Renewi announced yesterday (12 September) that it has successfully reached an agreement to exit its “loss-making” Dumfries and Galloway contract in Scotland.
The agreement was reached between the waste-to-product company, Shanks Dumfries and Galloway Limited, Dumfries and Galloway (D&C) council and other parties, following discussions.
The exit from the contract, on time and for the expected cost, will deliver shareholder value, Renewi reports, and is aligned with the company’s strategy to actively manage its business portfolio.
Following the termination of the operating contract on 10 September 2018, Renewi will now operate on a transitional contract for the next two months.
“Under this transitional contract, Renewi will continue to provide all services as normal, working closely with D&G Council to prepare for a seamless transition,” a statement by the company said.
After this transitional contract expires on 10 November 2018, Renewi will transfer the relevant services, facilities and employees back to D&G Council.
The council signed a 25-year PFI-backed waste management contract with the project company, which was a subsidiary of the Shanks Group – which later re-branded as Renewi – in November 2004 (see letsrecycle.com story).
The contract was signed with the subsidiary Shanks Dumfries & Galloway Ltd and subsequently, the operating contract was allocated by Shanks Dumfries & Galloway Ltd to Renewi UK Services Ltd.
As part of the £270m contract, Renewi was to process around 95,000 tonnes of municipal solid waste and under the contract, Renewi also had to operate, complete and restore the council’s landfill sites as well as run the council’s civic amenity sites.
This also included building and running the MBT plant in Dumfries.
In March 2018, Renewi announced its intention to end the contract 10 years early, explaining that after making a £3 million loss in the year ending March 2018, it is pulling out to avoid “future risk”.
And, it noted that it had been talking to the local authority and other stakeholders for “a number of years to determine how this 15-year-old PFI waste project and the related operating contract could be amended to meet the requirements.”
Renewi at the time also pointed to Scotland’s “demanding waste legislation”, the Waste (Scotland) Regulations, which banned the use of Landfill from 2021, as one reason for having to pull out of the work (see letsrecycle.com story).
Commenting on the announcement, James Priestley, managing director of Renewi’s municipal division said: “We are pleased to have exited this loss-making contract under appropriate terms with all parties. We have concluded this exit on schedule while ensuring that services are maintained. We now look forward to working closely with D&G Council over the next two months to ensure a seamless transition.”