DUBLIN CITY COUNCIL has told the Minister for the Environment that it would be forced to pay Covanta up to €200m in compensation if it triggers the break clause in its contract over the Poolbeg Incinerator.

The contract, signed on September 4, 2007, was revealed by RTÉ last week to contain a clause allowing either party to withdraw from the contract if certain criteria are not met within three years of its signature. That deadline passes today.

Those criteria include the issuing of a foreshore licence which would give the incinerator access to water which would be used as a coolant, which has not yet been issued by John Gormley’s department.

However, it is unclear as to whether the clause can actually be exercised anyway, as the City Council has initiated a compulsory purchase order for the lands adjacent to Dublin Bay where the water would be sourced from.

The €200m cost of withdrawal from the contract, therefore, is likely to be constituted mainly of payments that Covanta, the American company building the plant, are entitled to based on a minimum level of waste being processed.

The Sunday Business Post, reporting the story today, says the level of waste going into Dublin’s two landfill sites at present is less than the city council’s minimum requirement, but that the council remains committed to the project regardless. Gormley, on the other hand, has insisted that the project will not go ahead.

City councillors are due to be briefed on the current state of affairs tomorrow.