Deniliquin Pastoral Times

Court action

- ~ Anna McGuinness

Murray River Council is heading to Victoria’s Supreme Court to recover more than $1 million in unpaid debt from proposed Moama ethanol plant developer Murray River Energy.

A report to council’s meeting on Tuesday revealed a barrister had been appointed by council to prepare filing of legal proceeding­s, and that a notice of default had been served on MRE and its directors.

MRE proposed to build a $100 million ethanol plant and bio-digester north of Moama, which it said would create 250 jobs in the region.

It is believed MRE’s directors were also involved in the Deniliquin ethanol project which received developmen­t approval in 2014 but has since stalled, and saw Edward River Council threaten legal action to recover a loan given to kickstart the developmen­t.

In November 2018, Murray River Council loaned MRE $460,000 to discharge the debt owed to Edward River Council.

The company provided a first mortgage on property in Gheringhap, near Geelong, as security, which has been independen­tly valued between $1.5 million and $1.65 million.

In March 2019, Murray River Council approved an increase to the investment to MRE up to $900,000.

In addition to legal costs and interest, the council is now owed $1,009,011.14. An additional $137.12 per day will be added for each day the loan in outstandin­g from now on.

Mayor Chris Bilkey confirmed in May the due date for the loan had passed without repayment.

Cr Bilkey confirmed the ethanol plant would not be built in Moama and said economic developmen­t was about exploring and supporting developmen­t opportunit­ies ‘‘in a way that council’s assets are not put at risk’’.

‘‘When opportunit­ies present benefit to councils in terms of employment numbers and revenue, then that’s something council has an obligation to pursue,’’ he said.

‘‘If councils didn’t have some risk appetite, they would never do anything.

‘‘We’ve done work around other projects that have stimulated employment in the area.

‘‘This is one that did not pan out, but importantl­y, all the assets of council are being preserved.’’

The report to council also revealed the cost of an audit investigat­ion undertaken by external company Centium earlier in the year, the outcome of which led to council referring the project to ICAC and NSW Police.

According to the report, the appointmen­t of Centium to undertake the investigat­ion cost $26,245.

A total of 60 hours of staff time has gone into responding to council questions and investigat­ions, at a cost of about $20,000.

The report was written by director of community and economic developmen­t John Harvie, and also touched on what could be done with the land council bought for the ethanol plant in September 2018.

The 197ha block on Mathoura-Line Rd was purchased by council for $1.2 million without a registered valuation being obtained.

A memorandum of understand­ing was signed for MRE to subsequent­ly buy the land and build the ethanol plant and biodigeste­r.

Council received an independen­t valuation report on the land in December 2020, which priced the open market value in the range of $840,000 to $940,000 and a special value range (industrial) between $1.15 million and $1.25 million.

It also recommende­d a rental value for the land of $24,000 per annum — much higher than the current five-year lease back to the previous owner, with a five-year option, of $7312 per annum.

The NSW Office of Local Government investigat­ion into council’s involvemen­t in the proposed ethanol plant developmen­t is underway.

MRE did not respond to requests for comment.

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