Page last updated at 10:43 GMT, Tuesday, 23 March 2010

Guernsey pays more than 11m on incinerator plans

Lurgi and Suez plant designs
Deputy Flouquet provided a breakdown of the costs

Guernsey States has spent more than £11m on tendering for two incinerators over seven years.

The figures were revealed in a written response to questions asked by Deputy Roger Domaille.

He wrote to Public Services asking for a breakdown of the costs of the tender processes that led to the appointment of Lurgi back in 2003 and Suez in 2009.

Deputy Domaille said the lesson to be learnt was that tendering was expensive and indecision had a high price.

Lurgi plant cost estimates
Consultant costs £1,501,878
Staff costs and overheads £250,000
Legal costs £298,540
Payments to Lurgi £3,551,161
Site costs £1,046,526
Loan interest £132,394
Total £6,648,105

Both companies were tasked with building waste-to-energy plants and currently both contracts have been subject to a change of heart by the States of Guernsey,

The Public Services Minister Bernard Flouquet, in his reply to Deputy Domaille, gave a breakdown of the figures for both projects.

He said: "The total costs for the Lurgi project, including all payments to the company up to the point when the States withdrew from the project, was approximately £6.65m.

"The vast majority of these costs were prior to September 2004, and applying a reflation factor of 17.9% to this total, would give a figure of around £7.8m as of January 2010.

Suez plant cost estimates
Consultants costs £970,810
Staff costs and overheads £250,000
Legal costs £297,000
Payments to Suez £782,000
Outstanding payments £2,418,000
Miscellaneous costs, including travel £24,164
Planning Inspector's Report £13,000
Total £4,754,974

"From January 2007 up to the present, the costs incurred in the procurement process that gave rise to Suez Environment being appointed as preferred bidder, and the subsequent expected costs still to be incurred under the Letter of Intent signed August 2009, have been approximately £4.8m."

The Letter of Intent means by withdrawing their status as the preferred tenderer the States is liable to pay Suez up to 4% of the contract price with a cap of approximately £3.2m.

Deputy Flouquet added: "Costs are approximate and certain other costs associated with the search for a waste treatment solution since the decision to cancel the proposed Lurgi contract are not included.

"This would include exercises such as the Independent Panel and the global technology search."

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