The contract for waste treatment was awarded in 2007 to Global Renewables under a £2bn, 25-year agreement to process the household waste from 1.4 million people in Lancashire.
As part of the deal, the firm designed, built and operated two mechanical biological treatment (MBT) facilities in Farington and Thornton in the north-west, which commenced operations in early 2010. The plants took in municipal waste for sorting and treatment to allow the recovery of recyclable materials and the processing of much of the residues to a marketable compost product.
On Friday (August 1), the councils announced that they had taken over ownership and responsibility for running the two sites, after the 25-year contract with Global Renewables Lancashire was mutually terminated.
Termination
According to a spokesman for Lancashire council, the original terms of the PFI contract allowed for the facilities to be handed over to the council at the end of the 25-year deal or upon early termination of the deal.
“The facilities have made significant improvements in operations over the past 18 months and whilst it is always difficult to say previous issues have been fully resolved we are confident that the facilities can operate successfully and achieve high levels of diversion from landfill.” – Lancashire council spokesman
The local authorities have refused to reveal the financial terms of the cancellation of the contract, but have claimed that they will now be saving money as a result of renegotiating the terms of the PFI arrangement.
Lancashire and Blackpool claim that by restructuring the financing for the sites, they will jointly save more than 12 million pounds per year over what would have been the remaining 22 years of the contract.
The facilities had suffered teething problems since beginning operations, and in February 2013 it was revealed that around 75% of the waste which had been sent for treatment at the sites in 2011/12 had ended up in landfill (see letsrecycle.com). This was despite Global Renewables claiming that the sites could divert up to 75% of waste from landfill once fully operational.
Improvements
While improvements in the sites performance have been made, the councils have admitted that some issues are still unresolved. Work has been carried out on the Farington site to attempt to mitigate the odour released by the process for which Global Renewables was fined £150,000 by Preston Magistrates Court in April 2013. Mechanical failures have also seen the plants shut down for maintenance since opening.
The spokesman added: “As with any facilities of the scale and nature of our two waste recovery parks it takes a certain amount of time to fully understand and optimise operations. The facilities have made significant improvements in operations over the past 18 months and whilst it is always difficult to say previous issues have been fully resolved we are confident that the facilities can operate successfully and achieve high levels of diversion from landfill.”
It is not yet clear what the cancellation of the deal will mean for the future of Global Renewables operations in the UK, as it currently operates no other facilities in the country. The firm declined to comment on the deal or its future in the UK market when contacted by letsrecycle.com
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