To update the audit and governance committee on the current status of the energy from waste loan arrangement to enable the committee to fulfil its delegated functions.

Andrew Lovegrove, Chief Finance Officer, introduced the report the purpose of which was to update the Audit and Governance Committee on the current status of the energy from waste loan arrangement and to enable the Committee to fulfil its delegated functions.

During discussion the following principal points were made:

·        The loan arrangement was being repaid as expected and the Section 151 Officer had no concerns about the financial viability of the project.

·        There were concerns however about what would happen when the current contract arrangements came to an end and how new terms would be renegotiated.

·        At the end of the current contract there would be a balance outstanding on the loan but the value of the Plant was far in excess of this amount.

·        There were a number of options being considered for when the contract came to an end including agreeing an extension to the contract and refinancing, selling the Plant or the Council taking over the arrangements.

·        The role of the Audit and Governance Committee was to oversee the role of the Council acting as a bank.

·        It was never envisaged that the £40m would be repaid over the current contract as the value of the Plant greatly exceeded the cost of the loan.

The Committee RESOLVED that:

1.     The risks to the Council, as lender, were confirmed as being reasonable and appropriate having regard to the risks typically assumed by long term senior funders to waste projects in the United Kingdom and best banking practice; and

2.     Arrangements for the administration of the loan were reviewed and confirmed as satisfactory.

3.     The Section 151 officer writes to the Worcestershire Committee, referring to the dynamic nature of the ownership change, and requests that the Audit and Governance Committee is kept up to date with any changes to the risk register kept by Worcestershire in relation to this matter.