Mea Megathread

[teapot]

this wave power thing - heard an item on Radio 4 yesterday that Aldernay are looking into using wave power, and hoping that they will be self sufficient in electricity eventually. Evidently they are able to progress with this because they own (by accident) the sea bed for so many miles. they were overlooked by the Crown Office. Other Channel Islands don't own the seabed, which is owned by the Crown as they are Crown Dependencies. How are we fixed for owning the sea bed? If we do, will this effect Mr Proffitt's ideas about placing machinery? This is all getting v technical! Any explanations please. All sounds v expensive to me.

So, this new company that Mr P is involved in and also the other chap from the MEA, it hasn't anything to do with our Government, it's private, is that right. Will they have to have cooperation from our Government it they want to place windfarms and or seapower machinery in the waters/on land around the Island. Will the Government then be able to charge them for the use of the sea/land, and then will they, the Government, in a round about way be able to get back some of the money that they've lost on the MEA thing, and reduce our tarriffs?

[teapot]

"The cost of the projects to REH is expected to be £33 million, with 80 percent funded through debt financing and the remaining £6.6m supplied through REH’s existing cash reserves. The final purchase price is subject to the projects being completed on time and to cost and may be reduced if the construction is subject to delays or increase in cost. The 1.3 and 2.3 MW wind turbines to be used on both sites are to be provided by Siemens AG. "

 

Quote from REH site

 

80% funded through debt financing - what is this please?

6.6m through REH's existing cash reserves - ? where has this come from?

 

It's a pity that our Government don't have contracts like this one on all their projects -

 

"The final purchase price is subject to the projects being completed on time and to cost and may be reduced if the construction is subject to delays or increase in cost"

[kellyiom]

the £6.6mm came from reserves; this is the shareholders who subscribed for shares in the company; the debt finance will probably be a longer-term loan at a fixed interest rate, with perhaps some assets pledged for security. Still a totally private arrangement tho

[ButterflyMaiden]

Will they have to have cooperation from our Government it they want to place windfarms and or seapower machinery in the waters/on land around the Island.  Will the Government then be able to charge them for the use of the sea/land, and then will they, the Government, in a round about way be able to get back some of the money that they've lost on the MEA thing, and reduce our tarriffs?

<{POST_SNAPBACK}>

 

It doesnt seem likely this company, or any other, would be interested in renewable generation plant in or around the Isle of Man. The financial incentives aren't here for one, and the market is far too small for another.

There are probably some advantages in terms of the company being located in the Isle of Man, tax experts on the forum will know, but these are not the same as the opportunity to sell into a renewable energy market and take part in trading the various bits and pieces which make up non fossil fuel incentives available elsewhere.

Regarding your final point .. it isnt at all clear to me that Mr Proffit et al are the culprits in the ongoing MEA saga. The PKF report has been somewhat less than illuminating and most people I talk to are not optimistic that a Select Committe will deliver the goods either.

I dont know the best way forward on this one. Mr Karran had suggested a public Inquiry. That seemed a good idea and may have produced a balanced account of what actually happened. However, there doesnt seem to have been any support for that idea, in Tynwald, at least.

PKF contains references to the involvement of DTI, for example in securing the contractual arrangements with the gas pipeline, and one is left to wonder exactly what went on between MEA and DTI. One is also left to wonder why a power station was built in the first place and we can only assume it is Government policy to have sufficient generating capacity on the Island without recourse to interconnectors. (does anyone know if this is the case ?)

Anyhow, to get back to the point, REH are free to pursue their business as they see fit and are not subject to any more constraints than any other company.

Neither should they be.

[Gladys]

I agree BM (sorry), what does concern a tad is the apparent transfer of intellect from MEA to REH in such a short time after the problems at MEA becoming apparent. You can't help feeling a little uneasy that REH was born earlier this year after what must have been quite a gestation with some familiar names from MEA. I am not suggesting that Mr Proffitt et al are at all culpable, but I have the feeling something has happened which rendered the MEA board's business expectations to be founded on erroneous assumptions. The whole thing just does not stack up and I cannot get a feel for where the problem lies.

 

I remember some time ago there was quite some publicity of the delivery of telecoms thru the power cables running into everyone's homes (not the same as the fibreoptic, I gather), but from memory this seemed to be followed shortly by an announcement that the MT licence had been renewed and all was quiet on the MEA's initiative . I am only going on memory and the two may not be connected, but are these all factors which have a bearing and have yet to be properly aired?

[kellyiom]

that's a really good point teapot; it's sensible commercial practice having penalties in contracts so you don't face open-ended obligations...so why then doesn't the government do the same; you would think if the likes of relatively small companies can do it then governments should have more clout. It's when you see stupidity like that then you start thinking there must be some other sinister reasons...

[lisner]

It's also inconceivable that no-one in Joe Public knew about the loan. Its the Isle of Man and people talk, you'd expect someone in either the MEA, Cains, Barclays, government or the accountants to have talked to someone. I don't buy the fact that it was some kind of uber CIA-secret loan that no one knew about. If it was, then the treasury weren't doing their job.

 

. . . MEA, Cains, Barclays, government or the accountants to have talked to someone.

 

I think they must have been talking alright, but very tightly amongst themselves.

[Chinahand]

I'd like to turn the thread back from REH to the MEA. My only comment about the familiar names that crop up again and again between REH and the MEA, is that its the MEA's loss ... these people worked for years and years developing business opportunities within the MEA; telecoms, Broadband via power lines, data storage, satellite communications. PKF says the business plans had revenues in the £10's of millions in only a few years. That these have now come to nothing isn't the MEA's fault; its the Politicians, the DTI and Treasury who are to blame for shutting them down. The fact that REH has similar ideas isn't too problematic for me ... if a director at Rover turns up working at Ford is that so wrong?

 

One thing that no one has mentioned as far as I am aware is that the losses and overspend only occur in the first 10 years of the projects. The gas pipeline has a 60 year life; it won't only take natural gas, but methyl-hydrates the next big thing in blue sky research as a replacement when oil and NG run out. The power station has a life of 30 years.

 

What I've heard is that these projects aren't white elephants leaving the island with a mill stone of losses to be repaid out of our hard earned taxes. They'll make more enough to pay off the loans over their lives. Its a matter of smoothing out the cash flows. Yes its frustrating that the projects cost more than expected, but they aren't loss making in the long run.

 

[Whether there could have been a different project that would have made even more money over their life is an important question ... and a whole additional thread, but one that relies on a lot of 20-20 hindsight!]

 

I reckon that the reason why the banks were willing to lend the MEA the money in the first place was that they knew the money was secure over 30 years or so ... Another point: S&P's hasn't changed the IOM's AAA credit rating as a result of all this ... strange as its rating the entire economy ... why hasn't the rating changed ... because overall its not loosing money ... its a matter of financing and funding initial losses to be recovered with later profits.

 

So why all the scandal at the moment ... well the main issue for me is that I do honestly think the polititians in treasury hadn't a clue what was going on ... while the Treasury civil servants ... well ... I've heard that's a whole other story.

 

But another reason for all the scandal is that it allows Tinkerbell himself ... the very politician who allowed himself to miss the MEA borrowing £120 million from the bank accross the street ... to ride in portraying himself as the saviour of the Island bailing out the MEA. If he makes it look as bad as possible and portrays himself as the one who sorts it all out ... well ... won't he just be the hero.

[Tugger]

Are you in China, Chinahand?

[Lonan3]

I don't entirely go along with Chinahand's analysis of the situation but, in one or two certain respects, I think he's quite correct. Even though the report was headlined as 'no one to blame' I feel that there has been a certain amount of spin employed to direct criticism away from the politicians and on to the people who ran the MEA.

If you look at the 'quality' of the politicians involved it isn't hard to see that there is a definite lack of informed knowledge about the intricacies of business and, even though their civil servants may have done their best to advise them, their own lack of knowledge of the procedures of commercial enterprises would probably not have given the kind of insight that the situation required.

Whilst it isn't difficult to level criticism at the board of the MEA, I think its important to remember that they took what they believed to be appropriate decisions based on their assessment of the risks and opportunities that existed.

It's also very important to remember that, ultimately, the politicians at the DTi and Treasury were the people who were responsible for good governance.

[ans]

I smell a vested interest.

[Rog]

if a director at Rover turns up working at Ford is that so wrong?

 

<{POST_SNAPBACK}>

 

if a director at Rover turns up working at Ford is that so wrong?

 

It can be.

 

 

When I was first promoted to a senior management role as part of my promotion I had to sign a changed contract of employment whereby I undertook not to take a position with nor own shares in a series of companies and corporations published in a list that was updated periodically for a period of 6 months following my leaving my employer without first getting written permission from my employer.

 

As I was further promoted so the period extended until when I eventually retired the quarantine period was standing at 18 months.

 

What does occour to me is to what extent these guys setting up this new company are making use of intellectual property that they acquired whilst in the employ of MEA? Certainly if a senior manager was to have instigated a study into renewable energy using his employers resources, received the report, and then left his employer and set up a company based on the generation of renewable energy it could and probably would result in prosecution in most countries on the basis of theft of intellectual property by that person that was obtained for, paid by, and therefore owned by his precious employer.

 

There is a great deal of precedence.

[Lonan3]

What does occour to me is to what extent these guys setting up this new company are making use of intellectual property that they acquired whilst in the employ of MEA?  Certainly if a senior manager was to have instigated a study into renewable energy using his employers resources, received the report,  and then left his employer and set up a company based on the generation of renewable energy it could and probably would result in prosecution in most countries on the basis of theft of intellectual property by that person that was obtained for, paid by,  and therefore owned by his precious employer.

 

There is a great deal of precedence.

<{POST_SNAPBACK}>

 

That is a fair point. However, if your employers had not had the foresight to put such clauses in your contract - and the opportunity had arisen to take advantage of some 'intellectual property' to start up a potentially profitable new business - would you, in all honesty, have allowed your conscience to prevent you from doing so?

That is why, I believe, we should not allow ourselves to be too distracted by the consequences of the affair without a searching examination of the system of control that was in place - and, in particular, of the role of the politicians in applying good practice to the running of it.

 

(Incidentally - "his precious employer?")

[martyn]

sorry I haven't been reading this, but I just heard as of next month the leccy bills are going up by 45% 45 f ing percent ?????? the robbing bastards.. god i wish i'd gone to that xmas party of theirs now, get my pennies worth.

[Alias]

Didn't some businesses threaten to relocate if this happened? Namely Strix?