UPM dumps ‘untenable’ Dart deal for ReGen
(CNS): The Cayman Islands Government is going through the process of withdrawing from the deal it signed with a Dart-led consortium to take on the country’s waste management problem and the construction of a waste-to-energy facility. What had become the UPM’s worst kept secret was finally revealed in parliament on Thursday when Sustainability Minister Katherine Ebanks-Wilks confirmed that almost 2,500 days after the previous PPM-led government signed the last-minute deal with the islands’ wealthiest developer, the CIG has come clean that the talks to reach a final deal have failed.
Answering a question from former premier Wayne Panton, the previous sustainability minister who was the first to tell the country that there were significant challenges with the preliminary agreement signed by the Progressives just a few weeks before the election, Ebanks-Wilks revealed that the government was pulling out and “taking the necessary steps” to end it and start all over again because the project was “untenable”.
In response to Panton’s question and before she gave the full statement, she said, “Achieving a modern, sustainable and affordable solid waste management solution remains a top priority for the government.” But she said that this deal was unaffordable.
Dart was picked as the preferred bidder in October 2017, but discussions that began then on the ReGen waste management project rolled on for almost seven years. After the PPM signed a pre-deal, Dart was allowed to begin remediating the actual dump and began covering up Mount Trashmore, as the dump is known. Many saw this as a major mistake because it removed the government’s main leverage in the negotiations.
After she took over as the minister in October last year, following the Cabinet coup that ousted Panton, the novice minister was faced with a longstop deadline on 30 November to reach a deal on the complex and troubled project.
In her full statement, she told the parliament that there were still outstanding issues that had not been agreed upon that would have prevented the parties from being able to meet the deadline, so a new date would have to be agreed. At that point, Cabinet believed it needed to review the deal before setting a new date for the financial close, but there were some major unresolved issues, including risk, liability, indemnity and problems with insurance, as well as the matter of local company control.
The power purchase agreement between Dart, CUC and the government regarding the electricity generated by burning the rubbish was also problematic and protracted. As a result, that element had been taken out of the talks to allow the ministry and Dart to focus on the rest of the deal’s costs and other problems.
“Essentially… if we closed on the project agreement, we did not have a customer secured — the only customer on the island,” she said. Closing without that being resolved could leave the government unable to secure a competitive price per kilowatt hour, Ebanks-Wilks explained. “So the government would enter into a contract to sell energy, and the only client to buy the energy, CUC, had not yet signed the agreement.”
The minister said the government had always anticipated that the energy costs in the power purchase deal would be around 15 cents per kilowatt hour, but that had not been agreed. The review by Cabinet revealed a long list of challenges going all the way back to the original business case, she noted.
Given all of that, she said, Cabinet had decided it was time to consider terminating the project agreement. Explaining the potential issues relating to that, she confirmed there were no liabilities on the parties over the existing deals.
“We need to find a more affordable option for the future,” Ebanks-Wilks said. Pointing out how big an impact the deal would have on the country’s budget every year, she said the CIG could risk breaching compliance with the Framework for Fiscal Responsibility if it didn’t raise fees to cover this project’s cost, and given the current rate of inflation, this would be too much.
“This decision by Cabinet was not taken lightly,” she said, adding that the government remained committed to finding a solution. “We need to move away from landfilling as our main method of dealing with solid waste as it is essential to the continued sustainable development of the country.”
It was apparent that the solution, while necessary, had to be affordable now and in the future, but the problems were rooted in the original deal signed by the Progressives, she said. Since the years of rigorous negotiations had failed to solve a litany of problems, Cabinet had decided that the goal was to find a way out of the deal that was agreeable to both the CIG and Dart.
Echoing what Panton had repeatedly stated when he was the sustainability minister, Ebanks-Wilks said that the deal left by the PPM was far from a full deal that merely required a few loose ends to be tied up. Given how much of the proposed contract was unresolved, she said it was no wonder it had taken so long to try to agree a deal.
The deadline had been repeatedly pushed back to try to move it forward, but it became clear that the costs and risk for the largest project ever undertaken by the CIG were “untenable”. Ebanks-Wilks said, “The decision was based on facts and figures.”
She accepted that people would be worried that a major investment to this point would go to waste, but that was not necessarily the case. The remediation work on the old dump, which cost around $23 million, was a separate and important part of the overall clean-up, and the government had learned a lot, which will position it well for a new bid, she said.
The government is now reviewing the policy and the original strategic outline case for it, but she said the CIG would be in a good position to manage a much more successful tender next time.
With the current waste input, the Department of Environmental Health has said that it can use the landfill for another five or six years, provided that there are no major hurricanes. However, she said the government was well aware that it needed to apply the lessons learned and tender a revised project that would meet government needs, and it would begin the tender process as soon as possible.
Panton noted the complexities around the project and asked why the government believes a new tender would cost any less. The minister was unable to fully explain this but said that, given all the concerns, the CIG was going to end the project.
Chris Saunders asked the government to release the value-for-money report conducted by the auditor general. In response, Ebanks-Wilks wrongly suggested that it was not Cabinet who could decide whether or not to release it.
Joey Hew, who was the minister in charge of the project when the PPM-led government signed the deal and is also the brother of CUC’s president, asked about the problems with the CUC element. Ebanks-Wilks answered that while there were problems with that aspect, it was by no means the only issue that had sunk the negotiations.
Hew also raised concerns that the landfill would not last another five to six years. He asked if the government was considering a second site for landfilling and how it planned to manage the terrible smell throughout the area. Ebanks-Wilks said the government was confident it could get at least five years from the existing dump and, in the meantime, the dump would be properly managed.
Opposition Leader Roy McTaggart asked the minister about the final projected cost of the ReGen deal with Dart, saying it was impossible to understand how it had gone from $620 million to $2 billion, as has been suggested.
However, the minister said she was mindful of revealing that, given that a new tender process was about to begin. She said that the government would release as much information as it could going forward.
See the minister deliver the full statement below on CIGTV:
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Category: Environmental Health, Health
Another glorious day for the civil service……time for more awards franz!
mount thrashmore…the perfect monument to the failures and incompetence of caymanian mla’s and their attitude towards the environment.
Hope voters are ‘taking the necessary steps’ to have a clean sweep of these moronic, unprogressive. repetitive members of government who are ‘untenable’and a shameful detriment to the Cayman Islands. Get rid!
The smell is from the solid waste ponds upwind of the dump. They aren’t going anywhere. Why doesn’t Joey Hew know that?
Not sure I understand what the LCCL issue is with respect to a specialist waste to energy construction contractor etc. Does CIG think a majority Caymanian owned constuction company can build a waste to energy facility?
The legal, engineering and accounting firms involved are the winners – having billed millions in fees for this project.
There is absolutely no way that Mt Trashmore will last another four to five years and there will be a major hurricane!
Take the Dart offer of the land in the district of Bodden Town (the land is actually quite a ways inland from Bodden Town itself).
Construct a properly lined, common-sense facility and scrap any waste-to-energy plan (which is not likely economically feasible and needlessly complicates this).
yep ..but we can’t upset small minded backward bodden towners…..zzzzzzzzzzzzz
I hope that when a new solution is arrived at the country choses a partner with the experience to deliver.
yet the government can justify the craziness and the some $50M spent in the Julliana-ville, sorry, i mean The Brac, for a unnecessary sport facility thats being sold to us as a ‘school’
But of course not the heaping trash mound thats been in talks for the better part of 10+ years and the only people that did anything in that time and have it looking better is dart lol nice news here
Its safe to say that the gov will not fix this; current gov nor any in the future as it seems at this rate since its the same hooligans cycled through since i was a kid lmao
Sell the dump to Dart. Take the land he previously offered in Bodden Town that he would line and prepare for a proper waste disposal site.
It is only when government got the hair brained idea that they were sitting on a gold mine and could make money off the dump that this fiasco has happened.
Shut the dump and seal it all up. Turn it into a park. And make the old deal with Dart.
Problem solved.
Joey was right out front and deep in the middle of the Dart-CUC-Regen deal. Surely he should be able to educate the current Minister on all the details.
As reported on many times on CNS, the PPM deal to make a deal was a blank page without any substance or detail. This government is correct to reject it, and to rethink its relationship with this developer. They need to audit the NRA deal duty waiver exhaustion, and send them a collection invoice for back-duty, plus interest.
How come Jersey in the Channel Islands has had one for years, and even Tortola (they need to upgrade their one though ) Cayman is so backward with its waste management. Put it in and make CUC accept the electricity or remove their Licence, otherwise Goverment need to take control of the grid and set up their own electricity company.
You understand that you pay for this electricity, right? It gets bought by CUC and then passed on directly to you.
No surprise here. Good win for Dart, the landfill has been capped and he doesn’t want the waste to energy plant next to Camana Bay anyway. CIG now haven’t got the land to expand the present landfill so will have to relocate!! CIG are complete muppets! Interesting to see if CIG try and compulsory acquire Dart’s surrounding land….major legal battles on their way.
Exactly. Check mate. Mr D must be very happy indeed.
no one wins under the current arrangement….especially not dart…who is likely looking at legal challenge to cig incompetence
With the new bypass planned to the East and all the development planned along it already, meabs a new landfill should be positioned in the center of Cayman.
Bodden Town remains the best location, an they have happily sent their garbage to GT for decades, so time to return the favor
Bidden Town looking like a dump now anyway!
The latest in the long list of epic failures on the part of the CI Government.
Incompetence at its worst.
Indeed and starting with Minister Wilk’s Chief Officer I’m sure.
This is delayed competence. Rejecting a deal to make a deal without a merit case, was the right call. Took awhile. Let’s also hope that whatever the former PPM-led signing parties may have agreed to privately, comes back to haunt them with the ACC.
The new landfill hills look more attractive every day. Imagine green hills on Grand Cayman. Maybe that’s why people are coming from Nepal. Building Cayman up as high as possible is the way to go. Once the current GT uplands are complete a new mountain area should be planned between Savannah and Bodden Town.
But since Dart has been the one “greening” the current dump, I suppose all that will stop now too.
The Dump, Port and Airport are all things the Government have asked for proposals and signed MOU’s and then backed out. I believe all of these cost the Government Money to get out off. I am not sure why anyone would waste their time and money on proposals. The Government in power at the time will approve and sign an MOU and the new Government after them will cancel it.
Not exactly what happened here. Did you read the article? This deal was unworkable for the people of the Cayman Islands. Good call from André sitting-in for Juju.
correction. it costs US as its our hard earned the gov loves to waste so much (unintended pun).
Wayne Panton and Jennifer Ahearn’s legacies will be defined by the stinking shitheap to remain for all eternity.
9:20 am EXACTLY !!!
Minister of Donkeys – is that you trying to deflect attention from your incompetence?
Of course it was untenable. The expense and running cost were simply too high. Find a new location ( probably a disused quarry somewhere) and start properly preparing and lining it. Immediately start recycling of glass and metals, and all yard waste should be composted. Minimize generation of garbage and handle it in a safe, environmentally responsible and efficient manner.
This location should be in Honduras.
if only it were that simple….
It seems so very obvious, but no Government minister has the courage to do what is right regardless of losing popularity. What we need is a team of well educated new Ministers for the next Government who have made their money already, and really just want to do the right thing for this country. They cannot be bought or swayed. I am praying for this. Lord please deliver this for us! Cayman is crying out for it.
not surprised all the back door dealings that went on with this so called project for 10 years! Where is the report on exactly how much money we have lost on this, because i can assure you it wasn’t Dart losing.
Sadly this is not a surprise. The lack of vision and action by successive governments to deal with waste management in Cayman is astounding. We can’t deal with a simple issue of crushing glass let alone a sophisticated project like WTE.
I think its time to abandon the gold-plated waste management plan, which is something we can’t afford with such a small population. Not enough of a critical mass to make the capital costs feasible.
Time to go with something more reasonable; something in between the current dump and bury, and a gold-plated waste-to-energy solution.
Yes, I too would like to live in a $15 million mansion behind the gates in Vista Del Mar, but then I have to be realistic.
can u immagine the monthly fees the govt will probably levy on us to maintain that? lord have mercy…
More like we’d be paying indirectly through every orifice in our bodies for the next one hundred years.
I can’t see another private party now willing to step up on such a financially risky investment. A private third party is only going to want to do this if there is a highly probable likelihood of long-term profitability, commensurate with the risk, especially for a party with no connection to Cayman.
Back to square one. This is a long, long, long way from ever getting done.
Don’t worry, the UDP/UPM Family & Friends Enrichment Program likely already has companies laying in wait for when this project is re-tendered.
If Dart couldn’t get this deal done, no one will, thanks to to the “Panton/Ahearn” legacies of ignorance, delays and stubbornness.
More evidence that all of them are useless.
We could have had a modern landfill and recycling in the DISTRICT of Bodden Town years ago. I say district as everyone seemed to talk about it as if it would be right in the middle of the main residential areas, which it wasn’t.
So, we’ve wasted millions and continue to endanger the environment and people’s health.
But at least a few people have made some money on this farce so everything should be cool to keep stumbling along for a few more years at the current site.
Big Daddy Dart is not going to be to happy with this decision. Sure seems funny that when a contractor bids a Dart job, the Dart team wants the cheap prices but when they charge the government then the sky is the limit as far as pricing goes. Where does all that extra money go?
I think you’re wrong. Dart will be very happy as it is highly probable that any new solution will have to be done elsewhere. Success.
Bingo!
If this doesn’t outline how inept this government is, nothing will.
To be fair, all administrations involved in the REGEN deal messed up from the start when they decided to go with Dart. It was bound to fail.