DEPARTMENT FOR INFRASTRUCTURE
TRANSFER OF CAPITAL BUDGETS TO PART FUND THE PURCHASE OF A
SPARE TURBINE
- Purpose of Report
To enable the Minister to approve the internal budget transfer totalling £525,657.90, being £415,153.95 from the EFW Plant La Collette head of expenditure (Q0000C2695) and £110,503.95 for the Clinical Waste Refurbishment head of expenditure (Q00MF13030) to the EFW Replacement Assets Capital head of expenditure (Q00MC10012) to part fund the purchase of a spare turbine.
- Background
The Energy from Waste Facility was commissioned in January 2011 and entered a commissioning period lasting two years. During this time the main contractor CNIM, Spie Batignoles, Camerons (CSBC) was responsible for the operation and maintenance of the various sections of plant. This was largely carried out by the Engineering Procurement Construction (EPC) contractor and lead party in the CSBC consortium, CNIM.
During the lifetime of the steam turbine four services are required to fulfil a contractual obligation for the removal of the rotor for inspection and refurbishment at the original equipment manufacturers premises (GE Thermodyn, Le Creusot, France). There is a balance to be struck between the basic service requirements for the machine against the likelihood of replacing one of more stages of turbine blades or associated rotor structure.
- Main Content
It is recommended that a spare rotor, including storage canister, is purchased with a value of €797,000 (+/- £693,000) for use in each of the four services during the life of the steam turbine assembly. With a spare rotor the impact on the EfW facility is an improved turbine availability, which in turn reduces the risk of having to burn waste without generating power, and therefore losing income.
GE Thermodyn has advised us that in their experience, without a replacement rotor, the turbine stage 8 blades will need to be replaced once during the 30 year life of the turbine at a cost of €167,400 (+/- £146,000); with a spare rotor this will not be the case and this expense is avoided.
The rotor will need to be removed during each service in the years 2017, 2023, 2029, and 2035. It is assumed that at the end of the design life of the plant in 2041 there will be no requirement to replace the rotor for the next six years
- Recommendation
That the Minister approves the transfer of £415,153.95 budget from the EFW Plant La Collette Capital head of expenditure (Q0000C2695) and £110,503.95 budget from the Clinical Waste Refurbishment head of expenditure (Q00MF13030) to the EFW Replacement Assets Capital head of expenditure (Q00MC10012) to part fund the purchase of a spare turbine.
- Reason for Decision
Article 18 of the Public Finances (Jersey) Law 2005 (the Law) and Finance Direction No.3.6 ‘Variations to Heads of Expenditure’ (the FD) set out the procedures for transfers between heads of expenditure. Paragraph 5.1 of the FD and Article 18(2) (c) of the Law require departments wanting to transfer funds between heads of expenditure to obtain the approval of the Minister responsible for their administration. Article 18(1) (c) of the Law requires the approval of the Minister for Treasury and Resources for any budget transfers between heads of expenditure. Paragraph 5.2 of the FD delegates non-contentious transfers between heads of expenditure up to £1,000,000 to the Treasurer of the States. Paragraph 5.3 of the FD states that, in all other instances, the approval of the Minister for Treasury and Resources must be obtained.
- Resource Implications
The EFW Replacement Assets Capital head of expenditure (Q00MC10012) will increase in 2016 by £525,657.90, the EFW Plant La Collette Capital head of expenditure (Q0000C2695) will decrease by £415,153.95 and the Clinical Waste Refurbishment head of expenditure (Q00MF13030) will decrease by £110,503.95.
7. Action Required
The Finance Director to request the approval of the Minister for Treasury and Resources Department for these budget transfers.
Written by: | Senior Management Accountant |
Approved by: | Director of Finance |