Beijing Enterprises Holdings loses out in key waste PPP legal battle

17 November 2017 - 12:00 am UTC

Beijing Enterprises Holdings has suffered a major setback for its plans for its EEW business, losing a legal battle over rights to develop an energy from waste business in Poland, Inframation has learnt.

The Hong Kong-listed Beijing Municipal Government-backed investor Beijing Enterprises Holdings last year paid EUR 1.44bn to EQT Infrastructure II for German energy-from-waste business, EEW, which operates 18 EfW plants.

For the Chinese buyer, the success of the deal, billed at the time as the largest direct investment in a German company by a Chinese investor, in part centred on growing the EEW business from Germany, Netherlands and Luxembourg.

To this end, EEW’s SPV, Beijing Enterprises-controlled EEW Energy from Waste Polska, was provisionally selected as preferred bidder to operate Gdansk’s 25-year waste management contract in July.

However, earlier this month, the company lost its appeal against a decision to award the contract to a consortium led by Astaldi, the runner up for the tender run by the municipal waste company of the City of Gdansk.

The claim by the Astaldi consortium, which also includes French energy from waste (EfW) operator Tiru, and Italian technology provider Termomeccanica Ecologia, had originally been lodged with Poland’s National Appeal Chamber, which in August concluded EEW’s offer for the contract should be excluded.

The reason behind this decision, according to sources, was due to a “misinterpretation” of the bidding rules. A total of 10 objections were upheld by the presiding judge.

EEW Polska’s managing director, Frank Paasche, said publically in September the company was “amazed by the evaluation” and had filed an appeal. This has now been rejected by Gdansk’s District Court.

Astaldi’s higher priced offer for the PPP has now been taken forward and is expected to be signed this year, subject to a review by the Polish Public Procurement Office, a source added.

As part of the PPP, the consortium must build a circa EUR 100m EfW facility, which will process 160,000 tonnes of waste annually and supply heat to GPEC, which operates Gdansk’s district heating network. It will be up to the local authority to raise finance for the project.

The PPP has had a rocky journey since it was first tendered in 2014. Offers for the project had to be re-evaluated in 2015 after complaints were submitted in the Polish Chamber of Appeal by two previously unsuccessful bidders.