Sunday 5 September 2010

Council will not break incinerator contract

DUBLIN CITY Council has denied claims that it could break its contract with the developers of the Poolbeg incinerator without incurring costs, including potentially punitive compensation payments.

The council was responding yesterday to a report on RTÉ’s Prime Time that a “get-out” clause in the contract signed with incinerator developers Covanta in 2007 would allow it to terminate the contract tomorrow.

The programme reported that the contract for the development of the 600,000 tonne-capacity incinerator runs out tomorrow and the council could extend, renegotiate or walk away from the deal if conditions necessary for the development of the facility had not been by that date.

Minister for the Environment John Gormley has yet to grant a foreshore licence for a cooling facility needed for the plant.

The council yesterday said it did not intend to break the contract and that the incinerator was essential to dealing with Dublin’s waste.

“The Prime Time report on the project aired last night (Thursday Sept 2nd) stated that the council could ‘walk away with no cost’ . . . This is factually incorrect,” the council said.

It said the four Dublin local authorities had already spent substantial sums to date in land acquisition, statutory processes and client representative costs. Dublin city manager John Tierney has previously stated that these costs amount to about €120 million.

The council also said that it was committed to further “major expenditure” in relation to the purchase of lands on the site.

“This does not take into account any compensation that might be payable to the PPP company should the contract be terminated,” it said.

Substantial costs had also been incurred by Covanta, the council said. A spokesman for the company could not be contacted yesterday.

A source close to the project said the compensation, which would be payable to Covanta, would be in the region of €200 million. He also said that tomorrow’s date was no longer relevant in terms of the contract and no moves would be made by either side.

The council said it would be updating city councillors on the matter on Monday night at the first council meeting of the new term, and that it would be making no further comment on the contract until that time.

Mr Gormley, who is in possession of a copy of the contract, was not available to comment on the matter yesterday. However, last week he said that the contract should be renegotiated. A spokesman yesterday said that Mr Gormley’s position remained that the facility was too large and would end up costing the taxpayer money.

An application for the foreshore licence was made to the Department of Agriculture in 2008.

Responsibility for determining foreshore licences was transferred to Mr Gormley’s department last January. Construction of the incinerator began last December but has been suspended since May because, Covanta has said, of the lack of a foreshore licence.

However, the council, following a request from Covanta, last month began a process to compulsorily purchase the land needed for the cooling facility. By taking ownership of the land, the council would no longer need the licence from Mr Gormley.

The compulsory purchase process could involve Bord Pleanála hearing, and could involve further expense and delays for the project. It is not known if the contract was renegotiated at the time the council agreed to start the process.

Mr Gormley last March appointed accountant John Hennessy SC to carry out an independent examination of the contract and its financial implications.

Mr Hennessy’s report is due shortly.

Irish Times

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