Martin Engineering Systems' bid to run the plant was rejected
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Guernsey's Board of Administration has hit back at claims it ignored a cheaper option for burning the island's waste.
Martin Engineering Systems (MES) said its waste-to-energy plant could save Guernsey £75m over the next 25 years, compared with the Board's preferred option.
The company called the whole tendering process into question.
But Board of Administration president, Deputy Roger Berry, said the MES bid was rejected for licensing reasons.
"We have to operate under certain health standards for flue emissions and how we deal with the ash the plant creates," he said.
"The way the company deals with the chemicals that deal with their flue emissions do not satisfy the Board of Health's requirements for licensing.
"We understand their system could not be licensed by Guernsey's Board of Health."