Wednesday, 23 August 2017

Spluttering into 2014...

DOUG COLLIE on yet more setbacks for Easter Langlee

The damning evidence which Scottish Borders Council wanted to keep from public scrutiny shows 2013 had been a veritable annus horribilis for the project team aiming to provide the region with a fit for purpose waste management facility costing £23 million.

Council contractors New Earth Solutions were warning of another two-year delay to the project at Easter Langlee, Galashiels as engineers struggled unsuccessfully to get the chosen gas incineration technology - inappropriately dubbed NEAT - to work. Only Borders councillors had been impressed...they approved the untested system in October 2012.

And newly released files from a debacle which cost taxpayers, shareholders and investors many millions of pounds have revealed that the money needed to build the plant simply had not been sourced.

Not Just Sheep & Rugby has brought much of the evidence from 2013 into the public domain after SBC was ordered to end its concerted attempts to surround their disastrous liaison with NESG with secrecy. But the collection of some 80 reports, emails and other correspondence show progress on Project Easter Langlee would also be non-existent throughout 2014.

One of the litmus tests for the NEAT Advanced Thermal Treatment (ATT) appears to have been to get it to function non-stop for 120 hours at New Earth's R&D centre in Canford, Kent. This would be a watershed if banks and other investors were going to commit.

We have already reported on several failed tests during the course of 2013, and 2014 would prove to be little different. The documentation may be technical but the outcome is there for all to see.

This report followed an attempted 120-hour test in January 2014:

"A 120hr trial began at 9pm Sunday 12th January 2014. The whole system was run – pyrolyser, gas clean-up, engine – and the trial progressed well for 64 hours. Whilst operating, the engine produced c.310KWe. At two points within this 64hr run, operations had to cease (for 14 hours in total) due to failures of ancillary equipment: Diesel burner problems (used to heat the pyrolysis tube). The fuel feed pipeline to the diesel burner was restricting the flow. The pipeline was replaced.


"Unfortunately the trial was stopped after 64 hours due to a pressure drop across the ceramic filter indicating a broken filter element. Investigations confirmed that an element had broken. The cause of the breakage is thought to be differential thermal expansion of the cleaning mechanism (as per previous breakages). This will be remedied through increasing the tolerances further."

The following month's test produced this documentation:

"It was proposed to carry-out a 120hr trial in w/c 17th February. The trial commenced on 18th February and initial progress was good with a consistent fuel gas being produced.
However, the trial had to be halted after seven hours of operation as the gas booster fan tripped.  The plant was shut down in a controlled manner as required to prevent escape of gas and uncontrolled combustion.

"On investigation it was found that the electrical motor for the fan had collected water within the casing.  The site had been experiencing inclement weather for some time and despite the weatherproofing of the fan, rainwater had penetrated the casing. Unfortunately the rain had also penetrated the building containing the combustion chamber and soaked the ceramic fibre insulation which subsequently collapsed into the chamber."

Third time lucky? Not exactly: there were a number of issues to be addressed following a further test in early April 2014:

"On Sunday 6th April a 120hr trial commenced on the plant at Canford. RDF (Refuse Derived Fuel) had been dried prior to this to ensure sufficient fuel was available. The trial was stopped after approximately 36hrs as the pressure drop across the ceramic had increased indicating a breakage of one (or more) of the filter elements. 

"This is being investigated. From an initial review of the data, the syngas quality was as expected and the fuel feed system worked well at a feed rate of c.500kg per hour. Despite the assumed breakage of filter elements, the quench system did not show signs of particulate indicating that there has been no carry-over from the filters. During the trial the char extract system jammed a couple of times due to large foreign objects – temporary fencing clamps, metal wall ties, metal sweet tins, etc. but these were dealt with without interrupting the process. Further upstream removal of metals may be required to alleviate this."

Ceramic filter breakages continued during further trials over the summer.

COMING NEXT: FULL STEAM AHEAD!


Tuesday, 22 August 2017

A disturbing new discovery....

by EWAN LAMB

An investigation by Not Just Sheep & Rugby has uncovered another mysterious chapter in the story of the Scottish Borders' failed £23 million waste treatment project following the release of 'commercially confidential' files on the orders of the Scottish Information Commissioner.

As we have reported over the last few days, the recently published paperwork showed Scottish Borders Council's deal with waste management contractors New Earth Solutions Group (NESG) was in deep trouble during the second half of 2013.

Project reports and emails from senior officers confirmed troubling issues had been encountered on two fronts - technology and finance.

There was even mention of the scheme to construct an Advanced Thermal Treatment (ATT) facility at Easter Langlee, Galashiels incorporating New Earth's self-styled NEAT technology having to be cancelled altogether.

The development of the NEAT system was proving troublesome while potential funders New Earth Recycling & Renewables Ltd (NERR) - managed by Premier Group (Isle of Man) - could not bridge the cash gap.

As an email written by a project team member warned: "NERR's cash balances stood at £5.484 million on August 20 (2013), down from £7.968 million on July 19 ---- the gap between the cash funds at NERR's disposal and the amount actually required to deliver the (Borders) project (£23 million) has widened over the past month".

By November 2013 NESG had advised there would be another two-year delay at Easter Langlee with construction of the ATT facility unable to start until June 2016.

A 120-hour technology trial of the NEAT system which started on November 17 had to be stopped after just five hours, and the plant had to be shut down to prevent significant damage. This event prompted a council appointed consultant to comment: "This may have been the final incident that convinced NES to come clean and admit that there was no chance of implementing NEAT on a commercial scale in 2014".

However, those engaged in the procurement of Project Easter Langlee appear to have been living in a parallel universe to that inhabited by directors and managers of the NERR fund, and by the top brass at NESG, our investigations have found.

A lengthy press statement issued on the Isle of Man by Premier, and dated November 28 2013, boasted that net assets of NERR "are now around £200 million". But that was not the only claim being made by those at the helm.

According to the news release NEAT was "patented and fully operational", and the company's 'stat-of-the-art' energy recovery facility in Avonmouth, Bristol could process 120,000 tonnes of waste derived fuel each year and exported enough electricity for around 25,000 homes.

The highly positive spin on the performance of NERR and of NEAT was part of a strategy leading to a "possible Initial Public Offering [IPO] on the London stock exchange to support ambitious UK and overseas growth plans".

These must have been staggering claims in light of what was happening with the Scottish Borders venture. But there is no indication that these fanciful plans were challenged or questioned by those in charge at SBC.

 Premier's statement declared: "Launched just over 5 years ago amidst the worst global financial crisis this century, the New Earth fund range have seen strong demand both in the UK and internationally such that net assets of New Earth Renewables & Recycling (Infrastructure) plc, the master holding fund, are now around £200 million.

"The fund’s investors have seen the value of their shares increase by nearly 84% in the original Sterling Sub-Fund of the Premier Investment Opportunities Fund Protected Cell Company plc, with very little volatility along the way, whilst even the more recent investors are looking at good returns over 6 months of nearly +6% in the same share class."

NERR investors were barred from making withdrawals from the fund from 2013 onward and the investment entity became totally insolvent in 2016 with more than 3,200 individuals warned they could expect to lose everything. And in 2013 NESG was already heavily in debt to banks and to NERR itself.

None of that prevented NERR director David Whitaker telling potential investors: "The successful conclusion of this project (IPO) will help New Earth make the step change required to take it on to the next level and, very importantly for the shareholders, should lead to a successful outcome for them too."

And Head of Premier, Mike Richardson provided this quotation:“We are really pleased that New Earth feel that the time is now right to make their move. Given the recent performance of the UK economy and stock markets, including a very successful high profile IPO, we are fully behind the decision and hope it will be as beneficial for investors in the funds as it will be for the New Earth themselves.”

A number of publications appear to have taken company statements at face value, and a clutch of positive articles were published, including a feature in the Financial Times.

Commenting on the future of New Earth to online trade magazine Let's Recycle, company chairman Bill Riddle said: New Earth started life as a composting business but is now firmly focused on residual waste treatment, thermal technology development and renewable energy generation. The NEAT technology offers scope for us to become not just a national company, but an international one."

Unfortunately the Stock Market flotation never happened, the finance to develop Easter Langlee was never in place and the NEAT technology continues to cause problems at Avonmouth to this day.



Monday, 21 August 2017

Not so NEAT: Borders project in intensive care!

DOUGLAS SHEPHERD shows why Scottish Borders Council were so keen to hide evidence...

If the lack of progress on the Scottish Borders' £23 million waste management facility at Galashiels was concerning the group of council staff and their advisers attempting to procure and deliver the scheme then their frustrations must have been magnified many times when the contractors warned of a further two year delay because of serious technical issues.

Newly released top secret documents from the Scottish Borders Council/New Earth Solutions files include stark warnings from consultants in December 2013 that:

*Development of the Easter Langlee Advanced Thermal Treatment [ATT] plant could be cancelled altogether.
* There was a risk that SBC would have no solution for dealing with the region's residual waste.
*New Earth Solutions could have decided to put the Scottish Borders project "on hold".

Our previous revelations have provided strong evidence of the repeated technical issues which were preventing any meaningful progress on the development of the so-called NEAT pyrolysis and gasification system needed to incinerate rubbish in the Borders.

And funding for the multi-million pound Easter Langlee job was dependent on the refinancing of New Earth's recently completed Avonmouth Energy from Waste project near Bristol. That particular plant would develop major problems in the months and years ahead, and it is currently closed down completely to facilitate radical modifications involving major additional investment by new owners.

The 'investment house' regarded as the most likely to bankroll the Borders venture was New Earth's partners New Earth Recycling & Renewables [Infrastructure] Ltd (NERR).

Reports and emails from two firms of consultants working for SBC - Nevin Associates and SLR Consulting - reveal the extent of the growing crisis which was threatening to envelop the project well over a year before SBC decided enough was enough and abandoned the scheme at a cost to local taxpayers of at least £2.4 million.

The SLR report, written after visits to Canford, the New Earth R&D centre in Kent, and to the Scottish Borders, coincided with NES's bombshell letter indicating a potential two years delay to the project whilst a demonstrator facility was built at Canford and was proven, leading to a re-jigged construction programme at Easter Langlee with commissioning now pushed back to July 2017.

The somewhat technical explanation states: "The justification given for the delay is the financing requirement to demonstrate a significant operation through from front-end to final engine exhaust as an integrated facility demonstrating utilisation of heat recovery and efficiencies of operation throughout".

This followed on from an unsuccessful attempt to reinstate a 120-hour testing programme when a new issue was determined and explained as being in connection with over-drying of feedstock and loss of sealing plug in the feed system which in turn led to a safety issue for the process.

According to SLR's expert: "As a part of the justification the implication is that NERR financing is more risk averse due to issues emanating from the Avonmouth facility's failure to meet targets and some scepticism perhaps with regards to anticipated outputs.

"Indirectly it was reported that the facility at Avonmouth operates at up to 75% of targeted performance and perhaps reading between the lines this may also be at the sacrifice of availability although this was not officially confirmed by NES."

SLR's report also reveals that between Oct 2015  and Feb 2016 the revised target was now for 2000 to 4000 operational hours leading to an ability to commit to financial close for the Scottish project in early 2016.  

"It was pointed out that plant operation indicated as July 2017 could jeopardise Renewables Obligation certification and NES indicated that they would look to bring this to March 2017 for operations to commence. Overall the programme seems to be very loose and SLR should question its accuracy and the ability for NES to be able to firmly guarantee anything with respect to meeting the proposed targets – especially in light of an inability to demonstrate 120-hours operation on the simplistic test facility within the past 6 months plus."

NES were unable to provide any confirmation with regards to conditions imposed by their own test facility finance which might be required before their project commencement date of April 2014 although this might link to demonstration of 120 hour test with the current test rig. 

SLR's report concludes: "In summary it is difficult for SLR to understand whether there is a reticence to try to develop because; data attained does not show the process favourably; if operational issues at Avonmouth are taking priority or are showing some fundamental issues with the technology; if the technical team are capable of addressing and managing the problems to an expedient solution."

The bottom line was that NES would not be in a position to commence work on the ATT facility at Easter Langlee until June 2016 although even that date - more than two years behind schedule - appeared optimistic.

In a separate contribution to the debate Nevin Associates wrote: "The 120 hour technology trial for NEAT starting on November 17 stopped after five hours when 'the fuel that forms the plug preventing air ingress into the pyrolysis tube failed, and in order to prevent significant damage to the plant, the plant was shut down.' This may have been the final incident that convinced NES to come clean and admit that there was no chance of implementing NEAT on a commercial scale in 2014 ."

Yet again Not Just Sheep & Rugby believes it must point out that Borders councillors had sanctioned the use of NEAT technology in OCTOBER 2012. It is therefore extremely surprising, and perhaps concerning, that the new files contain not a single contribution from elected members of the local authority.

There is no mention of councillors who should have been supervising planned expenditure of £23 million asking questions about potentially fatal blows for a vitally important environmental facility. If meetings were held and minutes were taken then they certainly have not been produced so we can only conclude they do not exist. 

The public's elected representatives must therefore shoulder responsibility for the decision to allow work on the project to continue unhindered beyond 2013 despite the evidence from documents now publicly available for the first time.

Nevin's report pointed out the revised programme meant that the detailed design of the Canford project would be completed by April 2014, and construction of the Canford demonstration facility would commence in July 2014.

"The facility itself will, on this programme, only become operational in July 2015, and revised schedule for the Easter Langlee facility – i.e. start on site in June 2016 – implicitly assumes that there will be no significant problems at Canford. If there are, then one could anticipate further delays, or even cancellation, of the Easter Langlee ATT facility.

"This could leave us hanging on the outcome of the Canford trials, over which we have no control, and if those were to fail or (more likely) take longer than anticipated to succeed, then we would still potentially be exposed to the risk of having no treatment solution in place for the Council’s residual waste."

In a separate comment, the consultant declared: "The paucity of information on the progress of the project suggests that NES have in effect put the Scottish Borders project on hold,".

NEXT: CRISIS, WHAT CRISIS?  NEW EARTH CLAIMS N.E.A.T WILL MAKE THEM WORLD FAMOUS


Sunday, 20 August 2017

Council "in the dark" over waste project start date

by EWAN LAMB 

A start date for construction of the £23 million waste treatment facility to deal with household rubbish in the Scottish Borders had still not been fixed some two and a half years after local councillors awarded a potentially lucrative contract to debt-ridden 'specialists' New Earth Solutions.

The uncertainty which prevailed in late 2013 as to when building work would get underway at Easter Langlee, Galashiels is outlined in some detail in reports and emails made public for the first time via Freedom of Information requests.

And while apparently insurmountable issues continued to bedevil technology trials for the so-called NEAT Advanced Thermal Treatment system planned for the Borders site, New Earth bosses were becoming more and more frustrated over the "attitude" of the Scottish Environment Protection Agency [SEPA] towards the granting of an operating certificate for the incinerator.

Not Just Sheep & Rugby has reported in the past on attempts by the contractors to pressurise SEPA into sanctioning the paperwork for Easter Langlee. Now correspondence between NES and Scottish Borders Council confirms SBC was deeply unhappy with the attempts to steamroller the independent Scottish watchdog.

A report from September 2013 which was written by NES sets out their position. It states: "As SBC is aware, we disagree with SEPA in a number of areas relating to their need for certain data in order to process the certificate.  Now we are through the “difficult” part of the project (i.e. the planning application), as discussed at the previous meeting, we may need SBC’s assistance with lobbying through Scottish Government to bring pressure to bear on SEPA. .

"We  met with Zero Waste Scotland (at an event) and expressed frustration with SEPA’s approach and we will be following up on this initial contact."

The council was less than pleased with NES's attempt to hector SEPA. A response made public with the rest of the 2013 file reads: "In relation to your soundings to ZWS  regarding SEPA's performance, can you please refrain from further discussions until the situation has been discussed with the Council. 

"We do not believe that representations to another government body (Quango) on the performance of a regulatory body reflects well on us (NES are effectively representing the Council to deliver the project) and could cause the Council future (wider) issue with SEPA, if they take exception to the complaint route that has been taken.

"As discussed at the last contracts meeting, if NES feel that SEPA's performance needs to be challenged then a meeting is to be convened with the Council to discuss the issue, the risks, the approach and who is best place to take it forward."

The floundering contract was hit by another wave of misfortune the following month, according to a document attributed to a consultant who also had membership of the Easter Langlee project team.

The report makes it clear it appears likely that the start on site for the advanced thermal treatment facility will be later than anticipated, because of delays in technology testing, and the knock-on effect this will have in securing the permit.from SEPA.

"The All Reasonable Endeavours (ARE) report indicates further slippage in technology trials, with the second 120 hour trial delayed until the week commencing October 28th 2013.", added the report.
"From a non-technical viewpoint, one's impression reading the report is that there are still some significant technical issues to be overcome before NES could be confident enough to finalise design of the ATT facility, let alone start building it."
 
And the consultant added to the growing negativity surrounding the project by writing: "Rather ominously, but not surprisingly in the light of the technology trial delay, page eight of the October ARE states that NES are currently carrying out an internal review of the delivery timetable, and 'then wishes to discuss the timetable with SBC. It is anticipated that additional time will be required to deliver the integrated facility.' .


"So we're still in the dark as to the likely start date on site, or commissioning date for the integrated for treatment facility, although in the October ARE NES state that they are targeting financial close for March 2014, commencing construction in April 2014 and service commencement in July 2015. It is in NES's financial interest to get the facilities up and running as early as possible so that they start becoming cash generative, but on the facts as presented this timetable looks optimistic."

As things turned out the new "timetable" outlined by NES proved to be remarkably optimistic. As we will report next SBC would soon receive a letter from New Earth warning of a potential two year delay to the entire scheme.

However, even faced with that devastating setback there is no evidence in the newly released files that SBC even contemplated pulling the plug on the contract in November 2013.

Saturday, 19 August 2017

Tensions grows as waste project stalls

DOUG COLLIE dissects another batch of damning evidence from council files

The growing sense of frustration among members of Scottish Borders Council's £23 million waste treatment project team following the technological and funding problems encountered during 2013 can be revealed in detail for the first time thanks to the release of highly sensitive documents.

More than two years after the original 2011 deal with waste management contractors New Earth Solutions [NES] the money needed to build the "state of the art" gasification and pyrolysis facility at Easter Langlee, Galashiels had still not been sourced.

And as our series of articles on new material obtained under Freedom of Information shows the so-called NEAT Advanced Thermal Treatment (ATT) incineration system remained a long way from proving itself to be commercially viable despite receiving a green light from Borders councillors.

So far as funding was concerned everything seems to have depended on the successful re-financing of the NES treatment plant at Avonmouth, Bristol so that cash could be returned to NES's offshore investment partner, Isle of Man based New Earth Recycling & Renewables [NERR]. But as we have already reported the re-financing had hit snags and was threatening to derail Easter Langlee completely.

This link between Avonmouth re-financing and Galashiels was highlighted in an email from a senior official at SBC to NES in September 2013.

He wrote: "The (project) Risk Register gives a “1” (very low) risk rating to the possibility of NERR not having sufficient funds to meet the development costs of the project.  Such a low risk rating does not seem to be supported by the evidence provided.

"NERR’s cash balances stood at £5.484 million on August 20th down from £7.968 million on July 19th – i.e. the gap between the cash funds at NERR’s disposal and the amount actually required to deliver the project (£23 million) has widened over the past month.  NES refer to "gross subscriptions of £56.9 million in the last 10 months at a rate of £5.7 million per month", but make no reference to withdrawals from the fund, and hence the rate of net subscriptions, which is the relevant consideration with regard to funding availability for Easter Langlee. 

"The conclusion would seem to be that the Avonmouth refinancing may be crucial to securing the finance for the Scottish Borders project."

Project Easter Langlee was faring no better on the technological front as yet another report demonstrates. Although aspects of the document are technically specific we have deliberately not edited the following passages so that a complete picture can be conveyed to readers.

"The trial was started with a feed rate of 30Hz, but the gas pressure within the drum became unstable and the feed rate was reduced to 15Hz.

"Ceramic filter panel lost power due to heating element shorting causing a protective trip to isolate the panel.  At this point the plant was shut down normally and safely without the cleaning elements operating for 2 minutes whilst the trip was reset.

"The plant was re-started at 15Hz, this was stable and the feed rate was increased to 17.5Hz. Despite the temperatures rising they were still within acceptable limits. The feed rate was increased to 22.5Hz and allowed to stabilize.  At this feed rate the gas pressure fluctuations in the pyrolysis drum were significant.  The flare temperature was also noted to be falling."

Not Just Sheep & Rugby has also decided to publish a commentary on the August/September 2013 technical hitches in full. It was prepared for SBC by a consultant.

It reads as follows: 

"The crux of the matter is that the engines have so far not operated at full capacity, and only time will tell if the engines can indeed operate at 100%.  The engine management system is currently limiting output to 25%, achieving 100% output is a large step up given the issues NES have previously faced. 

"For example, the ARE (All Reasonable Endeavours) report states the purpose of the 120hr run is to confirm the operation of the complete system over a prolonged period of time. The system can currently be run and has successfully been run on 3rd and 4th September 2013.

"However, NES acknowledge that upon examining the data and physical results of the trials to date, areas have been identified that require modification to enable successful long runs to be completed. It should be noted that a specialist engineer from the engine is not available until 1 October 2013 to make the required modifications.  However, there does not appear to be any mention of what this modification is or what it entails.  Are NES in a position to confirm the modifications will allow the engines to operate at 100% for 120 hours?"

So what were the potential implications of these latest setbacks at the company's research and development establishment in faraway Kent?

Another member of the project team pulled no punches when providing his assessment. He wrote:
"Potentially it leaves us in a limbo not knowing exactly what the extent of any delay might be, and  what the operational implications are for the Easter Langlee landfill site or on what basis budgets from 2014/15 onwards should be prepared – i.e. will the Council need to continue to landfill through to mid-2016?

"On the facts as now known, it seems to me quite possible that the technology development may delay commissioning and the start of operations from June 2015 to June 2016; - this may not be a deal breaker, but to keep our own principal properly informed we need to know.

"NES must come clean with us regarding the exact nature of the technological issues that they are seeking to overcome, and a realistic methodology and timetable to address them. I just feel at the moment that we are suffering a little from the "mushroom syndrome", with NES being somewhat disingenuous in seeking to apportion blame for the delay to SEPA [Scottish Environment Protection Agency]. 

"This may be a defensive mechanism on their part, to avoid the risk that we can refer to the legal provisions of the contract to claim damages from them in the event of a significant delay. In which case, a pragmatic way forward might be to assure them that this is not our intention, provided that we are kept fully informed of what progress is being made, and given a realistic date for the commencement and commissioning of the ATT facility."

On this evidence the entire venture was in serious difficulty in September 2013. But the non-productive saga would be allowed to continue consuming public funds for another 17 months before contract termination.

NEXT: THE BLAME GAME AND SOME DEVASTATING NEWS



Friday, 18 August 2017

£6 million profit for Borders PPP operators

EXCLUSIVE - by OUR FINANCE UNIT

The Luxembourg controlled partnership which provides services under a Private Public Partnership (PPP) agreement for three Borders secondary schools has achieved operating profits of more than £6 million since the properties in Eyemouth, Duns and Earlston became fully operational in 2009.

Meanwhile Scottish Borders Council, the so-called finance debtors in the controversial 30-year project, currently pays more than £6 million per year in liability and service charges plus £2.6 million in interest in an annual bill for the schools of more than £8.6 million.

According to the local authority's latest set of accounts total payments to be made for the PPP on the three educational establishments will be £238.5 million by 2038. This includes a bill for interest of £34.7 million.

Newly published financial statements covering 2016 for the so-called Scottish Borders Education Partnership [SBEP] - part of the giant Bilfinger Berger organisation - reveal an operating profit of £769,000. SBEP is registered at an address in Maidenhead, Berkshire.

It follows healthy six figure profits for the previous seven years ranging from £619,000 in 2009 to £911,000 in 2014. The yearly surplus averages out at £755,000, and following the 2016 result the overall operating profit breaks the £6 million barrier at £6.041 million.

As the statement explains the principal activity of the company is the provision of operational and maintenance services including "related financial arrangements" for the Borders schools. SBEP will continue to operate the properties for the 30 years covered by the agreement they have with SBC.

The firm is provided with a regular income stream which is subject to deductions for service shortfalls and the unavailability of facilities. Interest on the finance debtor is charged at 5.47%.

According to the report: "Financial penalties are levied by the authority in the event of performance standards not being achieved. In 2016 deductions of £115,000 have been levied (2015 £25,000) representing 3.24% of turnover.

"The project continues to perform generally in line with expectations and management of the scheme both logistically and financially remains under control".

The corporate structure of the partnership is set out in the accounts statement. It explains that SBEP is a wholly owned subsidiary of Scottish Borders Education Partnership [Holdings] Ltd. One hundred per cent of the share capital of this organisation is held by BBGI Investments SCA which in turn is an indirect and wholly owned subsidiary of BBGI CAV SA, a Luxembourg investment company.

Details are also provided of a so-called Bond Loan relating to senior secured funding totalling £68,33 million of which £15 million is held by Prudential Annuities Ltd and £53.33 million by Prudential Retirement Income Ltd with a 2.604% index linked coupon.

NAMED: EIGHT potential funders for New Earth

DOUGLAS SHEPHERD continues our story of the troubled Borders waste project

Waste management contractors New Earth Solutions identified eight separate banks and financial institutions "in strictest confidence" as likely backers for re-financing to release money for a £21 million incineration plant to serve the Scottish Borders after members of the project team expressed doubts about the company's ability to secure funding.

A series of top secret reports and email exchanges from mid 2013, released by Scottish Borders Council (SBC) on the instructions of the Scottish Information Commissioner, give an indication that representatives of the local authority were losing patience with New Earth over the crucial issue of funding.

The money for the Advanced Thermal Treatment [ATT] plant at Easter Langlee was supposed to be channelled through the Isle of Man-based New Earth Recycling & Renewables Fund (NERR}. But a lack of progress prompted SBC to ask for a schedule showing NERR's monthly subscriptions and disbursements as the re-financing of another plant at Avonmouth, Bristol stalled.

According to a contribution from a financial consultant commissioned by SBC in June 2013: "NES’s statement that they cannot supply us with a schedule showing NERR’s predicted monthly subscriptions and disbursement as it is "potentially price sensitive information" is disingenuous. They have provided such forecasts in the past, and we have always treated them as commercially confidential, not in the public domain, and released to us purely to provide assurance regarding the availability of funding for the Easter Langlee project, in which we have a legitimate interest.

"No member of the Council's in-house or advisory team would release this information to any third party, and we would only use it generically in reports to Council, to confirm that NES have provided reasonable assurances that funding for the project will be in place when the necessary permits and consents have been secured. Without this, we cannot provide such assurances to our principals.

"One possible inference from NES’s response is that NERR’s subscriptions have fallen behind earlier forecasts  (which is suggested by their cash balance of £7.7 million) and therefore there is a risk that NES may not have sufficient funds to meet the capital costs of Easter Langlee by early 2014.

The question is then what we do about it. I believe that the only thing we can do is flag it up to our principals (Elected Members) that funding availability remains a risk factor, notwithstanding NES's discussions with potential alternative fund providers (including the Green Investment Bank), although obviously we hope that they will ultimately bear fruit."

The following month NES sent the council a report in an apparent attempt to allay fears over the financing of the multi-million pound project.

Their document states: "We are currently in a refinancing process, the participants of which are commercially sensitive.  In May 2013, we presented to 11 parties. We then decided to proceed to an Avonmouth ERF site visit with eight of these 11 parties. On the understanding that the Council treats this information in the strictest confidence, we can disclose that the eight parties as being UK Green Investment Bank, Siemens, Macquarie, Santander, Investec, Star Capital, Amber and Ecofin. "

And for good measure the report added: " Based on discussions held to-date, we are confident of receiving three or more term sheets and achieving refinancing proceeds to NERR of circa £25m (as opposed to the £20m previously indicated)."

If the funding of Easter Langlee was "up in the air", the same was certainly true on the technology front with more negative reports emanating from the NEAT technology R&D chambers in Canford, Kent.

Here is an extract from a "progress report" assembled in July 2013.

"The 120 hour trial commenced at 23:15 on 15 July 2013. The system was run for a continuous period of 54 hours. At this point, a failure of a roller bearing supporting the pyrolysis drum occurred. The bearing was replaced and the trial continued. For the majority of the trial (to date), the gas has been flared, although the gas engine has been run for short periods. This is due to analysis of the gas leaving the engine showing that the temperature is too high, such that it may cause damage to the engine. The high temperature is due to the compression ratio of the engine."

At this stage it should be borne in mind that members of SBC had sanctioned the inclusion of the completely unproven NEAT system in the Easter Langlee facility nine months before that gloomy report was written.

NEXT: YET MORE DELAYS ON THE FUNDING FRONT AND NEAT MISFIRES AGAIN!