12 April 2013

Cornwall PFI waste contract restructured

Cornwall council has agreed a variation to its 1.1 billion, 30-year waste and recycling PFI contract with SITA UK.

Waste management firm SITA announced yesterday (April 11) that financing in the PFI contract, which was originally signed in October 2006, has been restructured in order to make it affordable following delays in gaining planning permission for its proposed energy-from-waste (EfW) incinerator in St Dennis, Cornwall.

An artist's impression of the St Dennis EfW due to open in 2016

An artist’s impression of the St Dennis EfW due to open in 2016

The Cornwall Energy Recovery Centre was finally given the go-ahead in March 2012 by Communities Secretary Eric Pickles, following a ruling in the Court of Appeal against anti-incinerator campaign group the Cornwall Waste Forum (see letsrecycle.com story).

Due to these delays in obtaining planning permission, SITA UK went back out to the market to identify and negotiate with potential investors.

However, its stressed that the contract restructuring would have a minimal cost impact on the council.

It said: The Net Present Value of cost for the council on a comparable basis has only increased by 1.6% from 426m to 433m, despite the significant additional costs.

Funding for the PFI contract will now be provided by The European Investment Bank (EIB), Bank of Tokyo-Mitsubishi, Japans Mizuho Corporate Bank and German bank Helaba. SITA UK, Japanese trading and investment firm Itochu and Lloyds bank will provide equity.

According to SITA UK, once third party waste and electricity revenues are taken into account, total project revenues are expected to reach 1.4 billion over the life of the contract.

‘The signing of the revised project plan provides long term security for the management of Cornwall’s waste.’

Cornwall council spokesman

Since the contract was signed in 2006, SITA UK said that 25 million has been invested in waste and recycling facilities across Cornwall. These have included upgrading works to household waste recycling centres and the construction of new centres in St Austell, Bude, St Erth, Falmouth and Launceston, along with new waste transfer stations at Connon Bridge, St Erth, Launceston and Pool.

Jean-Louis Chaussade, chief executive of SITA UKs French parent company Suez Environnement, described the PFI as a significant contract for the firm.

He said: This is a significant PFI contract for Suez Enviornnnement and SITA UK. Building on a strong performance in the delivery of the first six years of this contract we now have a clear path to proceed with the delivery of the much needed Cornwall Energy Recovery Centre which will reduce the countys reliance on landfill and create energy by putting residual waste to good use.

Commenting on the PFI contract variation, a spokesman for Cornwall council said: The signing of the revised project plan provides long term security for the management of Cornwall’s waste. At the centre of the plan is the establishment of the new Energy Recovery Centre. This facility, which is expected to become operational in 2016, will generate enough electricity to supply 21,000 homes in Cornwall.

Takao Shiomi, director of Itochu Corporation, said: We are delighted to participate in the project that contributes to the Cornwall councils environmental efforts to reduce greenhouse gas emission and direct landfilling.

St Dennis EfW

Expected to be operational in 2016, the St Dennis EfW will have the capacity to process up to 240,000 tonnes of waste per year and generate enough electricity for around 21,000 homes.

In the meantime, Cornwalls residual waste is currently taken to SITA UKs Connon Bridge landfill site, near Liskeard, in the county.

In a parliamentary debate last month (March 26), Liberal Democrat MP for St Austell and Newquay, Stephen Gilbert, called the St Dennis EfW plans outdated and said there were cheaper, cleaner and greener alternatives to incinerating waste (see letsrecycle.com story).

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