Greater Manchester and Cumbria strive for March signings

letsrecycle.com understands that the Greater Manchester Waste Disposal Authority (GMWDA) had hoped to finally sign its 25-year agreement with the Viridor-Laing consortium yesterday (February 26), or on Wednesday, but that the parties involved are now looking to achieve financial close early next week.

And, Shanks has confirmed that it is looking to achieve financial close on its 25-year public private partnership (PPP) deal with Cumbria county council, which it was named as preferred bidder for back in November 2006 (see letsrecycle.com story) before the end of March 2009.

The GMWDA's target of closing the deal before the end of March was made clear earlier this month, when the Authority's members were told, in a report, that, despite “some ongoing negotiation issue with VL” (Viridor-Laing), financial close “is expected to be reached well before the financial year 2009/10 commences”.

In the report on the GMWDA's budget and levy for 2009/10, the financial effect of the uncertainty over just when the contract would be signed was also made clear.

The report said: “Until we get to financial close we also will not have final debt and swap pricing. Given current volatility in long term interest rates and the Pound/Euro fluctuations these could have a significant financial impact.”

And, minutes from the Authority's meeting on January 23 reveal that due to “fluctuations” in financial markets, members were warned that the final costs for the project for the GMWDA could be “marginally outside the affordability envelope”.

The delay in getting the contract signed is thought to largely revolve around the difficulties faced in securing the finance needed to get the project up-and-running in the current economic climate (see letsrecycle.com story).

And, speaking to letsrecycle.com today, a spokeswoman for the European Investment Bank, which is expected to provide up to 200 million euros (£178 million) in senior debt financing to the project (see letsrecycle.com story) revealed that its contribution to the project had not yet been finalised.

“This has not yet been signed,” she said. “But we are working hard with the promoters and other funders to close this transaction as soon as possible.”

Earlier this month, Prime Minister Gordon Brown suggested that the government could become involved in getting PFI projects off-the-ground, and the Greater Manchester project was reported to be one of those set to benefit (see letsrecycle.com story).

But, media reports have now suggested that state intervention is less likely in the short-term, with Treasury officials expressing reservations about the impact it could have on projects that are – as is the case in Greater Manchester – nearing financial close.

Cumbria

Last month, Cumbria county council revealed that the process of achieving financial close on its £700 million contract with Shanks had also been affected by the impact of the current economic situation on finalising finance arrangements (see letsrecycle.com story).

But, it said that it aimed to get the contract up-and-running by April 1, the first day of the 2009/10 financial year.

And, speaking to letsrecycle.com this morning, a spokesman for Shanks said: “The banks are finalising their financial due diligence on the Cumbria municipal waste treatment contract and it remains our expectation that this will reach financial close during this financial year.”