Norfolk EfW contract cancellation could cost 30m

The report – compiled by the councils director of environment, transport and development summarises the potential costs from different scenarios surrounding contract termination and will be considered at a full council meeting next week (June 17), at which councillors are to debate the two motions which both call for a withdrawal from the contract.

The council awarded the 500 million deal to Cory Wheelabrator to build an energy-from-waste (EfW) incinerator in Kings Lynn in February 2012 (see letsrecycle.com story).

However, the proposals have met with considerable local opposition and a public inquiry was launched earlier this year into whether to award the facility planning permission. The inquiry ended on May 17 and communities Secretary Eric Pickles is due to make a decision by mid January (see letsrecycle.com story).

The project was thrown into further doubt last month when the Conservative within the council who largely support the contract lost their overall majority and big gains were made by UKIP, which opposes the facility (see letsrecycle.com story).

Costs

According to the council report, terminating the contract for failure to secure planning permission could expose the county council to the prospect of meeting Cory Wheelabrators costs of up to 20.3 million.

The council could also be forced to pay 1.5-2 million towards Cory Wheelabrators public inquiry costs and around 11 million from cancelling arrangements put in place to mitigate the risk of changes in foreign exchange and interest rates, based on current markets.

However, should the council voluntarily walk away from the contract, the report states that the cost to the council would be significantly higher than for termination linked to planning failure.

This is due to a combination of costs from this scenario, such as repayments to banks that have helped to fund the project, redundancy payments for the contractors employees, sub-contractor breakage costs and the value of all expected returns on the investment made by Cory Wheelabrator over the remaining service period up to 2040.

The report includes a briefing note by Paul Brittain, head of finance at the council, which states that the cost of voluntary termination is likely to be of such a scale as to have significant adverse impact on both day to day services and the sound financial standing of the council.

Council debate

Two motions are to be considered at the council debate on the incinerator contract next week (June 17) one calling on the council to withdraw from the contract after a decision on planning has been announced by the secretary of state following the public inquiry and another urging the council to scrap and oppose any plans for an incinerator in Norfolk by all legal means.

Should councillors vote in favour of either motion at the debate, the issue would go to the council cabinet, which would then have the power to take the councils recommendations to terminate the contract, proceed with the incinerator plans or call for more evidence.

Contract review

Furthermore, Norfolk council cabinet members yesterday (June 10) gave the green light for independent legal advisors to conduct further detailed investigations of the Cory Wheelabrator contract, calling on incinerator opponents to lead on selecting an independent QC for this process.

The cost of the contract investigations will be footed by the county council, with reports resulting from the reviews delivered to the council as quickly as possible.

Leader of Norfolk council, Labours George Nobbs, said: It is vital that independent reports are commissioned to ensure councillors are in possession of the fullest possible information before taking a final decision. But with so many people believing that this project has been shrouded in secrecy, we feel it is only right that they themselves are able to play a part in choosing the person who will conduct the review, so that there can be no question about their autonomy.