Friday, 23 June 2017

Will May keep this gravy train running?


Farmers in the Scottish Borders and elsewhere must be hoping at least one Tory manifesto policy survives the political carnage which has seen many of the party's flagship pledges ditched and shredded.

Gone even before a deal with the DUP could be stitched up were promises to introduce more grammar schools, to legalise foxhunting in England and Wales, to levy a 'dementia tax' on folk requiring care, to deny many pensioners their winter fuel payments along with the removal of the triple lock on the state pension. All conveniently abandoned to keep a lame duck prime minister in power for a while longer.

However, the well worn Hammond/May mantra "we must live within our means" continues to get regular air time, and there was nothing in the Queen's Speech this week to suggest there would be extra billions for education, the NHS and for other suffering public services.

So if there is no spare cash floating around The Treasury, where will the estimated extra £9 billion come from to deliver the Tories' commitment to guarantee the current level of financial support for British farmers post-Brexit? In other words, to extend the Brussels Common Agricultural Policy's (CAP) 'dripping roast' from 2019 to 2022. Or will this solemn promise be quietly buried too?

Last year more than 154,000 UK businesses collected in excess of £2.86 billion in subsidies, slightly less than the £3.185 billion which supported 183,000 separate recipients the previous year.

In 2016, more than 26,000 different Scottish rural businesses received a CAP payment from EC funds. The hand-outs were worth over £647 million, and a significant proportion of the money was used to promote environmental projects and schemes aimed at resisting climate change.

Research carried out by colleagues at Not Just Sheep & Rugby would suggest the Government will have to come up with more than £150 million over three years if farm related businesses in the Scottish Borders and North Northumberland are not to suffer financial losses once the CAP gravy train hits the buffers.

In the twelve months to October 2016 1,191 agri-linked entities across the region received £47.2 million following the 2015 statistics which showed some 1,300 businesses pulled in around £63 million from EU funds.

The loss of such a significant level of subsidy would blow a large hole in the Borders economy. According to tourism experts the money spent in the region by visitors on food, drink and accommodation is worth £65 million a year to hotels, restaurants and pubs. So the complete removal of CAP benefits from the Borders would be on a similar scale.

An economic profile for the Scottish Borders, produced by Scottish Borders Council in 2013, stressed: "It is critical for the local economy that CAP reform continues to deliver support for an innovative and competitive agricultural sector. Total income from farming in Scotland is less than subsidies received (£589 million income against subsidy of £633 million, so industry dependency on direct support is high".

Here is a postcode breakdown of the farm payments which found their way into the Scottish Borders in 2016, including some of the main beneficiaries:

TD1 - GALASHIELS - 49 businesses received a total of £2.304 million (2015 £3.620 million): including L G Litchfield, Bowland Farms £295,441; T & J Elliot £136,594; Torwoodlee & Buckholm Estates £127,536; Mrs C M Reid £126,541.

TD2 - LAUDER - 46 businesses received £1.664 million (£2.260 million); including W H Sharp & Son £108,415; W M Barr & Co £106,633; Firm of Sutherland £100,105.

TD3 - GORDON - 21 businesses received £1.671 million (£2.141 million): including G McDougal (Bassendean) Ltd £256,585; J & T F Macfarlane £484,213; Haddington Farms £152,502; R W Morris & Co £127,816.

TD4 - EARLSTON - 21 businesses received £1.067 million (£1.157 million): including Fans Farming £172,367; J W Fullerton & Sons £192,533; Hamish Morison Farming Ltd £120,450; Messrs R & J Scott Aiton £110,078.

TD5 - KELSO - 163 businesses received £7.249 million (£9.450 million): including C G Greig Farms Ltd £258,886; Balgonie Estates Ltd £197,634; Floors Farming £231,378; James Mitchell & Partners £187,847; Lochtower Ltd £128,629; D & D W D Thomson £151,835; Messrs J Jeffrey £168,460; Playfair Farms £129,882; T W & T B Edgar Ltd £203,876.

TD6 - MELROSE/ST. BOSWELLS - 64 businesses received £2.016 million (£2.922 million): including Mertoun Estate Farms £173,218; Messrs Maxwell (Faughhill) £112,067; Scottish Borders Council (Woodlands) £97,252.

TD7 - SELKIRK - 83 businesses received £2.858 million (£4.909 million): including BQ Farming Partnership Ltd £212,248; Langholm Farms Ltd £182,256; Sir F M Strang Steel £146,152; W N Douglas £113,440.

TD8 - JEDBURGH - 86 businesses received £3.153 million (£4.270 million): including Firm of Nisbet Mill Farm £190,896; R G Barbour & Sons £177,815; Robert Neill & Partners £135,589; Messrs A A Scott £121,019; J W Ogilvie & Partners £107,560.

TD9 - HAWICK/NEWCASTLETON - 171 businesses received £5.204 million (£8.389 million): including G W & M Richardson £106,813; H & M Farms £180,262; R H Brunton & Co £101,738; R J & T J & M T Feakins £183,718; S H & P M Shirley-Beavan £115,093; W S Davies & Son £108,370.

TD10 - DUNS/GREENLAW - 24 businesses received £907,000 (£1.871 million): including J C & K C Constable Ltd £104,239; John Mitchell & Co £106,899; The Firm of James Orr £129,683.

TD11 - DUNS/ABBEY ST. BATHANS - 126 businesses received £5.987 million (£8.017 million): including A M & A Calder Farms Ltd £168,885; C A Ramsay Partnership £119,164; Catchelraw Trust £150,923; Charterhall Farm £101,631; Ellemford Farming Ltd £120,556; Harehead Farms £170,380; Macfarlane Farms Ltd £220,361; R & J McDonald £212,752; R P Cowe & Co £107,057; W Arnott & Co £131,160.

TD12 - COLDSTREAM - 19 businesses received £759,000 (£1.162 million): including Ladykirk Estate Farms £152,584.

TD13 - COCKBURNSPATH - 16 businesses received £403,000 (£1.355 million): including J P H Wight & Co £78,596.

TD14 - EYEMOUTH - 55 businesses received £1.725 million (£1.583 million): including Eyemouth Freezers Ltd £319,313.

TD15 - BERWICK-ON-TWEED - 162 businesses received £6.902 million (£7.527 million): including A T Barr & Co £143,870; G H Millar (West Foulden) Ltd £106,810; Conundrum Farm Partnership £102,787; J A Frater £103,867; J E Armstrong & Son £166,147; Joicey Partnership £291,497; R T de Plumpton Hunter £184,552; Penmar Farming £443,295; R C Reed £136,936; Sunwick Farm Ltd £106,427; The President Estate Farming Partnership £240,133; Todd Farms £129,154; W L Douglas & Son £281,638.

EH45 - PEEBLES - 48 businesses received £1.515 million (£2.278 million): including Glenrath Farms £111,828; J P Campbell & Sons £212,171.

Wednesday, 21 June 2017

Creditors of SBC contractor will get 1.5p in the £


The mountain of debt which finally engulfed Scottish Borders Council's waste management contractors New Earth Solutions last year may have been as high as £116 million, it has been revealed.

And non-preferential creditors who previously thought they might recoup between four and eight pence in the pound will get just 1.5 pence in the pound while claims from unsecured parties have rocketed fourfold from £9.1 million to a staggering £36.289 million.

The latest financial statistics in the New Earth Solutions Group disaster are disclosed in a progress report to creditors by joint administrators Sarah Bell and Philip Duffy, of insolvency specialists Duff & Phelps.

Yet again it must be emphasised that members of Scottish Borders Council either failed to check on or were completely unaware of the company's fragile monetary state throughout the lifetime of a four year contract.

The fact that the local authority even considered doing business with such a debt-ridden Group simply beggars belief. The council decision to hook up with NESG cost local taxpayers at least £2.4 million, and the urgently needed waste treatment facility at the heart of the deal was never even started.

Documents seen by Not Just Sheep & Rugby show that NESG was heavily in debt to banks in 2011 when SBC sanctioned its original multi-million pound deal, but was also in hock to its associated off-shore fund New Earth Recycling & Renewables [Infrastructure] plc or NERR prior to a contract deed of variation being signed by councillors in October 2012.

The Duff & Phelps report shows there is insufficient funds from sales of assets to pay off the secured creditor (Co-op Bank) in full. The Co-op was owed £41.8 million.

Next in the pecking order of so-called secured creditors came NERR, the now bankrupt Isle of Man investment fund chosen by SBC to bankroll the £21 million waste plant at Easter Langlee, Galashiels.

According to the report: "NESG was historically funded via quasi-equity from NERR. [The fund] provided the Group with funding for ongoing trade as well as capital improvements. The funds were provided under a debenture created on September 19th 2011.

"As at the appointment (of administrators) the indebtedness to NERR totalled in excess of £39 million. As NERR's security is subordinated to the Co-op's debt there is no prospect of any distribution being made to NERR under its security".

Hundreds of investors and shareholders in NERR who lost everything now know their money went to prop up the struggling NES Group even though they had been told the fund invested in new waste recycling facilities in the UK.

So did the millions of pounds which NERR handed over to NESG in September 2011 mean the "green" fund could no longer finance the Scottish Borders project?

Within three months of the debenture being finalised New Earth informed SBC that a conventional facility to treat the region's rubbish could no longer secure bank funding. Surely the paying public have a right to know the full facts relating to the disastrous contract failure.

Duff & Phelps had expected to conclude the administration of NESG this month with a move to dissolve the business and remove its name from the Register of Companies.

But the report explains that a request has been made to extend the administration by twelve months to June 2018.

"The extension is necessary following the requirement of the joint administrators to include a provision for a significant non-preferential claim", says the report. "The claim is currently the largest submitted within the administration.

"However, it has not yet been possible to conclude the position in respect of this claim and therefore the extension will be required to conclude the adjudication of this claim".

There is no indication in the report as to the identity of the claimant or the amount being sought. A further progress report is likely to be issued in the near future.

Tuesday, 20 June 2017

Workers seek £109,000 from failed building firm


A group of 15 former employees of a Borders building company which crashed into administration late last year are taking the firm to an employment tribunal in a bid to claim over £100,000 in so-called protective awards.

The trade union representing workers who lost their jobs at long-established Galashiels builders Murray & Burrell is basing the case on the alleged failure of the company's management to consult prior to the appointment of an administrator.

Meanwhile it has been revealed that claims from ordinary creditors, estimated at £800,000 in November 2016 has now climbed to almost £2 million which means previous indications that all creditors would be paid in full may have to be scaled back once a final reckoning is reached. It now also seems unlikely that any funds will be returned to shareholders.

The information is contained in a progress report to creditors from administrator Richard Gardiner which sets out a series of developments since his appointment last November.

Mr Gardiner reports: "The sale of the company's plant, equipment, motor vehicles and stock realised more than my agent had anticipated and debtor collection to date has far exceeded my own expectations with further amounts still to be collected."

The sale of the yard from which the company traded has been completed for £167,000. Mr Gardiner anticipates the sale of the firm's development site at Craigpark Court, Galashiels will change hands for £540,000. Proceeds from the sale will go towards paying secured creditor Assetz Capital Ltd, the business which holds a bond and floating charge over all Murray & Burrell's assets, and which was owed £727,000 at the end of May 2017.

Mr Gardiner's report also shows employee claims will be in the region of £34,000 for arrears and holiday pay and £187,000 for notice/redundancy pay.

He adds: "However, in February 2017 I received notification that 15 of the employees, acting through their union, are seeking protection awards against the company for what they claim was a failure to consult. Having discussed the matter with the directors and legal agents, the decision was taken to vigorously defend the claims and a hearing date is awaited from the Employment Tribunal. It is estimated that if the Tribunal were to make the awards in full these would amount to some £109,000."

The report shows the sale of the company yard for £167,000 was to the Trustees of the Alexander Kemp Pension Scheme. Mr Gardiner explains that Mr Kemp is a former director of Murray & Burrell and the husband of Sally Kemp who is a director of the firm.

A number of asseys remain to be released, including a development site at Buckholm Corner, Galashiels which has been valued at £750,000 to £1 million. That valuation has been challenged by the firm's directors who also have an interest as representatives of the two major ordinary creditors, ASM Developments (owed £564,000) and Waukrigg Developments (£231,000).

"This land had been on the market with another agent prior to administration, but there had been little interest", writes Mr Gardiner. "From discussions with various agents it would seem that there is currently little interest for plots of this size in the Borders area".

D M Hall, the agents who valued the Buckholm Corner site have agreed to 'revisit' their assessment prior to fully placing the property on the market. The directors have also suggested the possible appointment of a joint marketing agent to reach out to potential purchasers from overseas.

Mr Gardiner also explains that following a review of old planning applications in the Borders area on which no development has commenced, Scottish Borders Council had indicated an intention to remove this land from their Development Plan.

"As the intention is to sell the land for development I instructed my property agents to lodge a defence and this has been submitted to the council in order to preserve the value in the land", he states.

There has also been little interest in a site at Lilliesleaf valued at between £200,000 and £275,000.

The development of nine houses on Craigpark Court land had commenced prior to administration. Two properties had been completed, one of them having already been sold and the second being used as a furnished show house.

This site was subject to "an onerous Section 75 planning obligation" (developer contributions) which could potentially put off prospective buyers or lead to reduced offers.

"The purchaser (of Craigpark Court) ius a provider of social housing and is thus usually exempt from Section 75 obligations".

In a section of the report entitled Prospects for Creditors, Mr Gardiner says: "My staff continue to receive and log claims from (ordinary) creditors. Ordinary claims are currently projected to be in the region of £1,996,000 but I would stress that, to date, no formal adjudication has been carried out on any claims and this is merely an indicator based on the creditor list provided by the company and claims received to date".

The estimated financial position of the firm included within the administrator's proposals published in January suggested that, based on the asset values provided by the directors at the time, a dividend of 100p in the pound would be available to creditors.

But according to the new report: "The level of dividend will depend on the final sales values that can be achieved for the various land and properties and, whilst I still anticipate that a substantial dividend could be available to ordinary creditors, I am unable to provide an estimate of the timing or quantum of such dividend until such time as the outcome of asset realisations is known. However, creditors should be aware that the assets remaining to be sold are likely to take some considerable time to sell".

In a message to shareholders, Mr Gardiner says the anticipated surplus in the estimated financial position of the company included with the January proposals indicated that there might be funds to be returned to shareholders.

He warns: "However, this now seems unlikely given the potential lower returns from the sale of assets, the costs of the administration and interest accruing on creditors' claims".

A note headed Directors' Conduct, the administrator says in terms of the Company Directors Disqualification Act 1986 and the insolvent companies (Report on Conduct of Directors) (Scotland) Rules 1996 he is required to prepare a report regarding the conduct of the directors who held office in the three years prior to his appointment.

"This report has been submitted but I am unable to divulge the contents of such reports", concluded Mr Gardiner.

Monday, 19 June 2017

Ticking all the wrong boxes!

EWAN LAMB reports on the Borders' latest waste management performance

Hidden away in a 44-page annex of a report to be considered by Borders councillors this week are four ticks in separate boxes, indicating that the local authority is on target and in line with national trends when it comes to waste recycling and landfilling.

Hardly surprising that Scottish Borders Council has awarded itself four out of four passes when it is allowed to mark its own homework book.

The annual and quarterly performance reviews show that in 2016 SBC managed to recycle 39.07% of the rubbish it collected, up from 36.89% the previous year. At the same time the tonnage of garbage being buried actually increased although the overall percentage dropped from 62.2% to 60.7%.

However - perhaps conveniently - there is no mention of how SBC is doing compared to national averages or when their data is set alongside other Scottish local authorities who form a 'Family Group' for bench-marking purposes.

The Scottish Government's recycling targets continue to be missed by a country mile in the case of Borders. The aim was to achieve 50% re-use of waste by 2013, 60% by 2020 and 70% by 2025.

There seems little chance those ambitious heights will be reached by SBC following the complete collapse of its waste management strategy, the abandonment of a project which was designed to divert 80% of rubbish from landfill, and the recent decision by its own members to turn down a planning application for a waste transfer station.

According to this week's report to the influential SBC Executive: "Over the last four quarters there has been a small but consistent increase in recycling rate observed. This is thought to be related to the introduction of food waste kerbside collections, and in an increase in garden waste collected at the recycling centres.

"The tonnes of waste going to landfill have increased slightly over the period of the past four quarters. This could be related to economic activity. However, over this same period there has been a small but consistent decrease in the percentage of waste going to landfill.

Statistics for 2016 for all 32 Scottish local authorities will not be published by the Scottish Environment Protection Authority (SEPA) until September. But the 2015 data gives a snapshot of SBC's record compared to its brothers and sisters in that Family Group.

The Borders landfill figure of 62.2% for 2015 was only exceeded by Eilean Sar (Western Isles) Council on 64.8%. The other figures for the Group were Aberdeenshire 56.1%; Highland 54.6%; Argyll & Bute 48.7%; Shetland 22.0%; Dumfries & Galloway 29.3%; Orkney 23.9%.

The 2015 proportions of so-called other diversions from landfill (not including recycling) show SBC close to the bottom of the league. This section of the waste management figures comprises waste disposed of by incineration, recovered by incineration or managed by other methods.

The percentages for the Family Group were Dumfries & Galloway 43.5; SBC 1.79; Aberdeenshire 0.13; Argyll & Bute 17.4; Orkney 51.2;Eilean Sar 13.9;Shetland 68.8; Highland 0.9.

A fleeting reference to the "new" Easter Langlee waste transfer station merely tells us: "As planning consent was refused the project is now delayed and likely to incur significant additional cost".

Based on all available data the box ticking exercise which allows SBC to claim it is on target or in line with national trend or showing a long-term positive trend seems virtually meaningless.

Saturday, 17 June 2017

Uncovered: consultant's report on failed waste project

DOUGLAS SHEPHERD on first 'expert' paper to emerge from council's secret files

The role played by a team of at least twelve 'specialist' consultancy firms in the disastrous Scottish Borders Council/New Earth Solutions waste treatment project has never been publicly explained since the venture collapsed over two years ago with the loss of millions of pounds of taxpayers' and investors' money.

Experts in the fields of technology, finance and the legal sector were commissioned by the local authority to guide councillors and officials through the minefield of public procurement. Between them these firms collected around £1.6 million in fees, but at the end of four years SBC had nothing to show for that generous expenditure.

Now, for the first time, a consultant's report linked to the Easter Langlee waste treatment project has found its way into the public domain as an appendix to a larger confidential report submitted to a private council session at the dawn of the contract in 2011.

The report from financial consultants Nevin Associates - they were paid a total of £143,000 by SBC over the lifetime of the contract - examines the financial implications which might flow from the non-development of an energy from waste facility (Advanced Thermal Treatment or ATT) alongside a proposed conventional treatment plant.

In particular Nevin looked at various scenarios and how they might affect the solvency or insolvency of New Earth Solutions (Scottish Borders) Ltd. (NESSB), - known as the project company - which was specially set up to carry out the Easter Langlee project.

According to the report: "The construction of the ATT plant is not absolutely essential for service delivery. NES have confirmed that they can still deliver the service as specified in the contract by treating residual waste through a Mechanical Biological Treatment (MBT) plant and then securing an off-take contract for the solid refuse fuel (SRF) produced by the MBT process with a merchant plant outside the Scottish Borders".

Nevin Associates added that while NES intended developing an ATT facility at Easter Langlee, the process that New Earth envisaged using was still being trialled on demonstration plants, and although results appeared to be positive "it cannot yet be confirmed that the technology will prove to be feasible".

That clear marker appears to have been repeatedly ignored by councillors and officers alike for the inappropriately named NEAT technology never proved itself.

The investigation concluded that even if the generating capacity of the ATT plant turned out to be lower than forecast, the solvency of the project company would not be jeopardised, and would be in a position to continue delivering the contracted services.

Nevin went on to examine the likely outcomes for the NESSB if the ATT did not proceed at all, and off-take contracts for the SRF had to be secured. NES had indicated the off-take cost of SRF would equate to £65 per tonne.

Financial modelling showed that if the project company paid an off-take price of £54.01 a profit of £3.25 million would be generated over the project period, and NESSB would "remain solvent (just)".

Under an off-take price of £46.88 the profit over the 24-year contract period would fall to £2.378 million and NESSB would only be marginally solvent. Nevin commented: "Shareholders might not walk away, but to maintain solvency might have to accept suspension of sub-debt interest payments for a period".

NES had named a number of potential facilities that could accept SRF from Easter Langlee including one in Dumfries and another in THe Netherlands. According to Nevin: "It will be noted that some of these potential off-take facilities could have fairly significant transport costs associated with them".

The question therefore arose, wrote Nevin, of what the financial position of the project company would be if it had to meet a SRF off-take cost of £65 per tonne.

When two scenarios were analysed one concluded it was likely interest payments on subordinated debt would need to be suspended for a period while the other warned NESSB would run out of cash and become insolvent.

"In terms of the overall probability of project company insolvency if the ATT plant does not go ahead: The project team assessed that there is a 10% chance of the ATT plant not proceeding as a result of either technical or commercial failure with a somewhat higher risk that the implementation of the ATT plant could be delayed for these reasons.

"In the event of contract termination because project company becomes insolvent, the provisions of the project agreement are that the council will re-tender the contract and pay project company an amount equal to the adjusted highest compliant tender price in full and final settlement of all project company's claims against the council".

Should SBC be unable to re-tender the contract because of a lack of bidders then the council would be required to compensate NESSB for an amount equal to an independent expert's determination of the estimated fair value of the contract.

Friday, 16 June 2017

Controller of bankrupt recycling fund breaks silence


One of the businessmen who presided over a fund which was supposed to bankroll Scottish Borders Council's £21 million waste treatment plant has spoken for the first time since the debt-ridden investment firm went belly up almost twelve months ago.

But far from offering more than 3,200 investors in his worthless New Earth Recycling & Renewables [Infrastructure] plc or NERR an explanation or an apology - they face losses totalling in excess of £290 million - John Bourbon has branded an investigation into the fund's activities as "something of a witch hunt".

The NERR fund was part of Isle of Man based Premier Group which managed and controlled a range of investment vehicles all of which are either about to be dissolved or are teetering on the verge of insolvency. It is now the subject of a probe by the Isle of Man Financial Services Authority (IOMFSA).

Mr Bourbon, a former chief of the Manx financial regulator before joining the board of Premier Group, and his colleagues, collected tens of millions of pounds in fees from NERR and its associates before the Group also crashed late last year.

Between 2011 and 2015 NERR had the role of funder for the Scottish Borders project at Easter Langlee, Galashiels. But financial backing for the waste management plant never materialised, and since the collapse of the project in 2015 it has become clear that NERR strung SBC along with a variety of excuses.

As we reported recently, Premier Shareholders' Group (PSG), which represents some of the hundreds of investors who lost their savings in Premier's funds, has established that the NERR fund was the most lucrative in terms of fees earned for the parent company which was, in turn, controlled from the tax haven of British Virgin Islands.

In an interview with Manx-based journalist Adrian Darbyshire, of Isle of Man Today, Mr Bourbon addressed allegations of mis-selling and other dubious practices which have been levelled at his Group by PSG and others. A dossier of evidence running into many pages is due to be presented to members of Tynwald (the Manx Parliament) within a matter of weeks.

The dossier accuses Premier of paying large commissions to unqualified and unlicensed agents who then targeted pensioners by claiming the funds were 'low risk'. PSG goes on to allege that shareholders were trapped by punitive exit fees, often up to 30%, and they could not access their money after the funds suspended withdrawals.

But Mr Bourbon dismissed PSG's claims and told his interviewer it was unlikely that anyone with significant investments in his funds were unaware of the risk. All fees and charges were clearly set out in the documentation used to promote the funds, he explained.

He made the extraordinary claim that a greater number of people had made a profit from the New Earth fund which loaned cash for the development of waste plants in the UK before it was wound up by the Isle of Man regulators in July 2016. Those loans were made to New Earth Solutions, the contractors handed a multi-million pound contract by SBC. NES is also insolvent and in the process of being wound up.

A further 189 investors are believed to have lost £61 million in NERR's sister entity Eco Resources Fund which ploughed cash into bamboo plantations in Central America and South Africa.

Mr Bourbon is personally fighting moves by the Eco Resources Fund liquidator to have the fund wound up with an adjourned court hearing due to take place next month.

He told Isle of Man Today the fund retained the potential to produce returns for investors for years to come if it is refinanced.

"With the right liquidator, it would be possible to refinance the fund, pay off creditors and financial indebtedness by 2023 and be left with an asset which produces $25 million per annum for investors for the following 60 years", said Mr Bourbon.

Mr Darbyshire's article, which was published online today has already attracted many angry comments.

One writer declared: " Perhaps Mr Bourbon can explain why the Premier group appointed unqualified, unregulated and unlicensed 'agents' (calling them professional financial advisers) to sell experienced investor funds to inexperienced pensioners - some living alone aged over 80. These 'agents' vanished at the first sign of trouble, but Premier kept the money that they received and refused to hand it back. The PSG has absolutely NO record of Premier returning any money."

Thursday, 15 June 2017

Council assured waste project was "viable and fundable"

EWAN LAMB dissects the contents of SBC contractor's 'commercially sensitive' letter

A top secret letter sent to Scottish Borders Council by waste management contractors New Earth Solutions confirmed a planned treatment facility to serve the region remained viable and fundable without an accompanying thermal treatment system being available from the outset of the project..

But despite this seemingly cast iron assurance in February 2011 that a so-called Mechanical Biological Treatment (MBT) plant could be constructed and delivered on its own, the pledge was rendered worthless less than a year later when New Earth claimed a stand alone MBT without a thermal conversion capability could not secure bank funding.

A copy of the five page letter from NES outlining contingency plans should the Advanced Thermal Treatment (ATT) facility fail to materialise has been made public via Freedom of Information requests which were refused by the local authority, but upheld by the Scottish Information Commissioner.

Each page of the document is marked Confidential and Commercially Sensitive. It explains what would happen to the Solid Recovered Fuel (SRF) produced during the treatment processes at the Easter Langlee MBT centre, and discusses the various impacts which could affect New Earth Solutions (Scottish Borders) Ltd., the special vehicle set up to progress the Borders project.

Plans were in place for NES and SBC to share on a 50-50 basis any additional costs or benefits if the SRF had to be transported and treated by a third party outwith the Scottish Borders.

This so-called risk-share mechanism was to come into play if planning permission and/or a permit for the ATT were unsatisfactory or these consents were refused or if it proved technically or commercially not viable to deliver the ATT at Easter Langlee.

SBC had asked the contractor what the implications would be if the ATT was not technically or commercially viable. Ironically, the NES brand of technology remained incomplete and not fit for purpose four years after the letter was written. The ATT failure resulted in the contract being ditched with SBC forced to write off at least £2.4 million of taxpayers' money.

But back in 2011 NES wrote: "The proposed ATT facility supports the landfill diversion capability of the MBT, produces electricity to power the facility and generates revenues from the production and sale of renewable energy. The revenues generated are used to fund the capital and operational costs of the ATT. Without these revenues the ATT facility would not be viable".

However, if the ATT facility was not developed then the MBT would be re-configured to ensure the landfill diversion targets could still be met.

The letter continues: "NES would wish to point out that its future growth within the UK waste management market is based on incorporating on-site energy recovery within its MBT technology in new and existing waste treatment facilities.

"This means that over the course of the project, NES intends to develop an on-site energy recovery facility and thus, any use of a third party SRF off-take is likely to be on a short term basis or if, for unforeseen circumstances, the energy recovery facility is unavailable for short periods of time".

Then the council is told: "The project remains viable and fundable without the on-site ATT being available from the outset. At the point when an on-site energy recovery facility is ready to be developed, funding will be secured from the project funders i.e. New Earth Recycling & Renewables Infrastructure Plc (NERR).

Under the terms of the original contract the ATT could be delivered up to seven years after the MBT to allow the technology to be fully tried and tested. Both NES and NERR are now insolvent with mountainous unpaid debts.

The letter  explains that under the contingency plans for the Easter Langlee SRF, the fuel could be moved out of the Borders to one of many outlets. New Earth had recently agreed a deal with a major SRF user in Holland - The Van Gansewinkel Group - and material from the Borders could be hauled by road to Grangemouth before being shipped to The Netherlands.