Exclusive: Arlene Foster wrote to banks backing RHI loans
Arlene Foster wrote to banks to encourage them to lend money for cash-for-ash boilers, as it was revealed in explosive new emails obtained by the Sunday World in last weekend's edition.
In what has been described as a “smoking gun” that could bring down the First Minister, the DUP leader, who was Minister for the Department of Enterprise, Trade and Investment (DETI) at the time, appealed to banks to lend money to businesses so they could buy wood pellet boilers.
The discredited scheme could end up costing the Northern Ireland taxpayer £400 million.
The email chain started in December 2012 as a firm selling biomass wood pellet boilers asked for assurances about the now infamous Renewable Heat Incentive (RHI) scheme.At the time the RHI was underperforming and businesses were reluctant to shell out for the £50,000-a-pop boilers as they feared they wouldn’t see any return on their investment, while the banks were reluctant to lend.
And on January 18, 2013 a senior civil servant from the Renewable Heat division of DETI looked to allay concerns that businesses had about the initial outlay.
In the startling response, it is revealed that the then DETI Minister Mrs Foster took the unusual step of writing to the banks to let them know the scheme not only had full government support for 20 years but also made them aware of the “financial incentives”.
The email states: “Thanks for your email regarding the issue of access to capital for potential applicants under the RHI. We are aware that this is a major issue for large capital-intensive projects and has been of particular concern for many renewable energy developers.
“You should be aware that the DETI Minister has recently written to each of the main banks in Northern Ireland to make them aware of the financial incentives available from DETI for renewable energy projects.
“The Minister explained how both the NIRO and RHI schemes worked, the potential rates of return and made the important point regarding the grandfathering of tariffs i.e. consistency of this support.
“This correspondence should make banks more aware of the scheme and further work is being considered in terms of educating banks on the RHI and NIRO.”
The RHI was set up by the Department of Enterprise, Trade and Investment (DETI) under the stewardship of Mrs Foster in 2012 to encourage businesses and other non-domestic users to move from using fossil fuels to renewable heating systems.
But flaws in setting the scheme’s subsidy rate left it open to abuse, as claimants could earn more cash the more fuel they burned.
The scheme was finally halted early this year, by which time its overall cost had reached £1.18bn.
About £20m a year for the next two decades could be taken from the Northern Ireland budget to cover the overspend.
A respected source involved in the energy industry says it’s “fairly unusual” for a minister to get involved by writing to the banks.
The source said the email raised issues about recent claims from senior DUP figures that the scheme could be closed down.
The source said: “I don’t see how they can just close the scheme down, given the fact you have black and white evidence that the minister had written to the banks pretty much guaranteeing their backing for the next 20 years.
“At the time of the email the scheme was underperforming because banks wouldn’t lend because they didn’t believe the figures. If they try and close the scheme, the department will be faced with a legal nightmare. I have spoken with one ESCO [Energy Service Company] who sells energy to businesses, who says they have 20-year contracts with businesses which can’t just be ripped up.”
The Sunday World asked the Department of the Economy to release the letter Mrs Foster wrote to the banks.
It refused to do so, meaning it’s impossible to be sure what understanding she had back in January 2013 of the exact financial incentives of the scheme, but it demonstrates that the now First Minister had a very ‘hands-on’ approach to the scheme.
The revelations have led the Ulster Unionist Party to call for Mrs Foster and the Department of the Economy to release all the information they have on the RHI scheme.
Steve Aiken MLA, Ulster Unionist Party Economy spokesperson, said: “The latest revelations contained in this correspondence show the urgent need for Arlene Foster and the Department of the Economy to publish all material in relation to the Renewable Heat Incentive scheme.
“The correspondence from the official in the Renewable Heat branch inside DETI suggests that the then DETI minister, Arlene Foster, wrote to banks and lending institutions in Northern Ireland to vouch for the validity of the now scandalised Renewable Heat Incentive scheme.
“The official’s correspondence also implies that Arlene Foster was actively assuring lending institutions about the RHI scheme based on the tariffs, which have now created a mammoth bill of approximately £400 million for Northern Ireland’s finances, and tellingly talks about the ‘consistency of support’.
“Given that someone in the Executive has been flying a kite this week about the closure of the scheme, perhaps Arlene Foster can explain how she’s going to do that, given the implications of this correspondence are that she herself wrote to banks and lending institutions to assure them about the tariffs and the ‘consistency of support’ over 20 years.”