The value of the project is put at about £3.5 billion by GMWDA, but it is not clear if this will be the actual contract value. It is known that, the project will be significantly cheaper than the Authority had expected.
The signing will come next week (see letsrecycle.com story) even though a critical part of the project remains uncertain on planning grounds. 275,000 tonnes of refuse-derived fuel (RDF) produced annually from anaerobic digesters and mechanical biological treatment (MBT) plants built under the project is proposed to be used at a combined heat and power plant in Runcorn, Cheshire.
But planning permission for the CHP plant, which is to be developed by chemicals giant Ineos Chlor to reduce its dependence on gas, is still awaited. It will come from John Hutton, Secretary of State for business, enterprise and regulatory reform.
Complex
Last year Andrew Kilburn, clerk to the waste authority, identified the fuel use solution for Manchester as a risk to the commercial negotiations with Viridor/Laing. The arrangements for the fuel have been a major factor in the delay in signing a contract, because according to Mr Kilburn “the fuel use is an innovative and complex commercial deal”.
Should permission be granted soon for the Ineos Chlor project, Mr Kilburn has indicated that this would “give us grounds for optimism that we should have the approriate power generation facility two years earlier than had been expected, 2011 rather than 2013.”
Ineos Chlor said this week that the company was still awaiting a consent for the plant from the Secretary of State. A spokesman confirmed that the company fully intended to build a CHP plant which could take in RDF from Manchester, Merseyside and Cheshire. The decision is taken by BERR as the facility is to generate electricity under the 1989 Electricity Act.
The complexity of the financial side of the contract now appears to be reaching conclusion, with the GMWDA saying today that: ” It remains the Authority's intention to achieve contractual close before the end of the month.”
Planning risk
It has also emerged that GMWDA has sought to pass planning risk for the project to the contractor. In a report on the project, Mr Kilburn said: “We have had substantial negotiations to try and transfer greater risk on planning to the contractor beyond what is the norm in this sector.”
The authority told letsrecycle.com today that in terms of guarantees, should for example, Viridor/Laing run into contractual difficulties in the future, “there are appropriate contract conditions to protect the Authority's interests in all matters. The Authority benefits from Government approved contract conditions in this respect.”
Delegated
A recent statement from the authority noted: “At a Board meeting on April 4 2008 the Authority confirmed that it proposes to award the contract for its 25 year waste management services to the Viridor Laing consortium, subject to final contract details being agreed by the Authority's Clerk and Treasurer under delegated powers.
“In addition, the Authority must also satisfy Treasury requirements and be issued with the promissory note for £100 million PFI credits already approved (in principle) by Defra. This maintains the progress towards achieving contract signing by the anticipated date of 29th April 2008.”
Mr Kilburn said: “I am delighted that the Authority has reached this further significant stage for Greater Manchester, bringing a world class waste service to the region and setting a European record in the size and scope of the contract.”
Cheaper
Even though it has been delayed, the cost of the contract is still substantially cheaper than expected. Mr Kilburn has said that the price is “considerably below” the expectations of the waste authority and as much as 29% cheaper than projected. In a report last year he noted: “We continue to have good prospects of a final solution that is £1.2-£1.3 billion (26%-29%) cheaper in nominal terms than the affordability envelope that was previously agreed by leaders.”
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