Dublin City Council said today there is nothing surprising in the findings of a report that suggests taxpayers could be exposed to paying financial penalties ranging from €187 million to €350 million over 25 years for the Poolbeg incinerator.
The report, compiled by John Hennessy SC for former minister for the environment John Gormley, said the “put-or-pay” clause in the council’s contract with American waste management company Covanta could cost as much as €14 million per annum, on average.
This “worst case scenario” would arise if waste volumes reduced by 1 per cent per annum, recycling rates increased at 3 per cent per annum (to a level of 60 per cent) and the market shares of the Dublin local authorities reduced by 3 per cent per annum.
The findings of Mr Hennessy’s review of the council’s contract with Covanta, carried out under section 224 of the 2001 Local Government Act, were revealed in a letter from Mr Gormley last Friday to Éamon Ó Cuív, his successor in the Custom House.
Responding to the publication of details from the report in Mr Gormley’s letter, a spokeswoman for the council said the findings were based on the way the terms of reference for report were drafted.
“Covanta and the four Dublin local authorities are satisfied that even after maximum recycling, there will be sufficient waste for the Poolbeg incinerator and therefore the scenario envisaged by the terms of reference will not arise,” she said.
She said the “hypothetical figures” quoted by Mr Gormley did not take into account that under the terms of the agreement Covanta has the option to source waste from outside the Dublin councils.
The council said the Poolbeg project had been assessed and approved by An Bord Pleanála, the Environmental Protection Agency, the Commission for Energy Regulation, the National Development Finance Agency, the Competition Authority and the Department of the Environment.
“This project is the right size, in the right place, with the right technology for the right price. It’s what Dublin’s economy and environment needs,” she said.
However, Mr Gormley claimed today the local authorities had signed a “crazy” deal with operators and developers of the waste-to-energy plant, Covanta.
“I believe it to be in the public interest for this report to be published as soon as possible, as it identifies potential penalties of up to €350 million if the project goes ahead,” he said.
“Under the crazy deal signed, the Dublin local authorities will have to pay significant penalties if they fail to provide sufficient levels of waste to the facility.
“Now, because of the recession, increased recycling rates and more competition, the councils are collecting nowhere near the 320,000 tonnes a year they are obliged to provide.” At full capacity, Poolbeg could handle 600,000 tonnes of rubbish a year.
Mr Gormley said he has known about the threatened multi-million euro fines for months after commissioning Mr Hennessey to examine the Poolbeg contract.
Brendan Keane, spokesman for the Irish Waste Management Association (IWMA), said it supports a balanced approach to incineration.
“The Poolbeg incinerator is a relic of the ‘Celtic Tiger’, and the potential waste of money associated with it now mirrors the types of losses more commonly associated with Nama,” Mr Keane said.
“The IWMA is fully supportive of incineration as part of a balanced approach to waste management but it is essential that it is appropriately sized in the market.
“Not alone does the Poolbeg project represent a massive loss of money to the taxpayer, it poses a risk to recycling rates, to employment, and to our chances of developing a balanced approach to waste management.”