Friday, 22 January 2010

Losses likely on Poolbeg incinerator

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, is to 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 Sunday Business Post

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