On 15th March 2017, ANQ updates the market on Shoalhaven City Council’s changes to the proposed 65,000 to 90,000 tpa Resource Recover Facility (RRF) for the council’s mixed municipal waste.
The change is basically this: that Council decided to open up the tender to all new operator, not just the three it shortlisted a few years ago.
About three years ago Shoalhaven Council open an expression of interest evaluation process for its proposed RRF in Nowra.
Three companies were shortlisted: Anaeco, Global Renewables and the local SoilCo.
As discussed elsewhere on these blogs, Anaeco stands the best chance given its modular design, its technology, its low costs and the selected site all proposal are to be built on.
Between the shortlisting and Phase I of the project being approved by the state (NSW) government, there was about a six month delay in the government’s proposed amalgamation of various Councils – with no progress on any major project until the matter was settled.
This and the delay due to changes in where the RRF is to be located. A perfect site was found, the existing RSPCA on the site was relocated… and since then and government’s approval, site preparation and infrastructure was due to commenced late 2016.
It was proposed that Phase II of the project, requiring its own separate State government approval after a successful tenderer is selected, would start tendering in early 2017.
And here we are…
WHAT HAS CHANGED
From the news release: “…Shoalhaven City Council has now rescinded the previous selective tender process and made a determination to invite tenders for the construction, operation and transfer to Council of a waste processing facility. No timetable has yet been published by Council. AnaeCo will review the tender materials once they are published and then make a decision regarding participation.”
Two queries I had from that update are:
1. Does the “…transfer to Council…” mean that what, to my understanding, was a privatised RRF where the successful bidder will be responsible for all costs in the design, construct and operation of the RRF. Taking back its investment through the gate fees (and paying certain royalties to the Council)… will now be completely private with the winner merely a contractor to design and construct with operations and ownership transferring back to Council at successful commissioning.
2. Why the re-opening of tender? Were the short-listed operators not good enough and there are other potentials more suitable?
The first would be a positive in that ANQ could win and have its costs all paid for by Council – with certain royalties per tonne paid to it. Immediate cash inflow to take on other projects around the world – or just quickly repay Monadelphous to avoid its mate’s rate interests.
The second concern is bad. That if Council have other technology in mind… ANQ is just going to waste its time.
While Council cannot be all open to their thinking when someone just call up… but the replies I got are quite assuring.
First, the proposed RRF will go ahead with the same specs, on the same site, as previously proposed.
All conditions are the same – the bidder will design, construct and operate for 20 years, after which the site will revert back to Council.
The only difference is an open tender process instead of selecting from the previous short-listed three.
Because the delays have put the project back three years.During this time, new technology and new operator are out there, maybe.
Best to open the project to a wider set of operators and see what else they can come up with.
Fair enough I reckon.
THE POSITIVE SPIN
With millions of shares at stake, I obviously have big dream with ANQ succeeding. So here’s the potential talking myself into a dream kinda investment “rationale”.
If we believe that ANQ’s technology and unique modularised design is a perfect fit for Nowra, re-opening the tendering process should not change this at all. That is, the previous open tendering process was open and competitive – and ANQ’s technology was one of the three short-listed operator. I have not seen any new technology since then.
But given the XEPT’s debt/equity transaction that’s due to expire in 10 days (at end of March 2017)… a company whose technology had been shortlisted makes an attractive potential acquisition for those established operator who lost out when Shoalhaven first open its tender three years ago.
This delay might not be a bad thing. But that could just be wishful thinking. So sensible though. 😀