The decision comes just after Bradford metropolitan district council revealed it had also dropped plans for a short-term contract to develop an autoclave facility to treat its waste – also citing changes in the economy as its reason (see letsrecycle.com story).
Under the deal, known as 'Contract A', SRM – or Sustainable Resource Management – which is 20% owned by council-run waste firm Norfolk Environmental Waste Services – had planned to develop mechanical biological treatment (MBT), anaerobic digestion (AD) and composting facilities at Costessey, on the outskirts of Norwich.
The SRM facilities were expected to provide treatment capacity for the county as it moved forwards with its plans to develop further treatment infrastructure under a long-term PFI-funded deal – 'Contract B' – for which it received £92 million in PFI credits in March 2009 (see letsrecycle.com story).
Situation
However, Ian Monson, chairman of the waste project board and cabinet member for waste and the environment, explained that the situation had now changed, prompting yesterday's decision.
“We selected SRM, after thorough evaluation, because its proposal was the most economically advantageous as it compared favourably with others and was significantly cheaper,” he said.
“However, with more than a 50% increase in estimated costs due in large part to the credit crunch, we do not believe that the project – which is worth hundreds of millions of pounds – will deliver the value for money which the council strives to achieve from its services,” he added.
In the report recommending the SRM deal be abandoned, which the cabinet backed last night, particular emphasis was placed on the cost of borrowing money, the price of technology providers and engineering sub-contractors, foreign exchange and Landfill Tax, all of which, it said, “had an adverse effect on the waste sector”.
“Contract A is more expensive than other treatment solutions; Contract A no longer represents value for money,” it concluded.
At the same time, the council cited the “risk” of landfilling post-treatment residues, including compost-like outputs, from the proposed MBT process, which it claimed had made the overall risk of the deal worse than for PFI-style contracts.
This echoes concerns raised by the council earlier this year when it revealed that it had changed the reference technology for its PFI bid from MBT to energy-from-waste due to concerns that MBT outputs would end up being landfilled (see letsrecycle.com story https://www.letsrecycle.com/do/ecco.py/view_item?listid=37&listcatid=364&listitemid=11002).
And, the council warned that, even if it had pursued the deal, it would have been left with a shortfall in LATS allowance for 2011/12, due the Costessey facilities not being expected to deliver “full service benefits” until 2013 “at the earliest”.
Alternatives
The council has now said it will look at alternatives to allow it to treat the waste that would have been covered by 'Contract A' – both before and after its PFI-funded infrastructure comes online – which is expected to be in 2015.
The options it is set to explore include purchasing LATS allowances from other councils and encouraging the roll-out of kitchen waste collection by the county's collection authorities by providing “recycling credit-style incentives”.
They could also involve looking at “procuring surplus or panned treatment capacity elsewhere via framework contracts at the same time as re-procuring landfill services”.
And, there is also the potential to move some of the waste to the PFI contract, Contract B', with the suggestion that instead of launching it with a capacity of 90,000 tonnes-a-year, rising to 155,000 tonnes-a-year over the 25 years of the contract, it could instead offer 155,000 tonnes of capacity from the off.
Commenting on the alternatives, Cllr Monson said: “While we are disappointed to make this recommendation to Cabinet, it is pleasing that we have a robust strategy in place, including proposals for the PFI treatment facility, which has already attracted support from the government worth approximately £169 million over a 25 year period and considerable interest from the waste management industry.”
“This strategy also reflects Norfolk residents' impressive record – which is among the best in the country – for embracing reduce, reuse and recycle habits and, as a result, significantly reducing the amount of waste sent to landfill in Norfolk over the last few years,” he added.
A spokeswoman for the council confirmed that it would begin a “complete assessment and review” of the alternative treatment options “immediately”, as well as looking to build on the council's increasing waste prevention and recycling rates.
A spokesperson from SRM was unavailable for comment.
Subscribe for free