NIGG BRIEFING HIGHLIGHTS COST OF DELAY

A briefing note sent to Councillors from Planning Director, Stuart Black has highlighted the fact that valuable time has been wasted in getting Nigg back to work by not pursuing Compulsory purchase more vigorously.

The note highlights work that has to be done and revisits timescales for action first discussed in 2007. The report refers to a forthcoming Strategic Planning Committee in May but has been sent ahead of an SNP motion to Highland Council next week to urge the Council to.

An early Compulsory Purchase Order could have led to the area being ready to take advantage of a substantial jobs boost for a large part of Highland. Our fears have always been that there has been a lack of will to get the job done. I think folk in Highland will have to look at this Lib Dem led Council and ask why they are no further forward. If Highland loses out on Nigg’s potential then they will know where to look.

Former Strategic Planning Chair and SNP Council Group Finance spokesman, Councillor Drew Hendry has said “The briefing note restates what Councillors were told previously and it is a huge disappointment that the document seems to indicate a further significant period of time to get things going. We were given outline times of 18 months to 2 years for the process to obtain a “back to back” agreement and work required for a CPO in 2007 and in 2008. Consultants have produced a Masterplan for Nigg, but what we have here is a clear sign that work has effectively stopped whilst KBR were, ultimately, wasting time. Any background work should have been done alongside the fruitless waiting around for KBR”

He added “It is vital for Highland that we finally get this thing by the scruff of the neck and get a move on, every additional delay pushes our ability to take advantage of new jobs further away. I believe that we could have a World leading renewable industry here and that will only be achieved if those in control start showing some urgency.

Local SNP Councillor, Maxine Smith, Cromarty Firth further commented, “The detail of the report is largely old news, but the admission that we are virtually back to square one is alarming. It is also worrying that officers seem to be briefing with a recommendation ahead of a member’s motion to Council, I think that opens up serious questions about the lack of political leadership on the council, if, once more, officers are trying to “frame” responses to get the results that they want as opposed to the view of the elected members representing their constituents"
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The briefing note read as follows:

"BRIEFING NOTE FOR MEMBERS CONCERNING NIGG YARD

The Council is committed to securing the early release of the Nigg site in line with its approved Masterplan which focuses on the renewable energy potential of the Yard.

A report will be submitted to the PED Committee on the 26th May covering three issues:

a) The announcement by KBR on the 14th April that it would not be proceeding with its plans to re-develop the yard but would be seeking alternatives for the redeployment of the site including the prospective sale of the facility
b) To consider various options for securing the future development of the site including the prospect of promoting a CPO. In essence following a twin track approach by supporting the sale and release of the entire Nigg site whilst keeping the pressure on by undertaking the preparatory work to promote a CPO.
c) The first step in the CPO process is to draft a Back to Back Agreement which would be advertised in the OJEU for interested parties with the aim of securing a ‘preferred bidder’ before the CPO process begins.

The PED Committee will consider a paper to instruct Officers to procure external assistance to prepare the Back to Back Agreement. Thereafter the Draft document would be brought back for approval before advertising in the OJEU.

Background:

1. The Nigg Development Masterplan and associated documentation has gone through all necessary stages as has been approved by the Council as ‘supplementary guidance’.
2. This would underpin any CPO process.
3. There has been no direct contact from KBR with the Council since their announcement on the 15th April.
4. DSM has completed the acquisition of the adjacent 800 acre Dow Chemicals Site and are understood to have approached KBR to discuss the Nigg Yard site in which they have an interest. They propose to develop the Dow Chemical land and the Nigg Yard as a Business Park for large scale assembly/fabrication and to use some 20-30 acres of the yard area for decommissioning.
5. It is understood that KBR’s selling agents DTZ are awaiting instructions from their client on whether the sale will be on the open market or whether discussions are to be opened with DSM or other parties who have expressed an interest in the site.
6. The major stumbling point has been a clause in the lease of the Wakelyn Trust land to KBR which requires the lessee to reinstate the land to dunes at the conclusion of the lease in 2031. This would present a major impediment and disincentive to any developer even were the Wakelyn Trust prepared to assign the lease to them.
7. Were the site to be sold it is likely that the Wakelyn Trust would also wish KBR to ‘buy out’ this lease condition which would further complicate matters.

CURRENT SITUATION

1. The Convener has written to Scottish Ministers urging them to consider bringing the Nigg Yard into Public Ownership.
2. Officers of HIE and the Council have jointly prepared an options appraisal for the Nigg site which considers five scenarios ranging from ’do nothing’ leaving this to the market to dictate and outcome through to a public sector purchase by HIE, a CPO with ‘back to Back Agreement’ by the Highland Council or possibly a public sector/Joint Venture agreement. All options have pros and cons., differing likelihoods of success and timescales.
3. HIE may have difficulty in taking forward a public sector purchase whilst there are indications of private sector interest. They would only intervene where there is market failure.
4. The key decisions for the Council to make to move matters on are:
a) to instruct officers to commence work on the ‘Back to Back Agreement’;
b) in parallel with this to begin preparatory work to promote a CPO.
5. There is a risk of abortive costs in excess of a six figure sum being incurred in preparing a Back to Back Agreement and promoting a CPO if the site were sold before these could be applied.
6. From commencement to completion the estimated timescale for a Back to Back Agreement would be of the order of 15 months.
7. The CPO could not begin in earnest until the Back to Back Agreement nears finalisation with a preferred bidder appointed. It would take a minimum of 10 months thereafter to complete if it was not challenged by the landowners and anything up to 22 months if challenged through the courts.
8. The time frames outlined above represent an optimistic assessment but this clearly demonstrates that a CPO cannot be the only approach given the rapidly closing window of opportunity for entry into the Renewable Energy Market.

Stuart Black, Director of Planning & Development
Geoff Robson, Head of Environment & Development
5 May 2010"