Greater Manchester PFI is first helped by Treasury

The European Investment Bank – which is lending £182 million to the project – has revealed that the Treasury's Infrastructure Finance Unit set up last month (see letsrecycle.com story) helped the deal reach financial close this week (see letsrecycle.com story). The project was the first to be assisted in this way.

The details came as the EIB revealed the full breakdown of funding received for the project, from a variety of banks and government sources.

The EIB said: “HM Treasury ‘s Infrastructure Finance Unit has joined that syndicate of commercial banks and the EIB to enable the Greater Manchester Waste Disposal Authority's PFI scheme to achieve financial close. The Unit was established recently to enable PFI projects which will create jobs and deliver vital infrastructure to proceed.

“This is the first transaction completed by the unit,” it added.

The EIB explained that the £182 million it was lending to the project would be split between Viridor Laing and Ineos Runcorn TPS. Viridor will receive £100 million to treat municipal waste provided by the Manchester authority, including the production of solid recovered fuel from waste. Ineos Runcorn TPS will receive £82 million to incinerate the solid recovered fuel.

The bank explained that further financing would be provided by other banks, including £95 million from the Bank of Ireland, £55 million from Spanish-based bank BBVA, £55 million from Lloyds Banking Group and £40 million from Japanese-based bank SMBC.

Simon Brooks, EIB vice president responsible for lending activity in the UK, said: “We are delighted to help this landmark project. Not only will Greater Manchester residents see the environmental benefits of the project in their daily lives, but the project represents an important step for the UK on the road to meeting national and EU-wide waste and recycling targets.”

The EIB said that Greater Manchester PFI project was expected to contribute directly to the UK's commitment to achieving 50% recycling/composting and a 65% diversion from landfill by 2020 in accordance with EU requirements. The EIB said this was of particular importance for Greater Manchester which is the largest of England's six statutory waste disposal authorities, accounting for five percent of national waste.

In addition, the project boasts high energy efficiency as the proposed EfW plant which will form part of the project will produce steam and electricity that will be used by the near-by Ineos/Runcorn chemical site.

Mr Brooks said: “The EIB has a long and successful history of supporting UK PFI projects. We recognise the value that the PFI structure can bring to major infrastructure projects, and our determination to support the sector is in no way diminished by the current financial conditions.”