Monday, 31 January 2011

Public may face €350m bill over incinerator

TAXPAYERS COULD be exposed to paying financial penalties ranging from €187 million to €350 million over 25 years for the Poolbeg incinerator planned by Dublin City Council, according to an official report.

The report, compiled by John Hennessy SC for former minister for the environment John Gormley, said the “put-or-pay” clause in the council’s contract with American waste management company Covanta could cost as much as €14 million per annum, on average.

This “worst case scenario” would arise if waste volumes reduced by 1 per cent per annum, recycling rates increased at 3 per cent per annum (to a level of 60 per cent) and the market shares of the Dublin local authorities reduced by 3 per cent per annum.

The findings of Mr Hennessy’s review of the council’s contract with Covanta, carried out under section 224 of the 2001 Local Government Act, were revealed in a letter from Mr Gormley last Friday to Éamon Ó Cuív, his successor in the Custom House.

The Green Party leader and TD for Dublin South East expresses his concern that the promoters of the project “may again use the election period to create ‘facts on the ground’ which any new Government will have to deal with” – as they had done in 2007.

During the last general election, Mr Gormley says that “the promoters of the incinerator took advantage of the election campaign to resurrect the project, which was at that time moribund following the withdrawal of the original preferred bidder, [Danish firm] Elsam.

“While political attention was focused on the general election, the project board met to agree the involvement of an entirely new bidder, Covanta. This decision was taken days before polling in the 2007 election, and did not come to light until the election was over.” If it now “went past the point where termination or variation of the agreement may be achieved at a relatively low cost, the new Government may find it has no option, in financial terms, but to alter waste policy in such a way as to ensure the viability of this project.

“Having commissioned the Hennessy report and having been aware of its contents for some months, I cannot in good conscience allow debate about this issue to continue during the election campaign without the key facts above being known to the public.” Mr Gormley’s letter says he believes “it is clearly in the public interest that the Hennessy report be published in full without any further delay” and it calls on the new Minister to “make arrangements for its publication within seven days of the date of this letter”.

The report was submitted last September and copies were sent to the Taoiseach, the Minister for Finance and the Attorney General, with whom Mr Gormley had correspondence on the issue of publication. But he received no formal reply from the Taoiseach or Minister for Finance.

Mr Hennessy’s analysis “makes it clear that, for the Dublin local authorities to avoid financial penalties under their contract with Covanta . . . waste volumes would have to increase again at Celtic Tiger rates and sustain such rates of increase for the next 25 years.

“The scale of the potential losses would be outside the ability of Dublin City Council to meet and therefore constitute a significant risk to the exchequer”, because the council “is likely to have considerable difficulty” in meeting its “put-or-pay” commitment to Covanta.

According to the letter, Mr Hennessy says the council would “struggle to deliver” 320,000 tonnes of waste to the incinerator from the Dublin market in any year unless the volumes of waste generated increased significantly.

Irish Times

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