Corporation advised not to sign supply agreement

The uncertainty over the proposed Chala waste treatment plant will continue for some time as the city Corporation has been advised by its legal wing not to sign the supply agreement in its present form with the U.S.-based Loro Group as certain clauses in the tripartite concession agreement for the construction of a 35-tonne plant are said to be detrimental to the interest of the civic body.

“The Corporation’s standing counsel in the High Court has submitted its opinion. The contents of the report will be placed in the next council meeting for its consideration,” Mayor K. Chandrika told The Hindu. The concession agreement inked between the State government, Suchitwa Mission, and Loro Group was referred to the counsel after reports questioning credentials of the firm surfaced in the media.

Three aspects

The Hindu has reliably learnt that the counsel has raised objections mainly on three aspects that find mention in the concession agreement and, accordingly, the Corporation has been advised not to sign the supply agreement till the damaging clauses are removed. As per the concession agreement, the Corporation had to sign a supply agreement that would mandate the civic body to collect and provide waste for operating the plant.

Though the Corporation is not a signatory to the pact, there is a clause in the agreement that makes the civic body a legal party to the agreement, which the counsel found not to be in the long-term interest of the Corporation. Another aspect in the pact that did not find favour with the counsel was the power given to the private player to reject certain waste items. As per the pact, the firm can reject products such as building materials and other non bio-degradable waste. This cannot be materialised as the civic body does not segregate waste at source.

The counsel has opined that there is a need to reconsider some ‘force majeure’, (which means exemption from fulfilling the contractual obligations for causes that are not anticipated), clauses that give power to the firm to out rightly reject the waste.

The adverse legal opinion is certain to cast doubts on the entire project. In a council meeting held on March 25, the Mayor had categorically stated that it would only sign the supply agreement based on the legal opinion.

The concession pact was inked in November last for the construction of the Rs.65-crore plant which is expected to produce 3.2 mega watts of power a day. The Loro Group would run the plant for 20 years and then hand it over to the government. The land on which the plant would be constructed would, however remain with the government.