A report to council’s meeting on Tuesday, August 24, revealed a barrister had been appointed by council to prepare filing of legal proceedings and that a notice of default had been served on MRE and its directors.
MRE proposed to build a $100 million ethanol plant and bio-digester north of Moama, which it said would create 250 jobs in the region.
It is believed MRE’s directors were also involved in the Deniliquin ethanol project which received development approval in 2014 but has since stalled, and saw Edward River Council threaten legal action to recover a loan given to kickstart the development.
In November 2018, Murray River Council loaned Murray River Energy $460,000 to discharge the debt owed to Edward River Council.
The company provided a first mortgage on property in Gheringhap, near Geelong, as security, which has been independently valued between $1.5 million and $1.65 million.
In March 2019, Murray River Council approved an increase to the investment to MRE up to $900,000.
In addition to legal costs and interest, the council is now owed $1,009,011.14 plus $137.12 a day after August 24, with Mayor Chris Bilkey confirming in May the due date for the loan had passed without repayment.
Cr Bilkey confirmed the ethanol plant would not be built in Moama and said economic development was about exploring and supporting development opportunities “in a way that council’s assets are not put at risk”.
“When opportunities present benefit to councils in terms of employment numbers and revenue, then that’s something council has an obligation to pursue,” he said.
“If councils didn’t have some risk appetite, they would never do anything.
“We’ve done work around other projects that have stimulated employment in the area.
“This is one that did not pan out, but importantly, all the assets of council are being preserved.”
The report to council also revealed the cost of an audit investigation undertaken by external company Centium earlier in the year, the outcome of which led to council referring the project to ICAC and NSW Police.
According to the report, the appointment of Centium to undertake the investigation cost $26,245.
A total of 60 hours of staff time has gone into responding to council questions and investigations at a cost of about $20,000.
The report was written by director of community and economic development John Harvie and also touched on what could be done with the land council bought for the ethanol plant in September 2018.
The 197ha block on Mathoura-Line Rd was bought by council for $1.2 million without a registered valuation being obtained.
A memorandum of understanding was signed for MRE to subsequently buy the land and built the ethanol plant and bio-digester.
Council received an independent valuation report on the land in December 2020, which priced the open market value in the range of $840,000 to $940,000 and a special value range (industrial) between $1.15 million and $1.25 million.
It also recommended a rental value for the land of $24,000 per annum – much higher than the current five-year lease back to the previous owner, with a five-year option, of $7312 per annum.
The NSW Office of Local Government investigation into council’s involvement in the proposed ethanol plant development is underway.
Murray River Energy was contacted for comment.
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