THE CONTRACT BETWEEN Dublin City Council and US waste company Covanta for the Poolbeg incinerator has been renegotiated as the project is again pushed back.
A legal tender posted on the EU website TED (Tenders Electronic Daily) in June shows that the contract has been extended from 25 to 45 years, and the controversial ‘put or pay’ clause has been removed.
The ‘put or pay’ clause in the original contract was a guarantee that Dublin City Council would provide at least 320,000 tonnes of waste annually for the incinerator, and make up the difference in the event of a shortfall. This amount was estimated to have been potentially as high as €350 million over the lifetime of the project.
In place of the ‘put or pay’ clause, there will now be a revenue guarantee for the first 15 years. The amount guaranteed is not specified in the tender.
However, head of waste management for Dublin City Council Peadar O’Sullivan said that in the event of a shortfall, the local authorities would have to make up roughly 58 per cent of the cost, while Covanta would be responsible for the remaining 42 per cent. He did stress, however, that the contract has not yet been signed, and that as of now these figures are estimates.
The reasons cited in the tender for the change of contract is that the council no longer regulate the waste market, which has been opened up to private companies. For this reason the tender states that “the contracting authority [Dublin City Council] can no longer deliver waste and has a reduced functional role, requiring as a direct consequence that the Original Contract be restructured”.
O’Sullivan also confirmed that building has again been delayed, saying that he is “hopeful construction will start within the next few months,” although he did note that there is “no firm date at the moment”.
Delays
Construction has been delayed after a complaint was lodged to the European Commission by Sandymount residents Joe McCarthy and Valerie Jennings.
They claim that the council breached EU public procurement directives by awarding the contract to a company who didn’t bid for it [Covanta], and for increasing the capacity of the incinerator from 400,000 to 600,000 tonnes a year. The final breach that they cited was that the amount spent on client representative services was almost three times the initial estimate, up from €8.3 million to €28.4 million.
O’Sullivan told TheJournal.ie that the council is expecting “a favourable response in the coming months”. McCarthy, however, said that the complaint is “progressing quite well in Europe”, and said that he is also expecting a good response.
McCarthy claims that the council is attempting to rush through the project, and says that the original contract has been treated as “a state secret”.
“Dragged out all the time”
Several Dublin City councillors have also been unsatisfied with the handling of the incinerator by the council executive. Councillors voted on a Fianna Fáil motion in March to have the Department of the Environment take over the project. While the councillors did receive acknowledgement from the Department, councillor Jim O’Callaghan (Fianna Fáil) says that this is unlikely to happen.
O’Callaghan told TheJournal.ie that the project is “being dragged out all the time”. He also said that the councillors haven’t even seen the original contract for the incinerator, and that “nobody knows what’s happening”. He claimed that there was doubt “over whether it’s still going ahead or not”.
Covanta also still have to raise the necessary funding for the project. O’Sullivan said that the issue is “far advanced” and that the council expect it to be finalised “in the coming months”.
Dublin City Council has previously granted Covanta multiple extensions to secure funding. The latest extension was agreed on in April of this year, giving Covanta until 31 August to secure funding.
The council claim that the project is a vital aspect of their waste management plan as part of a government effort to reduce the amount of waste going to landfill, and is necessary to avoid EU fines set to come into effect in 2016.
The incinerator is expected to take 3 years to build and will cost an estimated €350 million. The project has cost over €90 million so far and has gone on for over a decade.
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