Norfolk EfW cancellation costs more than hoped

Norfolk county council must pay 33.7 million 3.4 million more than previously anticipated to compensate Cory Wheelabrator after formally terminating its 25-year energy-from-waste (EfW) contract with the consortium.

The council signed a deal worth around 500 million with Cory Wheelabrator in February 2012 to develop a controversial 268,000 tonne-per-year capacity residual waste plant in Kings Lynn (see letsrecycle.com story), but this contract was formally terminated on Friday (May 16) due to escalating costs.

After deciding to cancel the deal in April, the council set aside around 30 million to settle various elements of the contract: including Cory Wheelabrators claimed costs; costs of a previous public inquiry into the deal (up to around 21.9 million); and hedging arrangements, which are subject to long-term interest rate and overseas exchange rate fluctuations.

The costs of ending the hedging arrangement element were previously estimated in a range between 4.4 million and 12.7 million during the past year, with the figure in the middle of that range (8.4 million) at the time the decision to cancel the contract was taken.

However, the council said due to the subsequent strength of the pound and decreasing long-term interest rates, the final fixed settlement figure after formal contract cancellation on Friday is 11.836 million.

According to the council, the final overall costs for termination of the contract cannot be identified until July, but the hedging figure revealed last week means that the overall sum owed to Cory Wheelabrator now sits at around 33.7 million.

A council spokesman said the authority now had 40 working days from the day of the contract cancellation to pay Cory Wheelabrator the full compensation, meaning the deadline is July 14 2014.

George Nobbs, Norfolk county council leader, said: This final figure for the hedging element of the contract is more than we would have hoped it would be, but it has to be found, and will be found. None of this has been easy but the county council will cope and come through this.

Steve Morphew, cabinet member for finance, added: More bad financial news is the last thing we needed, but we are already working out how best to protect the people of Norfolk.

Willows site sale

In addition, the county councils cabinet scrutiny committee yesterday (May 20) recommended selling the Willows site previously earmarked for the EfW project to the borough council of Kings Lynn and West Norfolk.

The proposal to sell the site was put forward by county councillor Brian Long, who is also a member of Kings Lynn and West Norfolk borough council where he has been heavily involved in an alternative contract with Material Works Ltd for an alternative waste facility, which has yet to secure a site or receive full funding (see letsrecycle.com story).

However, Mr Long told letsrecycle.com that the borough council was not seeking to purchase the land for the Material Works waste treatment plant.

He said: My understanding is that the borough council needs an ongoing site for industrial developments.