22 August 2002

Devon Waste Management up for sale

Devon County Council is to conduct a trade sale of its wholly owned subsidiary waste firm Devon Waste Management.

Formed as a Local Authority Waste Disposal Company in response to the Environmental Protection Act 1990, Devon Waste Management has operated along commercial lines and at “arm's length” from the County Council.

According to a notice submitted to the Official Journal of the European Communities Public Procurement, DWM has a “successful track record and excellent prospects”. The county council is looking for a company to explore “alternative means of waste disposal for the longer term”.

Although the Council were unavailable for comment, it is thought that waste management Viridor are possible buyers because of their strong links with the South-West of England and previous contracts working alongside Devon Waste Management.

Owned by the Pennon Group, which also owns South West Water, Viridor has looked to expand its operations as recently as July, when it bought the Roseland Plant in Cornwall for around 9.5 million (see letsrecycle.com story).

Speaking last year after 12m worth of acquisitions in the South of England, Viridor's chief executive Colin Drummond said that they were looking to make waste management the core business of their parent company. Mr Drummon said that the firm would continue “to make acquisitions as long as they make strategic sense and the price is right.” (see letsrecycle.com story)

Devon Waste Management is one of a dying breed of Local Authority Waste Disposal Companies, with few remaining that have not so far been sold. LAWDCs were formed by councils because the Environmental Protection Act 1990 required local authorities to divest themselves of their waste disposal operations.

Councils either had to create wholly or party-owned “arms-length” companies – LAWDCs – or turn their waste operations over to the private sector. The aim of the legislation was to introduce competition for waste disposal into the system, to encourage a more efficient service and identify the full costs of waste disposal.

Devon Waste Management provide waste transfer and disposal services under contracts with eight district councils in the county. Its core business with 60% of DWM's turnover, waste disposal is primarily by landfill. The company operates two landfill sites – one of which it owns absolutely – and three transfer stations.

As well as this, DWM has a contract with the county council for the transporting and composting of garden and green waste. Following the sale of the company, the county council has said that its nine contracts with DWM will not be terminated before 31st March 2010.

The contract to run 15 civic amenity sites and eight rural facilities will expire on 31 March 2003, as will the county council's contract to store redundant fridges and manage the recycling of the CFC gases, provisions for which are being reviewed in the light of the latest legislation.

DWM also has a separate trading division, Coastal Waste, which provides services to the private sector, with contracts for the collection and disposal of commercial waste from a number of local firms.

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