Effectively rigged: Veolia says East Rockingham takeover process favoured Acciona
The only company with full site access has emerged as the preferred bidder for a $740m waste plant, sparking explosive claims by Veolia the process was rigged.
Veolia has claimed that the auction for the East Rockingham waste-to-energy plant was not conducted fairly after the project’s builder Acciona, the only party to have full access to the site, was named the preferred bidder.
Veolia Australia boss Richard Kirkman said rival bidders for the valuable infrastructure project were not granted reasonable access to the site or the contracts it has in place with local councils to take their red-bin rubbish.
“Despite comments to the contrary in the supplementary report from the administrators, it’s entirely untrue that there are no other bidders for East Rockingham,” said Mr Kirkman, whose company put in an indicative offer as part of a consortium.
“There are many interested parties and bidders, but they have been expressly excluded from proper access to the facility and contracts in order to price the asset.”
When East Rockingham collapsed last year with creditor claims of $740m, Acciona was the builder and Veolia held the operations contract. Acciona was fired when the project went under, but snapped up all the senior debt and appointed Cor Cordis as receiver. At that point, Veolia stopped being paid.
It echoed the story of the only commercially operating waste-to-energy plant in Australia, Kwinana, in a neighbouring Perth suburb. Acciona was the builder on that site and grabbed control when seed investor Macquarie Bank threatened to walk away and call in administrators because of massive cost overruns. Acciona then fired Veolia, which is now suing, alleging breach of contract.
At East Rockingham, Cor Cordis conducted a sales process and advised administrator KordaMentha that Acciona was the only bidder to put in a binding offer. It is tricky to value East Rockingham because though the physical construction is close to finished, there is an IP dispute over the complex technical aspects of moving the rubbish through the facility.
Acciona had to withdraw its bid for East Rockingham after the competition regulator flagged issues with it owning the only two energy-from-waste sites.
Kwinana and East Rockingham have cost taxpayers, equity holders and lenders more than $1.5bn to build.
Mr Kirkman said the construction time frame blowouts – Kwinana took seven years to build and East Rockingham is not yet complete six years after building started – and dramatic cost overruns are not helping sell the case for waste to energy.
“Energy from waste is important for managing waste properly across Australia and we need credible developers not flagrant rogues,” Mr Kirkman said.
It’s hard to see another energy-from-waste plant being built any time soon, despite the technology being part of the state and federal governments’ stated plans for dealing with Australia’s landfill problem.
In NSW, a plan to build a plant in Parkes is already receiving a community backlash.
Paris-based Veolia is the biggest energy-from-waste operator in Europe.
KordaMentha as the administrator for East Rockingham has supported a proposal to create a “holding DOCA” which would allow the project to continue to be built by Acciona, and would also stop other creditors being able to force the wind up of the business.
Mr Kirkman said it was “extraordinary” to read in the administrators report that Cor Cordis had retained its view that Acciona was “declared preferred bidder with no competition clearance,” even though Acciona had been forced to withdraw its offer because of the ACCC’s concerns.
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Originally published as Effectively rigged: Veolia says East Rockingham takeover process favoured Acciona
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