Byron Council have been forced to explore the possibility of a public private partnership to fund its planned bioenergy facility in Byron Bay.
It’s an option that would effectively mean privatising the plant and the public land it sits upon, for 25 years or more.
In the latest chapter in the six-year saga over the proposal to build the waste-to-energy plant next to the Byron Sewage Treatment Plant (STP), it has now emerged that Council cannot viably fund the $23M project by itself, and that government funding is unlikely to be forthcoming in the near future.
At last week’s meeting, councillors voted to submit a proposal to the state government for the project to be considered for ‘initial assessment’ as a Public Private Partnership (PPP).
This follows an unsuccessful funding application to the Australian Renewable Energy Agency, which Council had been counting on to bankroll the project as part of its business plan.
While this does not commit Council to going down the privatisation path, it is a significant step in that direction.
Preparing the application will cost the Council $70,000, adding to the $1.3M it has already spent on the plan.
In a written report to the meeting, Council senior project officer, John Hart, spelt out the financial challenges that Council now faced in trying to fund the project.
‘The size of the financial contribution required by Council to the Bioenergy Facility Project is considerable, and has the potential to significantly increase Council’s debt position if it chooses to deliver this project without any private sector financing via an approved PPP,’ Mr Hart said.
He noted that, at June 30, 2022, Council had $58.77 million owing in loans. ‘[I]t could take up to 25 years to recover the initial investment if Council had no alternative funding partner,’ he said.
Mr Hart also noted that government grant funding in relation to waste was now directed mostly toward helping other NSW councils set up a three-bin garbage system to divert organic waste away from landfill.
He said that two new infrastructure grant streams were proposed at the federal level in 2023, but funds would not be forthcoming until 2024, at the earliest.
This left Council with few viable options if it wished to continue with its plan to build the facility in the near future.
Under the PPP plan, a private company would obtain a 25-year lease for the land from Council. The company would also operate the facility. It would take up to two years for the facility to be up and running.
All voted in favour
Councillors are divided over the privatisation plan, though they all voted in favour of exploring it as an option.
Independent councillor, Mark Swivel, spoke in favour, arguing that Council needed to find other ways of financing the project after its previous attempt to get federal grant funding was unsuccessful.
‘A project like this should be Council owned, but given that option appears to no longer be tenable, I think we need to find other ways of financing it,’ Cr Swivel said.
‘It wouldn’t involve any selling of land to a private entity, so it’s not the worst kind of privatisation of public assets.
‘As I understand there would be a buyback down the track’.
Mayor Michael Lyon said that he was only in favour of exploring the PPP as a ‘last resort’.
‘I want to put on the record that I don’t want to do a PPP,’ Cr Lyon said. ‘I implore our federal representative to look for ways to fund this federally, as should have been done, and as was signalled by [federal government’s] ARENA [agency].
‘If it’s the last resort, and it’s $70,000 for an insurance policy, then I can accept that.’
According to Council’s website, bioenergy is a way of converting organic waste into renewable energy.
Council staff say, ‘It is known as a closed-loop carbon cycle, because the carbon created ends up as plant matter and stays within the system’.
‘Dry anaerobic digestion uses oxygen-free conditions to break down organic matter inside a contained facility. The resulting biogas is converted into energy’.