The latest opportunity to terminate the Sinfin Incinerator contract was defined, to the exact date ( 30 September 2018), nearly 9 years ago. It was not a surprise to anyone. The position is simple. If the plant has not been awarded its completion certificate by that date then both Councils ( City and County) can jointly end the contract. The contractor has known that, the Councils, and the banks who have bank-rolled the project, have known it.
Some aspects of the whole arrangement may well be confidential. What is confidential is not an exact science. We are all at the mercy of the Council’s Legal Officer as to where on the scale, the bar is set. Many would suggest that he is being ultra-cautious. It then becomes a balance of power based on who controls knowledge. It is difficult to challenge people who are publicly accountable when they decide how much information they reveal about how well they are serving the public.
As this point was so predictable, then one would assume that discussions have been on-going between all parties to prepare the ground for a decision which could be taken. Perhaps some of the “confidentiality” is a cover for the fact that the preparatory work has not been done?
Constitutionally, the Officers are just that. The elected members, the Councillors, are there to represent the people, set policy and make decisions within the legal framework. This week saw the administration close rank, turn their back on the policy of being “open and transparent”, and opt to maintain 100% privacy. The post-Cabinet meeting press releases were bland, gave no sense of direction, was not remotely sensitive to the real issues that were affecting the residents and just reinforced a perception about successive Council leaderships.
It is a myth that everything to do with this issue is commercially confidential. Given that the prime rationale for this project was for a cost saving to Derby City Council based on savings against land fill tax, and sale of electricity, then the Council Tax payers are major stakeholders in knowing whether the future payment of £25 million and the real health risks are worth a cost saving of up to £2m ( anecdotally this has deteriorated significantly)
The only information that should remain confidential is that which is the preserve of a 3rd Party which doesn’t impact on the outcome of the business case. However, much is in the public domain. It is known that:
- The main contractor has significantly overspent their project budget by around £50m on £145m. The Council contribution is capped at £25m.
- Resource Recovery Solutions ( main contractor) is illiquid and is being kept afloat by bank loans. It needed to have completed the Sinfin Incinerator by 30th June 2018 to receive the cash from the Councils.
- As this didn’t happen they had to take another bank loan/mortgage on the buildings from a Japanese bank, of the order of £40-£50m.
- Financially, RRS has no net value. Without the Sinfin Incinerator as a going concern it will collapse.
- If the Incinerator contract is terminated, then it is unlikely that RRS would be able to pay off the loans. In which case the banks will seize the building. Unlike, with domestic houses, selling it on would be difficult, but they would need to recover their loan. Without an operator, it will lose value. The bank, no doubt will have recourse back to the holding companies – Interserve plc and Renewi plc. Interserve is in a very fragile situation, financially, so may be unable to service the debt. That becomes commercially confidential, but should not have consequences on the residents of Derby. If it does then this should be made public.
- The contract also covers the existing waste management activities. There is a question mark over how continuity would be assured if the contract is terminated. However, as RRS will have a loan to serve then they would be obliged to continue with this to generate cash during their inevitable administration period. If there is a consequence then it should be made public.
- The contract in the public domain does not impose penalties on the Councils if the contract is terminated due to Contractor default. If this is not the case then it should be made public.
This could all be considered to commercially confidential but, actually, is all in the public domain ( or can be easily inferred) and therefore could have been spoken about in the public section of any meeting without fear of any retribution.
Is the Council’s political policy commercially confidential? Why can’t the Council give some direction in order to be open and transparent. This is not Brexit! This is a simple construction project where the position is well documented. Will they terminate in December 2018, or are they “just kicking the can down the road” in the hope that the problem will go away, or that the public will forget?
There was a golden opportunity to make a difference, create “clear blue water” in public presentation from the previous administration, and show some sensitivity on this much-ignored issue ….but it was all missed in a very public way.
Now there is an unnecessary information vacuum for 3 months…
Categories: Derby City Council