The £900 million waste management contract between Derbyshire and Derby councils and Resource Recovery Solutions (RRS) has been brought to an early end due to delays in completion of the Sinfin gasification plant.
The contract with Resource Recovery Solutions (Derbyshire) Ltd – a partnership between infrastructure firm Interserve and waste management company Renewi – was signed in 2009, but reached financial close in 2014.
It included managing Derby’s recycling centres, providing five transfer stations and building and running the 190,000 tonnes-per-year gasification plant in Sinfin, Derby.
The county and city councils issued a statement on Friday, August 2, stating that the contract – due to run until 2042 – has now ended and the facility “will temporarily cease to accept waste”.
However, the councils said that they still intend to use the gasification facility for the treatment of the region’s waste as this represents the ‘best value for money’ for both authorities.
Renewi has agreed a two-year contract with the councils to ensure the continued movement of waste from the region, and also to determine the “condition and capability of the waste treatment centre in Sinfin and the measures required for it to become fully operational”.
Derbyshire council told letsrecycle.com that as part of the interim arrangement, waste would be sent to transfer stations in Derbyshire and then sent to ‘contracted outlets’ at energy from waste (EfW) plants, RDF Facilities and landfill in the UK..
The council statement on Friday explained that the termination of the contract comes on the back of a “No Liquid Market” notice issued by the banks funding the project, which brings the contract to an end 14 days after being served, and the councils have not disputed the notice.
It follows months of negotiations after the councils asked the banks to step in to assist in getting the delayed facility fully operational.
Renewi also said in its 2018/19 annual results, that it had provided for the “complete termination” of the contract with the councils due to the ongoing delays to the facility (see letsrecycle.com story).
Funding for the provided was provided the UK Green Infrastructure Platform and three banks from Japan and Germany.
The councils say they will now enter negotiations to pay the banks an ‘estimated fair value’ for the plant that will be worked up by an independent expert, “taking into account all of the costs of rectifying ongoing issues at the plant, and the costs of providing the services to meet the agreed contract standards”.
“Both councils remain confident that the waste treatment facility still offers the best value for money for householders in Derby and Derbyshire compared to the alternatives available”
“Both councils remain confident that the waste treatment facility still offers the best value for money for householders in Derby and Derbyshire compared to the alternatives available,” the council statement said.
The gasification facility was billed as being able to divert up to 98% of the region’s residual waste from landfill by heat-treating waste to produce a gas which is then burned to create enough electricity to power 14,000 homes.
After the termination of the contract, the councils also confirmed that contingency measures have been put in place for residual waste to be dealt with, and that recycling centres and waste transfer stations continue to operate. These services will continue to be run by Renewi under the new two-year contract.
In the immediate future, work will continue on the facility to determine its condition and capability. This work will also be carried out by Renewi and will allow the councils to ascertain what measures need to be in place for the facility to become fully operational.
Commenting after the contract came to an end, Councillor Simon Spencer, Derbyshire county council’s cabinet member for highways transport and infrastructure, said: “We gave RRS every opportunity to get the waste treatment centre up-and-running.
“The fact that the plant has still not passed certified performance tests is clearly of enormous concern to us and the project’s funders have been unable to come up with a solution that everyone is satisfied with.”
“It’s clear to us that the contract with RRS has reached the end of the line”
Councillor Chris Poulter, leader of Derby city council, added: “It’s clear to us that the contract with RRS has reached the end of the line” so we’re not disputing this notice which formally ends the contract as of today. But this does not mean the end of the project.
“Though it’s disappointing to have ended up in this position, we’ve been preparing for the possibility of the contract coming to an end for some time now.
“We need a facility to give us certainty about the future cost of dealing with Derby and Derbyshire’s waste. We remain committed to fully completing the plant and we’re confident there is the industry expertise available in the market to help us achieve this.”
[Added Interserve comment on 06/08/2019]
From the perspective of Interserve, Chris Tyerman, director for infrastructure & engineering services at the company, said the firm is disappointed with the move as the facility is actually “well advanced”.
“We are disappointed that this step has been taken especially as we are well advanced with the testing phase, and the reliability of the plant has improved significantly,” he said.
Mt Tyerman, added: “As the plant is in the final testing stage, we believe action taken to remove Interserve from the contract is premature and is likely to result in further delays at significant cost to the taxpayer.”