Agenda item

The Committee considered the Technical Update - EFW Plant Reporting Requirements.

In the ensuing debate, the following points were raised:

·         Jim Heywood, a representative from Mercia Waste Management (MWM) reported that the company had met all the targets that formed part of the contract with the Council and there were no matters of concern to report to the Committee in relation to the repayment of the loan

·         Did the delay to the agreement of the revised financial model have an impact on the fee negotiated with KPMG? Rob Wilson, Finance Manager – Pensions and Treasury Management responded that this work would be included in the contract fee agreed between the County Council and KPMG

·         When would KPMG provide their assessment of the validity of the financial model? Rob Wilson commented that KPMG would only undertake their analysis when the revised financial model had been agreed. Negotiations were taking place and it was anticipated that these negotiations would conclude in January. KPMG would also be undertaking a ratio test on the ability of the MWM to repay the loan  

·         The lack of certainty about the conclusion of the negotiations was disconcerting and perhaps the Committee’s concerns should be reported to Council. Rob Wilson responded that every effort was being made to draw the negotiations to a conclusion as the financial model was in need of updating to reflect current prices. The Chairman indicated that this was a more appropriate as part of the consideration of the Risk register

·         In response to a query about the down turn in the recycled paper market, Jim Heywood explained that the market had reduced to the extent that it now cost the company to recycle paper. He could give no assurance as to when market conditions would improve. This highlighted the risks facing the company as it entered into the contract negotiations. At present the increased income from electricity production was offsetting these costs. Despite these difficulties, every effort was made to recycle materials because sending materials to landfill would impact on the company’s performance against the contract terms

·         In response to a concern about the increase in throughput of the EfW plant and the enforced plant shut downs and how this related to maintenance levels agreed in the contract, Jim Heywood explained that when the furnace was burning at 350 degrees, it was difficult to predict exactly what technical issues might occur. Every 3 years, there was an agreed longer period of maintenance. With the recent issues experienced with the plant, it had been agreed to bring some of this maintenance work forward. The revised permission to increase the throughput should not have an impact on the agreed level of maintenance

·         It was concluded that there were no matters of concern that needed to be reported to Council.

RESOLVED: that

a)    the main categories of reports or information that the Borrower must regularly produce and the Senior Term Loan Facility Agreement (STLFA) Assurance Statement for the Council and operating update attached as Appendix 1 to the report be noted;

b)   the update on the financial model and ratio analysis be noted; and

c)    there were no matters of concern to report to Council.