Committee extends Plasco’s deadline
Cancelling contract would be foolish, councillors say
Plasco Energy Group has garbage-eating technology that is so far ahead of the pack it would be folly for the city to cancel its contract with the local startup, city council’s environment committee decided Thursday.
Councillors also voted not to check whether that is true.
Reassessing the high-tech waste-to-energy industry now might look as though the City of Ottawa has lost faith in Plasco, which has a contract to build a major “plasma gasification” plant near the city’s Trail Road landfill, and that could torpedo the company’s ability to raise money it needs to get the plant built. So councillors agreed to extend a looming deadline for Plasco to get its financing in place.
If city council ratifies the unanimous committee vote next week, it will be the second extension for the company, which missed one financing deadline last March and won’t meet a new deadline set for the end of this month.
Not to worry, said Plasco’s chief executive, longtime Ottawa tech entrepreneur Rod Bryden. The company has already taken on $350 million from shareholders, mostly large American investment funds, and the prospects for a company that promises to turn municipal garbage into a power-generating gas and a small amount of glassy slag are practically limitless.
“That’s one of the reasons why the funds needed to complete Plasco’s development program and to build the Ottawa plant will be available,” Bryden said.
“Because the equity funds that support the company see a world market, not an Ottawa market.”
What’s missing, though, is about $130 million of the $200 million the company needs to build a commercial-scale garbage processor, which is supposed to come from lenders rather than owners.
Bryden refused to get into many fine details, even under questioning from councillors, but he did offer an example: Plasco is buying gas-burning generators from an Austrian manufacturer owned by General Electric.
It expects to borrow the money for them in essentially routine deals with some combination of GE and the Austrian government — it just hasn’t sorted out the details yet.
That’s why Plasco has yet to satisfy the provision in the contract with the city requiring the company to have secured all its financing by now Bryden explained. The clause — like others yet to be tested, setting dates for construction and operations to start — is meant to give the city an easy out if Plasco’s unproven technology can’t be made to work.
But Bryden says that by starting to buy equipment and paying engineers and architects to get going on detailed plans, his company has satisfied the spirit of the contract, if not the letter of it.
City lawyer Carey Thompson told councillors he went over numerous confidential Plasco documents with senior company managers Thursday morning.
“I’m certainly satisfied and pleased with the co-operation shown to me by the Plasco individuals,” Thompson said. The invoices and contracts are well organized and clear and they say what Bryden says they say, he promised.
Before giving Plasco the extension it needed, councillors on the committee argued about what preparations they should make in case the company never gets its act together. Coun. Scott Moffatt brought a motion, which the committee adopted, saying that if Plasco misses another deadline at the end of 2014 the city will immediately solicit expressions of interest from other companies with technology that competes with Plasco’s.
Kanata South’s Allan Hubley wanted to have city staff put together a report on what alternatives exist (“I think it’s very important that we stay aware of what the options are,” he said) but Thompson and other councillors talked him out of it, on the grounds it might make investors jittery and give Bryden grounds to blame the city if he can’t put Plasco’s financing together.
Instead, committee chair Maria McRae ordered up a “high level, bullet list” memorandum that will simply list other waste-disposal technologies, which satisfied Hubley.
Since signing a preliminary agreement with the city in 2005, Plasco has been working toward commercializing its plasma gasification process, which is supposed to be able to take practically any trash that comes off a garbage truck. Its competitors are either choosier about the waste they can take or produce energy much less efficiently, Plasco says.
If everything now goes as planned, the company will have a large-scale plant operating no later than 2016. It will be capable of consuming 109,500 tonnes of Ottawa’s municipal garbage. Council gets a final say on extending Plasco’s financing deadline on Aug. 28.