €500 million developing the 600,000-tonne capacity incinerator, while the four authorities have already spent approximately €100 million on the project. In September of last year the controversial incinerator cleared the last of many hurdles that had held up its development and is due to come onstream in 2017.
The Luxembourg company is charging 13.5 per cent per annum interest on the loan, which is to be repaid in 2029. The arrangement means that the taxable profits booked in Ireland by Dublin Waste to Energy (Holdings) will be reduced by the cost of servicing the debt to the Luxembourg company. One of the features of the Luxleaks controversy was the creation of entities in Luxembourg that created profit-reducing costs in other jurisdictions, while not producing comparable taxable profits in Luxembourg.
Dublin Waste to Energy (Holdings) is owned by Covanta and is the local holding company for Dublin Waste to Energy Ltd, the company that is the PPP partner with Dublin City Council, South Dublin County Council, Fingal County Council and Dún Laoghaire Rathdown County Council, for the incinerator project.
Dublin First WTE has no employees, according to its 2014 accounts, and it was established so as to invest in and take interests in other companies, and grant loans to affiliated companies. It is in turn owned by a company in the Cayman Islands.
The establishment of the PPP was an executive decision and was opposed by most city councillors. In a note to the city council in September 2014, the council chief executive Owen Keegan said the local authorities would provide partial revenue support for the first 15 years of the plant’s operation, if the fee income charged for taking the waste did not meet a certain threshold. However, he said an analysis indicated that the “gate fee” threshold would be achieved and the contingent obligation on the authorities would not be triggered.
Mr Keegan said the project would create significant economic activity, generate employment and generate significant tax revenues. The energy produced would be sufficient to supply more than 80,000 homes a year, and the project would also contribute approximately €0.6 million annually to a “community gain fund”.
The incinerator is designed to meet the waste needs of the Eastern and Midlands waste region and is considered crucial to the State being able to meet its landfill diversion targets, without being dependent on sending waste overseas.