Poolbeg Incinerator – Covanta – Dublin City Council and the Irish Government

The position on the Waste to Energy Facility is as follows.

Under the terms of the Project Agreement signed by the parties to the Agreement, Covanta was obliged to proceed to construct the facility, using their own funds, provided all the conditions precedent were met by 4th September 2010. (Conditions precedent included things such as securing planning permission, securing an EPA licence for the facility etc.) One of the conditions was the securing of a foreshore licence for access to the river via a cooling water channel to provide water to the plant for cooling purposes. The granting or otherwise of this foreshore licence was within the remit of the Minister for the Environment. The Minister did not issue the licence and as a result DCC used its powers of compulsory purchase to acquire the access but this was not completed by 4th September.

Accordingly, under the Project Agreement, DCC lost the right to insist on our Partner proceeding using their own finance.

Covanta have been consistent in saying that they wanted to re-finance the project at the earliest opportunity as the requirement to finance off their own balance sheet was a requirement before Covanta came on board the Project at all. ( They stepped into the contract in place of the DONG, a Danish company, when DONG dropped out around 2006) Covanta accepted the requirement but, under protest.

When the opportunity for them (post September 2010) to say they would only proceed when they were able to secure borrowing for the construction, they jumped at it.

We have been in continuous discussion with them this year on finalising various minor aspects of the Agreement but these have not in any way held up matters.

They have been in discussions with their banks with a view to securing a proportion of the construction costs in the form of a loan but this is delayed due to 2 main problems.

The first is the situation with banks lending generally and more specifically lending for projects in Ireland. The second is that, even if the banks were willing to lend for projects at the moment, the uncertainty in terms of regulation and legislation around waste generally in Ireland over the last 3 to 5 years has caused the banks to be extra cautious.

The current Government has indicated very clearly how they see the Waste market developing over the coming years. They have had a number of consultation documents out over recent months with a view, they say, to adopting a clear policy by the end of 2011. This is to be followed, in 2012, by revised legislation which will provide the certainty that everyone in the waste business requires. This should also clarify the situation for the banks and make it easier for Covanta to secure the funding they are seeking to resume construction.

As things stand, therefore, we are continually exhorting them to resume construction but it is unlikely that it will happen till next year.

Both parties are of the clear opinion that the facility is required, both from Regional and National perspectives, that sufficient waste is generated in the Dublin Region, not to mention outside this Region, to more than fill the capacity of the facility and that it’s construction and commissioning will enable Ireland to meet it’s EU landfill diversion targets in 2016 and thereby avoid hefty fines from the EU for continuing to dispose of waste via landfill.

If you need any further information, let me know.