Two compete for NLWA deal after Covanta withdraws

The company was one of three bidders to be shortlisted in April 2011 for a 30-year fuel use deal to burn 250,000-300,000 tonnes-a-year of solid recovered fuel (SRF) produced from residual waste in North London, alongside Veolia and a consortium involving energy giant E.ON and Wheelabrator (see letsrecycle.com story).

We now need to finish the procurement and make speedy progress to delivering new facilities

Cllr Clyde Loakes, NLWA

However, the North London Waste Authority announced today (February 13) that it has come to an agreement with Covanta to suspend its fuel use proposal and not progress to a final tender.

This means that Veolia and E.ON/ Wheelabrator will be the only two to be invited to submit final tenders for the work.

In a statement, the NLWA said it had made “an agreement between the Authority and Covanta that their proposed fuel use solution will be suspended and not progressed to a final tender in competition with the proposals from E.On/ Wheelabrator and Veolia.”

E.ON/ Wheelabrator Technologies is proposing to burn SRF at a Combined Heat and Power (CHP)plant at DS Smith Papers Kemsley Mill site in Sittingbourne, Kent. The plant will help meet the energy needs associated with the production of corrugated cardboard produced from recycled paper. Planning permission for the plant has already been granted.

Meanwhile Veolia Environmental Services (UK) Plc is proposing a CHP-enabled power plant at an existing industrial site. The site is in Hoddesdon, Hertfordshire, six miles from the boundary of North London and adjacent to an existing Scottish Power plant. The plant will generate renewable electricity and discussions are ongoing with local businesses about the use of heat that can be supplied by the plant.

Tate & Lyle

Covanta had been planning to send the SRF to a Combined Heat and Power plant (CHP) at the Tate & Lyle sugar refinery site at Silvertown, East London which would meet the energy demands of sugar production on site. It was due to submit a planning application in mid 2012.

However, a spokesman for the NLWA said: Covanta has identified that should they proceed to the next stage, they would be unable to confirm necessary commercial arrangements relating to their bid. This is for reasons unrelated to the firm or the procurement, but rather relates to the control over the relevant site and long term use of the fuel.

He added that the suspension meant that the bid will not be considered in competition with other bidder proposals which are being taken forward to final tender, but that in the event that the procurement was to go back, for any reason, to an earlier point in the process, Covanta would be invited to be involved in that process.

Malcolm Chilton, managing director of Covanta Energy, said: At our request, the NLWA has suspended our bid. This is for reasons unrelated to Covanta or to the ongoing procurement.This means that Covantas proposals will not be considered in the next stages of the procurement.

“However, if for any reason the Authority elects to step back in the process to any stage prior to the suspension of our bid we will have the option to re-enter the process. We will be considering our options as the situation develops.

Waste Services

Alongside the fuel use deal, the North London Waste Authority is also procuring a long-term waste services contract. This contract will involve the provision of recycling, composting, residual waste treatment, SRF production, transport and Household Waste & Recycling Centre services. Key facilities are likely to be located at sites in Edmonton in Enfield, Hendon in Barnet, Hornsey Street in Islington and at Pinkham Way in Haringey.

The NLWA confirmed today that, following the withdrawal of SITA UK in 2011, just two companies are also left in the running for this contract, which is worth approximately 3 billion. These are: Veolia and a consortium involving FCC and Skanska.

Chair of the NLWA, councillor Clyde Loakes said: The Authority is very pleased to have received good quality proposals that exceed our expectations on service quality in some respects and cost less than estimated. Both contract awards are highly competitive with all bidders having a good chance of winning if final commercial details can be agreed and final tenders can be completed with appropriate assurance on price and delivery.

The procurement and the markets response has been a great success to date despite the withdrawal of Government PFI funding part way through which has delayed the project by a few months. All involved to date are to be congratulated. However, we now need to finish the procurement and make speedy progress to delivering new facilities. North London needs the new services and the local economy needs the boost that will come from this green investment.

The Authority said that for both contracts it envisages a final stage of dialogue with final tenders being submitted in the autumn 2012, the selection of preferred bidders in December and financial close in June 2013.

NLWA

The North London Waste Authority (NLWA) is the UKs second largest waste disposal authority, handling just underone million tonnes of municipal waste – around 3% of the UK total – collected in the seven London boroughs of Barnet, Camden, Enfield, Hackney, Haringey, Islington and Waltham Forest.

Its 4 billion procurement programme was initiated under an OJEU notice published on 21st April 2010. It is for the provision of future waste disposal services and investment in new facilities. The two contracts together are potentially worth 3-4 billion in nominal terms over a 25-35 year period. They are expected to involve investment of 500-600m in new facilities.

The project was approved for a record 258.4m PFI credit support by Government in March 2010. This support was reviewed and confirmed in July 2010 and then subsequently withdrawn as part of the Comprehensive Spending Review in October 2010 (see letsrecycle.com story).