FRENCH oil giant Total have turned down funding requests for £700,000 from community groups in Shetland since they started working in the islands last year, the company reported this month.
Total is building a £500 million gas plant adjacent to the Sullom Voe oil terminal, which has brought hundreds of millions into the island community’s coffers since it opened more than 30 years ago.
In February last year Total agreed to pay a throughput levy to Shetland Islands Council after a lengthy series of negotiations, in which the council refused the offer of a single lump sum payment.
Though no figure has ever been disclosed, sources suggest the local authority is set to earn several million pounds every year once gas starts to flow from the Laggan-Tormore fields west of Shetland in 2014.
On top of the levy, Total have agreed to pay for 15 young Shetlanders to take up apprenticeships with the company, and to sponsor the Tall Ships visit in July and the annual environmental awards..
This month community groups throughout Shetland received letters from Total saying that their individual requests for funding had been turned down, months after some had asked for assistance.
Laggan-Tormore project director Robert Faulds said he had been surprised at the number of bids that had come in.
He said that every request had been individually looked at, but the company had decided the throughput levy covered their commitment to the isles.
“As a company we probably don’t spend any more than £30,000 a year on charity nationally, so obviously £700,000 is an enormous amount,” Mr Faulds said.
“We are good neighbours but we are not a philanthropic organisation, we are a business.”
The SIC negotiating team were “very good at their job” and had “squeezed every last drop” out of the company, Mr Faulds said, adding that such a financial deal with a local authority was unique in his experience.
The council had insisted on a levy that would bring a long term income over the lifetime of the gas plant, whose value will grow as energy prices increase in the future.
SIC head of finance Graham Johnston, who led the council negotiating team, would not divulge how much the throughput levy would earn the authority, topping up the £100,000 a year rent the gas plant will bring in.
“It could generate significant sums that will go into the reserve fund, which is the reserve over which the council has the most discretion,” Mr Johnston said.
When informed of the amount of funding requests Total had received, he said it showed the level of enterprise within the community that it should make such an effort to milk “a potential cash cow”.
He added that it would be up to groups to campaign how the Total levy should be spent within the isles, advising that no money would be forthcoming until gas production commences.
Last week Total issued a statement that said: “Since arriving in Shetland we have made it very clear that we wish to be seen as good neighbours and play a meaningful role in the local community. We hope to do this in part through direct involvement in appropriate local initiatives and events.
“For example, we have so far committed to funding a number of OPITO apprenticeships aimed at creating exciting career opportunities for young people on the islands; supporting the Shetland Environmental Awards; and part sponsoring the Tall Ships Race when it comes to Shetland in July. There will doubtless be further examples over the coming months and years.
“However, our principal financial contribution to the local community will be via a ‘throughput levy’ paid to Shetland Islands Council (SIC) on all gas that flows through the new Shetland Gas Plant, currently under construction at Sullom Voe.
“On behalf of Shetland Island residents, this form of community support was the option specifically requested by SIC when plans for the development of our Laggan and Tormore fields was being agreed. The levy will translate into a major investment into Shetland’s future sustainability and infrastructure and the well-being of its citizens.
“We feel sure that Shetlanders will understand that, having committed to a very significant contribution to the Shetland Islands community through the levy, we are not then in a position to offer the level of ad hoc support to community projects as might otherwise have been the case.”
Total hope to start laying pipes to the Shetland gas plant in April and have already started work on building an accommodation block for construction workers that should be completed by the end of the summer.
Last year work started on building a road to the gas plant site, where foundation work has already been carried including the creation of terraces and peat reservoirs.
Meanwhile work is being carried out at various manufacturing plants throughout Europe to build the various sections that will make up the gas plant.
Shetland Charitable Trust is hoping to earn in the region of £23 million a year if the Viking Energy wind farm is approved and starts generating power from 2017.
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