A consortium led by SITA UK has today (April 21) signed a 727 million, PFI funded contract to treat hundreds of thousands of tonnes a year of residual household waste on behalf of three North East councils.
The contract, which was let by the South Tyne & Wear Waste Partnership, involves SITA UK working with property group Lend Lease and I-Environment Investments Ltd, a subsidiary of Japanese investment company ITOCHU Corporation.
It is focused on the development of an energy-from-waste incinerator on Teesside which will treat 190,000 tonnes-a-year of waste generated by the three councils in the partnership, which are Gateshead, South Tyne and Sunderland.
SITA UK was originally named as preferred bidder for the contract in September 2010 (see letsrecycle.com story), and todays announcement means it is the first waste PFI contract funded by banks to reach financial close having been let using the competitive dialogue procurement method.
The banks involved are two French banking groups Crdit Agricole and Natixis and Spanish bank BBVA.
The signing of the contract was welcomed by Jean-Louis Chaussade, chief executive of SITA UKs French parent company, Suez Environnement, who said: This is a major PFI contract for Suez Environnement and SITA. Thanks to a strong presence and experience in the North East of England, we have worked hard to develop a competitive solution for the Partnership.
By recovering energy from residual waste, this project fits well with the Governments aspiration to reduce the amount of residual waste that is landfilled.
Partnership
The three-council partnership received 73.5 million in PFI support from Defra to help fund the capital costs of the project, which represents a major aspect of a 1.6 billion plan to change how they deal with waste generated by the 284,000 households across the South Tyne & Wear area.
Tony Alder project director for the partnership said: The signing of this contract is a major milestone for our ambitious waste plans. This contract will allow us to significantly reduce our reliance on landfill and provide our residents with a greener waste management service.
The partnership aims to increase recycling from 30% to 50% by 2020. A new kerbside recycling scheme has been introduced across the partnership area. A 240 litre wheeled bin holds commingled glass, tins, plastic and cardboard, with paper collected separately in an inner caddy.
It is letting a raft of contract for waste management, including a MRF sorting deal awarded to waste management firm HW Martin last year (see letsrecycle.com story).
EfW facility
SITA UK has already secured planning permission and an environmental permit for the EfW facility that will offer the capacity to treat up to 256,000 tonnes-a-year of residual waste in total.
According to Suez Environnement, revenues from managing third party waste at the plant and from selling the electricity the facility generates take the value of the deal up to 1.2 billion (1.1 billion).
The facility is expected to be operational in 2014, while also included in the contract is the development of three waste transfer stations and a visitor centre
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