Poolbeg firm may be dropped - council

Dublin City Council will seek a new partner to build the Poolbeg incinerator if ongoing negotiations with the current contractor are not successful, a public inquiry was told yesterday.

The council would then have "no option" but to terminate the agreement currently existing with Danish Oil and Natural Gas (Dong), the company which has the contract to build the proposed incinerator, according to a letter from Dublin's assistant city manager, Matt Twomey.

It was read out at the third day of An Bord Pleanála's hearing into the council's plans to build the incinerator on behalf of the four local authorities in the capital.

The proposed facility would burn 600,000 tonnes of waste annually in Dublin, providing enough power to generate electricity for 50,000 homes through a process called thermal treatment.

More than 2,600 residents and most politicians in the area are objecting to the plans.

In 2005 Elsam, which merged with Dong last year, won the contract to finance, design, build and run the incinerator under a public-private partnership plan.

Mr Twomey's letter said Dong had sought to change the manner in which it would finance the deal. Instead of providing 100 per cent of the corporate financing through its own resources, it was instead proposing to provide 25 per cent of the cost and seek the rest through third parties.

The letter went on to say Dong and its new partner, Covanta, an American-based waste-to-energy company, had sought "significant changes" to the original agreement and were therefore "non-compliant" with it.

The letter, dated from last February, concluded: "If Dong/Covanta are not prepared to proceed with corporate financing and commercial terms as agreed in 2005, the city council has no option but to terminate this procurement and commence a further one with a view to agreeing revised commercial terms for the project."

The letter was read out at the hearing in the conference room in Croke Park by Eoin Hardiman, who represented Tánaiste Michael McDowell and local PD councillor Wendy Hederman.

When asked by Mr Hardiman if the council was prepared to pull out of the deal, Mr Twomey replied: "That may be necessary if the negotiations which are ongoing are not successful."

However, Mr Twomey also stressed that those negotiations were not at an end, and a statement from Dong, which was placed on the record at the hearing, stated that the company was still in "continued, serious negotiations".

It also said it was engaged with the statutory process, including the ongoing oral hearings. Last week Mr McDowell claimed the deal between the council and Dong had effectively collapsed.