Vivergo upbeat despite reporting £50m loss

DESIGN and commissioning issues at Vivergo Fuels’s £350m biorefinery has led to a loss of almost £50m for the firm.

The Vivergo plant, a joint venture between AB Sugar, BP, and DuPont, was opened last summer and will produce 420m litres of bioethanol (a renewable transport fuel which is added to petrol) a year at full capacity, equivalent to a third of the UK’s current demand.

For the year ended December 2013, turnover reached £51.8m, however, the design and commissioning issues at the company’s plant in Hull led to lower than expected output volumes of Vivergo’s two commodity products – bioethanol and animal feed – and resulted in a loss after tax of £48.9m.

Continuous production of bioethanol and animal feed started during the second half of 2013, and volumes have increased steadily since that time, Vivergo said.

Looking ahead, Vivergo said it is looking forward to achieving full capability, which it expects to do by the end of the year. 

“Throughout the course of 2014, Vivergo’s production volumes have continued to increase, in line with our forecast, with large quantities of bioethanol and animal feed products being supplied to the market. Vivergo expects to achieve full plant capability by the end of 2014, following which the focus will be to run consistently at plant design – producing 420m litres of bioethanol and up to 500,000 tonnes of animal feed per year,” it said.

Vivergo’s long-standing dispute with Redhall Engineering Solutions was resolved in the Technology and Construction Court in December 2013. Although Vivergo was found to have been in breach of contract, Redhall was deemed to be in material breach of its contract at the time of termination and was responsible for the vast majority of the delays to the constructions works. The resulting settlement of £2.1m was within Vivergo’s prior year provision.
 
In 2013, Vivergo’s two main shareholders, AB Sugar and BP, injected a total of £40m in funding to the business, on an equal basis.

Using animal feed grade wheat, which previously would have been exported, Vivergo will become the UK’s biggest wheat buyer, taking 1.1m tonnes a year. The company’s aspiration is to source its wheat primarily from farms in Yorkshire and Lincolnshire.

Vivergo’s bioethanol will offer greenhouse gas savings in excess of 50% over standard petrol; this is equivalent to the current emissions of more than 180,000 UK cars a year.

The Vivergo plant is a brownfield re-development project built on a 25 acre site within the Saltend Chemicals Park near Hull.