HIE welcomes review of Arnish investment

Decisions by Highlands and Islands Enterprise (HIE) to invest in two separate wind turbine manufacturing companies at Arnish, Lewis, were based on sound procedures according to an independent consultants' report.

PriceWaterhouseCooper (PwC) was commissioned to examine the evidence on which HIE decided to invest public money in Cambrian Engineering and Camcal and the network's dealings with them.

Both companies subsequently went into administration while trading at Arnish - Cambrian Engineering in February 2004 and Camcal in December 2006.

The 50-page report concludes that HIE's actions adhered to internal procedures and that each investment was compliant with European Union State Aid rules.

The report finds: "The management of risks was considered at an early stage in the project... Conditions were placed upon investment decisions in order to mitigate risks, such as regular receipt of documentation, the appointment of a non-executive director and the establishment of a review group - all of which were actioned."

PwC also found that HIE applied further procedures to their processes, such as rigorous consideration of board competencies, when dealing with Camcal in light of experience with Cambrian. The report warns, however, that although renewable energy manufacturing operations are likely to become increasingly important to the UK and the world, there are external factors such as location of generation sites, pricing and supply that are beyond HIE control.

To be better equipped to steer the facility through these complexities, PwC makes a number of advisory recommendations. These include seeking advice from a range of independent bodies and recording responses about companies in which HIE proposes to invest. Such actions would have the effect of putting the length of time the enterprise network gives to fully investigate the robustness of a firm higher priority than the need to quickly find an operator.

PwC also recommend that board papers include a detailed knowledge of the competition which their supported companies face and show a clear division of rationale between equity investment and grant investment.

Area director for HIE Innse Gall, Donnie Macaulay said: "This report essentially acknowledges the difficult market conditions of this potentially lucrative industry. However it also confirms our confidence that we are working in the right way and in the right arenas to get the most benefit out of this very valuable asset at Arnish.

"This should reassure all those with a stake in the Outer Hebrides that HIE has consistently pursued the best options available and that, with our considerable experience in the renewable and manufacturing industry, we are well placed to promote its long-term activity."

Read the full report - available in both MS Word and Adobe pdf formats