Sunday 22 September 2019

Waste-to-energy firm Covanta lost €48m as Dublin plant started up

Burning ambition: The Covanta plant in Ringsend has reached its full capacity of processing 1,800 tonnes of solid waste a day. Photo: Conor McCabe Photography Ltd
Burning ambition: The Covanta plant in Ringsend has reached its full capacity of processing 1,800 tonnes of solid waste a day. Photo: Conor McCabe Photography Ltd
John Mulligan

John Mulligan

The controversial waste-to-energy facility at Dublin Port racked up a €48.8m loss in 2017 as the plant came on stream, accounts just filed for the business show.

The €500m plant is owned by US firm Covanta and a unit of Australia's Macquarie investment bank, and was developed as a public-private partnership with Dublin City Council, which acts on behalf of the four Dublin local authorities.

The accounts show that the facility generated turnover of just under €40m in 2017 and exported 151MW of electricity to the grid.

The plant processed 278,700 tonnes of waste last year and made an operating profit of €11.3m.

The waste-to-energy plant was designed to handle 600,000 tonnes of waste a year from the Dublin region. That waste is material that might otherwise have gone to landfills. Last November, it reached a goal of processing 1,800 tonnes of solid waste a day - its full capacity.

The owners were considering a plan earlier this year to increase the amount of waste processed by the facility by 90,000 tonnes a year.

The 2017 figures for the company behind the facility include a €6.6m loss on interest rate swaps, €13.5m in interest, and €37.4m lost on the extinguishment of debt.

In December last year, Macquarie's Green Investment Group (GIG) acquired a 50pc stake in the Dublin waste-to-energy plant, paying €136m in cash.

Covanta CEO Stephen Jones told news agency Bloomberg at the time that the US group's total equity investment in the Dublin waste-to-energy facility was between €150m and €175m.

"With GIG's investment into the facility for a 50pc stake, we are getting most of our investment back, at €136m, which enables us to fund the new growth projects in the UK," he said.

"There is a landfill levy in place in both Ireland and the UK, and this sets a fairly high gate fee for waste disposal in those countries," said Mr Jones at the time.

The latest set of accounts for Dublin Waste to Energy show that it had shareholder funds totalling €154m at the end of 2017. The company directly employed just three staff members during 2017, all of them managers. Their combined pay for the year was €683,000.

In December last year, the firm refinanced senior and junior debt.

The new refinancing package included €396m of senior secured project debt under a credit facility agreement between the firm and various lenders.

The proceeds of the new finance and other funds were used to repay a senior term loan that was due in 2021, a junior term loan that was to fall due in 2022, and other transaction-related fees and expenses.

Tranche A of the new senior term loan carries a 3pc interest rate, while tranche B carries a 2.77pc rate. Interest on tranche C is calculated as the six-month Euribor rate, plus 2.15pc.

Last month, Covanta reported third-quarter results, with revenue for the period rising to $456m (€400m). It made a net loss of $27m (€23.6m).

Covanta's global waste-to-energy facilities convert approximately 20m tonnes of waste into electricity.

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