The Authority and its preferred bidder are yet to agree a way forward in preparing three or four out of more than 40 sites that will treat Manchester's waste under the contract. Agreement is also needed over how residual waste will be used as fuel for energy recovery.
Nevertheless, with time running out to hit government landfill diversion targets, the construction programme for new waste facilities will begin after September, “as if financial close has been secured in September”.
The financial close of the negotiations for the 25-year Private Finance Initiative deal had already been pushed back from June this year until this month (see letsrecycle.com story).
The Authority's focus after the end of September will be on working alongside Viridor/ Laing to drive on with the construction programme.
Cllr Neil Swannick, GMWDA
The Authority revealed on Friday that the contract will now see a commercial closure this month and financial closure in December with preferred bidders Viridor/Laing.
The delay to the contract means that Tim Judson, the director responsible for its procurement, will leave before the contract comes to a financial close. Mr Judson was on secondment to the Manchester waste authority from Defra, but his two-year stint comes to an end this month.
Contract
Under the proposed contract, which has been estimated to be worth around £3 billion over 25 years, Viridor and Laing would be responsible for handling 1.4 million tonnes of municipal waste a year.
The proposed deal involves £300 million of capital investment in around 30-40 new waste facilities, including a mechanical biological treatment plant. This will create refuse derived fuel which will be sent to a combined heat and power plant.
The fresh delay to the contract signing has come because of difficulties with agreements over works needed on the newly-acquired sites for new waste treatment facilities. There are also questions over how Manchester's use of waste as a fuel will be agreed.
The financial closure of the contract has also been held up by due diligence proceedings being carried out by the Viridor/Laing consortium's bankers.
Once agreements are made between the two sides, the Authority will need to submit a final business case to the government to secure its PFI funding, which will take time to approve. Defra has promised £100 million in PFI credits to underpin the contract.
“Excellent progress”
Despite the latest delay to the project, the Greater Manchester Waste Disposal Authority insisted on Friday that it was making “excellent progress”. It said the “vast bulk of the solution” had been signed off, and said there would be commercial closure on the contract this month.
Speaking in Manchester, the Authority's chair, Councillor Neil Swannick, said the contract negotiations involved “hugely challenging service demands and timetable ambitions”. He said the Authority was pleased that Viridor/Laing had cut projected costs for the contract by £1 billion, and that pension provisions for existing Manchester staff had been agreed.
He said now the focus of contract talks would need to focus on the construction needed for new waste facilities.
Cllr Swannick said: “The Authority's focus after the end of September will be on working alongside Viridor/ Laing to drive on with the construction programme. The Authority's administrative arrangements will change at that time coinciding with the Authority's current Director of Procurement completing his period of secondment from Defra as planned.”
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