Veolia MBT bid favoured for Southwark PFI contract

The company has been named as preferred bidder for the 25-year Private Finance Initiative-backed waste contract for the London borough of Southwark.

A computer-generated image showing Veolia's proposed multi-purpose waste facility for the Old Kent Road

The project aims to divert three quarters of the 205,000 tonnes of waste generated each year by Southwark residents.

Backed by 34.5 million in PFI credits from Defra, the deal centres around a move to commingled recycling collections, new organic waste collections and the use of Dutch MBT technology to treat waste left over after recycling and composting.

A multi-purpose waste site is to be developed at a former gasworks on the Old Kent Road, which will include an MBT plant, a new materials recycling facility to sort collected recyclables as well as bulking and transfer facilities. It will also include a visitor centre.

Competition
Veolia Environmental Services beat a shortlisted bid from Cory Environmental to land the preferred bidder status, as well as earlier bids from Biffa and Shanks.

The contract is now expected to be signed in the Autumn, and is likely to see a “considerable” transfer of staff from the council to the waste company.

Cllr Lisa Rajan, Southwark's executive member for environment and transport, said: “The competition was strong, but we are confident that the tender from Veolia offers the best solution in terms of environmental benefits, cost and technical considerations.

“We look forward to working closely with them on this groundbreaking project and developing a fully-integrated waste management service that works best for the borough's quarter of a million residents,” she added.

Cyrille du Peloux, Veolia Environmental Services’ chief executive for UK and Northern Europe, said: “We will ensure this contract will bring the Borough and its residents the benefits of integrated waste management which combines collection, pre-treatment and disposal and will maximise efficiencies, economies of scale and value for money.

“We have set out an innovative and sustainable service that will take into account the latest advances of technology and includes the MBT pre-treatment of residual waste. We look forward to concluding negotiations with the London Borough of Southwark in due course,” Mr du Peloux added.

” We are confident that the tender from Veolia offers the best solution in terms of environmental benefits, cost and technical considerations. “
– Cllr Lisa Rajan, Southwark
Recycling
For recycling services, Veolia's bid is based on continuing existing collection arrangements until 2010, when a commingled recycling scheme is to begin. From 2015, this will be joined by a new organic waste collection scheme for low-rise households.

Veolia pledged to aim for a 44% recycling rate in the long-term, and to reach a guaranteed 40% recycling rate through recycling and composting, which was slightly lower than Cory's 47% recycling rate target and 45% guaranteed rate.

A council report even suggested the company's guarantee would not be sufficient to meet some of Southwark's more ambitious recycling targets in the long term, but said Veolia had justified this with experience learned on other long-term municipal contracts, suggesting the belief that higher recycling rates for the inner-city borough were not seen as realistic.

The report said: “Whilst this fails the council's higher recycling/recovery targets from 2022 onwards, they do provide a reasoned justification for their stated service levels based on experience elsewhere.”

The report also revealed that Veolia's plans would comply with Defra's long-term landfill targets set for Southwark under the Landfill Allowance Trading Scheme, providing more than 281,000 spare permits over the length of the contract.

Residual
For all residual waste, Veolia's bid stated its intention to use Dutch technology from Waste Treatment Technologies for the MBT plant on the Old Kent Road site.

The technology could see residues turned into a refuse-derived fuel.

The council said the door would also be open for other new technologies to be used “as they become technically and commercially feasible”.

For residues from the treatment plant that cannot be recycled, the Veolia bid could make use of the SELCHP incinerator.

The two shortlisted companies Veolia and Cory had originally been asked to submit two different options for residual waste – one using MBT technology, the other proposing thermal treatment.

Council officers believe the MBT proposals will have less risk of being vetoed by the London Mayor, Ken Livingstone, when he acquires new waste planning powers under the Greater London Authority Bill currently passing through Parliament (see letsrecycle.com story).