Scottish Information Commissioner’s decision notice 144/2021: FOI review

Information requested

You request, reference 202100249889
The information set to be disclosed as part of the request which led to the Scottish Information Commissioner's Decision Notice 144/2021.

Your request for review, reference 202100256418
I am writing to request an internal review.

This information is not set to be published, it has already been disclosed to the Financial Times, but not published publicly on the Scottish Government website. It should now considered public information, not something that requires FOI-ing under FOI that can be sat on for a further 12 weeks to avoid further public scrutiny. It is baffling why the Scottish Government considers this approach to be appropriate when the information has already been published.

Either disclose the information immediately, or I will be forced to submit an appeal to the Scottish Information Commissioner.

Response

I have been asked to look at your request afresh, to decide whether the original response should be confirmed, with or without modifications, as appropriate, or that a fresh decision should be substituted.

I have determined that we were not entitled to apply an exemption under section 27(1) of FOISA and I have therefore concluded that a different decision should be substituted.

Please accept my sincere apologies in this case, we should have shared with you the information to be disclosed as part of the Scottish information Commissioner’s Decision Notice 144/2021. This was an oversight and I have attached is a copy of the information you requested in the Annex.

Annex
In December 2016, following the approval of the Finance and Constitution Committee of the Scottish Parliament, the Scottish Government agreed to guarantee a portion of the electrical power purchase obligations of the aluminium smelter at Fort William in order to secure the survival of the plant and to underpin additional investment.

Under the power purchase agreement guaranteed by the Scottish Government, the primary obligation falls on the smelter (Liberty Aluminium Lochaber LTD) to pay SIMEC Lochaber Hydropower Limited.

Liberty’s annual payment obligations vary between £14 million and £32 million per annum over the 25 year life of the power purchase agreement (PPA), and the total nominal value of the guaranteed revenue stream at the commencement of the guarantee in 2016 was £586 million. From next month (December 2021) there will be 20 years remaining of the original power purchase agreement. Using the discount rates set by HM Treasury, as published in Public Expenditure System (PES) Papers, the net present value of the remaining Purchase Power Agreement revenue stream totals £285.9 million as at 01/11/2021.

In return for the guarantee, Liberty pays the Scottish Government a commercial fee. Since 2016, Liberty Aluminium has fulfilled all its power purchase and guarantee fee obligations, and there has been no call – and therefore no resulting public expenditure – against the Scottish Government guarantee.

To protect its position, the Scottish Government has taken first ranking securities over certain assets of the GFG Alliance at Lochaber including the aluminum smelter, the Fort William hydro-electric power station, and substantial land holdings. The audited accounts, published on Companies House, of Liberty Aluminium Lochaber LTD (for the year ended 31 March 2019) and SIMEC Lochaber Hydropower 2 Limited (for the year ended 30 November 2019) record the value of the assets at Fort William as £438,459,176. In addition, the Scottish Government holds cross-guarantees from other Group companies to protect its position in the event that it is required to make any payment under the guarantee. If such a scenario were to arise, the Scottish Government would have a range of options including asset sales to recover any amounts it had required to pay (that is, the expected value of the total security package held by the Scottish Ministers would be expected to meet or exceed any liabilities that might accrue to Ministers).

About FOI
The Scottish Government is committed to publishing all information released in response to Freedom of Information requests. View all FOI responses at http://www.gov.scot/foi-responses.