Ringsend, Dublin: Poolbeg Incinerator Penalties May See Taxpayers Ripped-Off For €350m: UPDATED

31 Jan

The proposed incinerator at Poolbeg in Dublin could end-up costing Dublin’s four councils between €187m and €350m in penalties, according to a newly published report.

 John Gormley - Wrote a letter to new Environment Minister Éamon Ó Cuív
 John Gormley – Wrote a letter to new Environment Minister Éamon Ó Cuív

The proposed incinerator at Poolbeg in Dublin could end up costing Dublin’s four councils between €187m and €350m in penalties, according to a newly published report.

The report was written by senior counsel, John Hennessy, who was contracted by the Department of the Environment to examine the financial viability of the plant.

Details of Mr Hennessy’s previously unpublished report are included in a letter from Green Party leader John Gormley to Environment Minister Éamon Ó Cuív.

The report was completed last September.

In the letter, Mr Gormley calls for the Hennessy report to be published and, critically, includes extracts.

Mr Hennessy concluded that the council’s contractual obligation of delivering a specified amount of waste to the incinerator each year could prove to be ‘extremely difficult’ to achieve.

He said, if that happened, the contract allowed for ‘significant penalties’.

Mr Hennessy estimated that even if EPA projections of growth in waste volumes happened, the potential total penalties could amount to €187.4m.

In a worst case scenario, the council could be obliged to pay the plants’ operators, Covanta, €350.7m over 25 years.

In his letter, Mr Gormley says Mr Hennessy also found that the costs of abandoning or varying the project were much lower than claimed by Dublin City Council.

NEWS UPDATE:

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.

NEWS UPDATE:

Dublin City Council has rejected the findings of a Government commissioned report, which concluded that the Poolbeg incinerator could incur more than €350m in penalties over its 25-year lifetime.

Dublin City Council has rejected the findings of a Government commissioned report, which concluded that the Poolbeg incinerator could incur more than €350m in penalties over its 25 year lifetime.

Extracts of the unpublished report were included in a letter from Green Party leader John Gormley to Environment Minister Éamon Ó Cuív.

A spokeswoman for the council said that was a ‘hypothetical situation, which simply was not going to happen.’

The report said that the proposed incinerator could end up costing Dublin’s four councils between €187m and €350m in penalties.

The report was completed last September by senior counsel, John Hennessy, who was contracted by the Department of the Environment to examine the financial viability of the plant.

Mr Hennessy concluded that the council’s contractual obligation of delivering a specified amount of waste to the incinerator each year could prove to be ‘extremely difficult’ to achieve.

He said, if that happened, the contract allowed for ‘significant penalties’.

Mr Hennessy estimated that even if EPA projections of growth in waste volumes happened, the potential total penalties could amount to €187.4m.

In a worst case scenario, the council could be obliged to pay the plant’s operators, Covanta, €350.7m over 25 years.

In his letter, Mr Gormley says Mr Hennessy also found that the costs of abandoning or varying the project were much lower than claimed by Dublin City Council.

Dublin City Council spokeswoman Elizabeth Arnett said that while the report contended it would be ‘extremely difficult’ to secure waste – this was not the view of the Council, plant operators Covanta or the ESRI.

She said: ‘It’s a worse case scenario that simply isn’t going to happen.’

She said a far more likely scenario was that the Councils would be paid €10m a year for the energy, which the plant will produce in the incineration of waste.

Ms Arnett pointed out that the plant had already passed An Bord Pleanála, the Environmental Protection Agency and the Commission for Energy Regulation.

The Irish Waste Management Association (IWMA) has called for the report to be released in full without any further delay.

‘The Hennessy Report bears out many of our concerns, and highlights the huge financial risk that this project poses to taxpayers,’ said Brendan Keane of the IWMA.

A Department of the Environment spokesman said the report was still being considered by both the Attorney General and the Government and would not be published.

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