Isle Of Wight Tidal Energy Funding: Council "Likely" To Lose £1 Million

The decision to stop Isle of Wight Council funding of a tidal energy scheme off the Island coastline has been ratified.

The council’s corporate scrutiny committee voted earlier today to back the cabinet’s decision to extend the term of its £1 million loan but not invest a further £244,000 in a loan to Perpetuus Tidal Energy Centre (PTEC.

But members were warned the decision could jeopardise the council’s chances of seeing its original £1 million back

Isle of Wight Council leader, Cllr Dave Stewart, said had there not been the current pandemic situation, the council would have likely invested the additional money, like other shareholders have done, as it was a means of creating Island jobs.

He said:

“Although it would be possible for the council to invest further, I do not believe this would be the appropriate use of public funds.

“As it stands, if no investment is made the project is likely to fail and the original £1 million investment lost. With the council taking these actions there is a chance of success and the aspirations achieved.

“The additional conditions are necessary for PTEC to secure the funds for the next stage.”

At its meeting earlier this month, the scrutiny committee agreed with recommendations to the cabinet that the £244,000 loan not be granted, due to the state of the council’s finances, and that up to two-thirds of the councils 15 per cent shares in PTEC be sold to raise the money.

When the decision came to cabinet a few days later, a new condition was added that would extend the original £1 million loan terms — given to PTEC in 2013— by five years, remove the IW Council from its board and take away the priority status the council held to have its loan paid back first, all in an effort to potentially attract other investors.

The decision was supported unanimously by cabinet but raised questions from members of the scrutiny committee who felt they would not have supported the decision if the changes had been proposed earlier.

Cllrs Michael Lilley, Debbie Andre and Andrew Garratt brought the decision back to corporate scrutiny where, ultimately, the same decision was made.

Speaking at the meeting, Cllr Lilley said there were too many uncertainties to support further conditions.

He said: 

“There is no current evidence that PTEC will be able to raise the funds, so why give away the terms and conditions until there are funds on the table?”

Cllr Andre said the burden of responsibility seems to fall on the Isle of Wight Council as shareholder.

She said:

“There is almost a feeling we are being pressured into action because if we don’t, we risk the company going under.”

With the council’s original loan term set to end in May 2022, chief executive, John Metcalfe said the loan needed to be extended anyway.

He said:

“The view of the cabinet was to support the company in another way. PTEC suggested to us it could work with the proposals but would require further commitments."

The council’s chief financial officer, Chris Ward, said:

“The balanced judgement is do you put further council funds at risk or do you accept those terms and conditions that were offered to you?

“In taking that decision, it is my view the cabinet has better protected the council’s investment and provided greater opportunity for those objectives to be met. There were simply conditions of an alternative.”

Councillors voted in favour of the extension to the loan terms and the other associated conditions five (Cllrs Chris Quick, Vanessa Churchman, Stephen Hendry, John Hobart and Julie Jones-Evans) to two (Cllrs Debbie Andre and Michael Lilley).

The decision will now go back to the council’s cabinet who will meet today (Tuesday).

By Louise Hill, Local Democracy Reporter