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Losses likely on Poolbeg incinerator
17 January 2010 By John Burke
Dublin City Council could lose money on the planned Poolbeg incinerator in Dublin, even if the facility is highly profitable, The Sunday Business Post has learned.
Under the terms of a contract between the council and US energy giant Covanta, the council will forgo a large proportion of any income it is entitled to if it fails to supply an agreed ‘Band 1’ tonnage of waste to the facility. The clause applies even if the incinerator is profitable.
In addition to the potential loss, the council will face penalties if it fails to supply the 320,000 tonnes of waste to the incinerator each year. The incinerator will have capacity for 600,000 tonnes of waste, so the council is contracted to supply more than half the total each year.
The contract states that revenue from the sale of energy from the incinerator - both electricity and heat - will be shared between the council and Covanta. The agreement also specifies strict circumstances under which both sides may withdraw from the contract if an ‘‘uninsurable risk’’ arises or in the event of a relevant ‘‘change in law’’.
It is understood that the areas covered by an uninsurable risk would include a legal determination that the contract breached competition law. Environment minister John Gormley, who is opposed to the incinerator development, will next week appoint a special investigator to examine aspects of the project at Ringsend in Dublin. Gormley has also said that he may refer the deal to the Competition Authority for scrutiny.
The confidential agreement between the council and Covanta, a copy of which has been seen by The Sunday Business Post, also shows that engineering firm RPS Ireland was hired to carry out the key environmental study on the public private partnership project.
RPS was criticised in a recent High Court judgment for ‘‘massaging’’ elements of reports it carried out for Dublin City Council and the other three Dublin councils, in order to suit the wishes of the councils. RPS has denied any wrongdoing.
In the same unpublished High Court judgment, economist Francis O’Toole, a director of the Bess business course at Trinity College Dublin, was also accused by the court of altering elements of his reports to suit the needs of Dublin City Council.
O’Toole said that his findings in relation to the economic assessment of Dublin’s waste market had remained consistent throughout his assessment.
‘‘As part of the process of reviewing any economics of competition policy issue, I listen to and read comments from various parties, including - but certainly not limited to - the client and/or its legal representatives," he said.
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