Sunday 17 May 2009

Poolbeg consortium can’t get bank finance

The international consortium selected to build and operate the Poolbeg incinerator has been unable to secure bank finance to fund the first phase of the controversial project.

The group, Dublin Waste to Energy Limited, headed by US energy giant Covanta, is considering self-financing phase one of the project. A number of lenders, including Bank of Ireland, have informed the consortium that they may consider part-financing latter aspects of the project.

However, no institution was willing to act as primary banker, due to the lack of liquidity on the international credit markets. The planned Dublin incinerator is a central element of the country’s waste management strategy.

When complete, it is expected to burn 600,000 tonnes of waste annually, creating electricity for some 50,000 homes and hot water for a further 60,000 households. Dublin Waste to Energy concluded an agreement with Dublin City Council two years ago, and construction work is due to begin shortly, Covanta said.

The Poolbeg development, which would be one of Europe’s largest waste incinerators, has been dogged by controversy since Dublin City Council agreed to seek a private sector partner to construct and operate the facility some years ago.

A number of large infrastructure projects have struggled to raise finance as a result of the credit crunch. The National Development Finance Agency (NDFA) has warned finance minister Brian Lenihan that banks are either unable or unwilling to finance large-scale projects in the current economic climate.

The state agency said that the global financial crisis was hitting funding for PPPs, a finance model by which the state teams up with private businesses to co-fund projects.

A statement issued to The Sunday Business Post on behalf of Covanta Europe president Scott Whitney said the company was ‘‘in the final stages of pre-construction activity, the financing to construct the facility is available and we expect to commence construction when the remaining statutory approvals have been received’’.

Seamus Lyons, Dublin Assistant City Manager, who heads the council’s environmental and engineering department, said that Dublin City Council was ‘‘satisfied that Covanta has finance in place’’.

Sunday Business Post

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