Essex county council and its waste infrastructure contractor Urbaser Balfour Beatty have failed to reach agreement over contractual issues and now a court hearing is on the cards.
The authority confirmed today (20 June) that preliminary steps towards a court hearing were underway over the MBT plant built by Urbaser Balfour Beatty under a long term waste contract for Essex. Urbaser today referred enquiries to Balfour Beatty and the latter noted that it had nothing further to add to the local authority’s statement.
The first residual waste arrived at the Urbaser Balfour Beatty (UBB) mechanical biological treatment (MBT) facility at ‘Tovi Eco Park’ near Basildon in November 2014. Construction work started on the facility in March 2013.
The council said this spring that the MBT plant is accepting waste and achieving diversion from landfill but “is still in its commissioning phase and the contractual longstop date has passed.”
Committee minutes explained that parties were utilising “contractual mechanisms to seek resolution to the commissioning issues that have arisen.” Consequently, “the Facility, and associated PFI liability, will not be recognised in the Council’s Balance Sheet until the Acceptance Test Certificate is issued for the Facility or a likely future obligation exists.”
And, alongside its financial statement, the authority commented: “the Council cannot yet demonstrate that the economic benefits and service potential of the Plant will flow to it, as the Plant remains subject to testing. The Council has therefore determined that the asset and the associated PFI liability should not be recognised within its financial statements for 2016/17.” (for earlier articles about the plant: see letsrecycle.com story)
As at 31 March 2017, both parties made detailed submissions to the experts but, in a statement to the council’s Audit Committee which is meeting next week, the authority said there had been no agreement from going to the experts.
On the financial front, the council has noted that the outcome “remains uncertain. It is not possible to provide an indication if any additional contract costs will be incurred as a result of the range of possible outcomes. The council has taken expert advice and as a result no liability has been recorded in these financial statements.”
Now, on Monday the Audit Committee is to discuss events since the authority’s balance sheet date. The committee has been told that: “Since 31 March 2017, there have been further developments in relation to the waste treatment plant. Following the outcome of the review by independent experts, no satisfactory resolution has been reached and the parties to the Contract have entered into the preliminary period of initial hearings prior to commencement of proceedings in court.”
Cllr Simon Walsh, Essex county council cabinet member for environment and waste told letsrecycle.com: “During the ongoing commissioning period at the Basildon MBT plant, Essex county council has been aware that our operators UBB were experiencing plant performance and process issues. We have worked closely with them to attempt to resolve these.
“Both parties have been using the appropriate contractual mechanisms to resolve these issues. The next stage in this process, where there has been no final determination of the issues, is for matters to be considered by the court and we are in the preliminary stages of this next step.
“Because of the confidential nature of the contract and the status of discussions, we cannot discuss these matters publicly, and it would of course be wrong for us to do so. Our contractor is bound by exactly the same constraints. It is important to note that the Basildon MBT is operating, and diverting considerable waste from landfill.”
Meanwhile, Essex said in January 2017 that it was ‘urgently’ procuring a short-term refuse disposal contract to avoid a waste treatment capacity gap of up to 255,000 tonnes (see letsrecycle.com story)
Cllr Walsh explained: “The purpose of the procurement of new framework agreements for the disposal of waste is to ensure contingency waste disposal arrangements are in place. This is to ensure that Essex county council is able to meet its ongoing statutory obligations as Waste Disposal Authority in coming years, ensuring value for money for taxpayers.”
And, he added: “This procurement also aims to secure new disposal arrangements for refuse-derived fuel, which is an output from the Basildon MBT.”