Norfolk shapes up bid for £73.6m in PFI credits

And, the county is launching a public consultation to seek the views of residents as it procures the PFI contract.

An Outline Business Case must be submitted by Norfolk county council to Defra before the end of April, with the county hopeful of gaining £73.6 million in PFI credits to pay half the costs of a new waste plant.

If Defra grants Norfolk the funding, a new 25-year treatment contract could be signed in late 2010, with the county anticipating a two-year search for a private sector waste partner beginning from this October.

The so-called “Contract B” project should see a waste management plant capable of processing 200,000 tonnes of residual waste a year operational by 2013.

Prior to the Outline Business Case being submitted, the county council is writing to Defra to seek clarification on certain concerns expressed by the Department regarding the county-owned waste company NEWS.

Market testing

The county council has already carried out informal talks with waste management companies who might be interested in bidding for the contract.

Of those involved, three firms favoured autoclaving – the use of high-temperature steam to stabilise biodegradable fractions of residual waste prior to separating recyclable material.

Three companies suggested they would put forward energy-from-waste incineration proposals, while five suggested they would favour mechanical biological treatment (MBT) systems.

Norfolk councillors visited Cyclerval’s energy-from-waste plant in North East Lincolnshire on Friday to view the technology, and are to visit Shanks’ MBT facility at Frog Island in East London as well as Veolia’s incinerator at Chineham in Hampshire.

NEWS

The county council has already agreed that its own waste management company, Norfolk Environmental Waste Services (NEWS) will not bid for the PFI contract.

NEWS has already won preferred bidder status for the county’s “Contract A”, a similarly-sized but non-PFI disposal contract, as part of a consortium including equity partners. It intends to develop an MBT system using anaerobic digestion at a facility in Costessey, outside Norwich.

However, in approving Norfolk’s expression of interest for PFI credits this winter, Defra expressed some concerns about the possibility of NEWS bidding for Contract B.

The PFI system, it argued, is about shifting some of the risks involved in waste treatment projects into the private sector – but NEWS would not see enough risk transferred away from Norfolk county council.

And, Defra officials said that to have NEWS bidding for Contract B could dissuade other private sector companies from coming forward with a bid.

Speaking to letsrecycle.com, Norfolk project manager Joel Hull explained that the county council accepts Defra’s concerns, and he confirmed that NEWS would not be making a bid for the contract either itself or as an equity partner within the Sustainable Resource Management (SRM) consortium that is to operate Contract A.

Clarifications

However, Mr Hull added that the county is writing to Defra to seek clarifications as to, for example, whether Defra would accept a NEWS facility being used by the winning bidder on a sub-contract basis.

He denied local reports that Defra had ordered the county not to use NEWS for the PFI contract. “Defra haven’t necessarily told us to do anything,” he said. “We are seeking to benefit by PFI credits, and the county council has decided to address Defra’s concerns by saying that NEWS will not be allowed to bid as an equity bidder.

“Defra has outlined its concerns, but we are asking Defra to clarify the extent to which they have those concerns,” he explained.

Local anti-incineration campaigners NAIL2 are calling for Defra to allow NEWS to bid for Contract B. Rob Whittle told letsrecycle.com that the company’s private sector partners – Land Securities Trillium and construction and property consultancy Cyril Sweett Investments Ltd own a 80% stake of SRM – would mean most of the funding coming from the private sector.

Mr Whittle said: “If there is anyone listening in Defra, SRM should be allowed to bid in Norfolk’s residual waste Contract B, as the likelihood is that most of the non PFI money is coming from the ‘private’ sector anyway, with most of non PFI bank rolling of debt being covered by the private banking sector.”

With the number of companies already expressing an interest in Contract B, Mr Whittle also claimed that a NEWS bid would not dissuade competing bidders from coming forward.

Consultation

Norfolk produces around 410,000 tonnes of waste each year at present – with waste production growing at 1.25% a year, while the county is achieving a 38% recycling rate.

The £500 million Contract A will see NEWS dealing with around 150,000 tonnes a year of material from around 2011, with planning permission already approved for its MBT facility at Costessey.

For Contract B, the technology has not yet been decided, with officers confirming to councillors at a meeting last Wednesday (March 5) that “nothing has been ruled in or ruled out”.

The county council is launching a public consultation today (March 10) to seek public views on what should happen with Contract B, to support the procurement process. This will involve around 346,000 questionnaires published in local newspapers as well as through libraries and the council website.

Officers are already in “advanced negotiations” to secure a suitable site for a waste plant – an important consideration when the original preferred bidder for Contract A, Waste Recycling Group, failed to secure land for its incineration proposal.

However, the council has said bidders for Contract B will be allowed to suggest alternative sites. A planning application is expected to be made by 2010.