This will encourage the UK waste industry to see that these types of contract are beginning to move again since the dire effects of the credit crunch started last summer.

The following is from the LetsRecycle News item:

Greater Manchester’s £3.8 billion PFI contract with Viridor Laing was the first to be pushed through by a new Treasury unit set up to help projects struggling in the current financial climate, it emerged on 8th April.

The European Investment Bank – which is lending £182 million to the project – has revealed that the Treasury’s Infrastructure Finance Unit set up last month helped the deal reach financial close this week (see letsrecycle.com story). The project was the first to be assisted in this way.

The details came as the EIB revealed the full breakdown of funding received for the project, from a variety of banks and government sources.

The EIB said: “HM Treasury ‘s Infrastructure Finance Unit has joined that syndicate of commercial banks and the EIB to enable the Greater Manchester Waste Disposal Authority’s PFI scheme to achieve financial close. The Unit was established recently to enable PFI projects which will create jobs and deliver vital infrastructure to proceed.

“This is the first transaction completed by the unit,” it added.

The EIB explained that the £182 million it was lending to the project would be split between Viridor Laing and Ineos Runcorn TPS. Viridor will receive £100 million to treat municipal waste provided by the Manchester authority, including the production of solid recovered fuel from waste. Ineos Runcorn TPS will receive £82 million to incinerate the solid recovered fuel.

The bank explained that further financing would be provided by other banks, including £95 million from the Bank of Ireland, £55 million from Spanish-based bank BBVA, £55 million from Lloyds Banking Group and £40 million from Japanese-based bank SMBC.

Simon Brooks, EIB vice president responsible for lending activity in the UK, said: “We are delighted to help this landmark project. Not only will Greater Manchester residents see the environmental benefits of the project in their daily lives, but the project represents an important step for the UK on the road to meeting national and EU-wide waste and recycling targets.”

The EIB said that Greater Manchester PFI project was expected to contribute directly to the UK’s commitment to achieving 50% recycling/composting and a 65% diversion from landfill by 2020 in accordance with EU requirements. The EIB said this was of particular importance for Greater Manchester which is the largest of England’s six statutory waste disposal authorities, accounting for five percent of national waste.

Manchester waste PFI deal to be done by end of month

Europe’s largest waste management contract, the £3.3bn Greater Manchester waste PFI, will be finalised by the end of the month, an insider on the project has claimed.

The source said the banks involved in the 25 year contract were close to agreeing the struc­ture of the finance.

A joint venture between infrastructure investor John Laing and waste contractor Viridor was originally named as preferred bidder by client Greater Manchester Waste Disposal Authority (GMWDA) in January 2007.

But the complexity of the deal and increasingly difficult lending conditions caused by the credit crisis have meant that every deadline for the project has so far been issed. Last December GMWDA predicted that the deal would be wrapped up by Christmas 2008 (NCE 4 December 2008).

I think that many are waiting anxiously to see these signings go through. The industry needs this vital re-assurance that the banks are still able to put together a deal of this size, are lending, and that the credit crunch has done its worst… (The Waster)

Source: New Civil Engineer Magazine

England is too slow at reducing the amount of waste sent to landfill and could face European Union (EU) fines as a result, the government’s public spending watchdog has warned.

The National Audit Office’s Managing the Waste PFI Programme report accuses the Department for the Environment Food and Rural Affairs (Defra) of being too slow to react when in 1999 the EU ordered member states to cut by 50% the amount of biodegradable waste they send to landfill by 2013.

It added that although 18 new PFI waste schemes worth £1.6bn are underway, local authorities had experienced delays in completing deals and bringing the projects into operation.

Auditor General Tim Burr said: “Defra is doing a lot to accelerate the programme of new waste treatment facilities being procured through private finance.”

“But, at the rate at which projects are being delivered, England risks missing the 2013 EU landfill reduction target, leaving the UK open to the possibility of fines.”

** End of NCE report **

The Waster says: The situation has the potential to deteriorate quite rapidly now for the UK’s PFI award programme. Many contracts have been delayed by the credit crunch which has meant the unexpected renegotiation of terms for loans between PFI providers and their banks when the banking system suffered so heavily in autumn 2008.

A number of PFI Contracts have been due to start since the summer, but still await award, and their programmes (which include building all the new waste processing facilities essential for the UK to meet the UE targets) must necessarily be put back.

The Greater Manchester PFI is just one example of the delays witnessed and was reported by the Wastersblog just after Christmas, yet there is still no news of award.

At the Wasters blog we started the year by reporting the gap between Ireland’s actual rates of recycling and waste diversion away from landfill, and the target requirements. It seems that Ireland will need to speed up its progress or soon face fines from the EU for failing to comply with the targets set up in the Landfill Directive.

This contrasted strongly against stories of success from the United Kingdom which were posted on our blog throughout the year. In fact, the Environment Secretary for Scotland announced ambitious plans to exceed the EU targets, for waste management in Scotland. The new targets amount to 60 percent recycling by 2020 and 70 percent by 2025. Also, incineration received a knock as a part of this plan, when it became clear that no more than 25 percent of waste is to be used to generate energy. The ultimate target is that they will reduce municipal waste being sent to landfill to just 5 percent by 2025. That is quite a target to go for! Especially as the easy option of incineration will be severely capped.

All the time last year, new announcements of new waste collection and massive investment in waste and secondary resource processing facilities planned were being made by the big five waste management companies, and indeed newcomers to the PFI Contracts, especially for the very large big-city contracts.

At the start of the year all were surprised that the Greater Manchester Waste Disposal Authority (GMWDA) was still in extended negotiation for its PFI Contract. In March we were told that they would very soon be announcing the award. However, the end of April arrived before there was a further delay announced. Even now the deal is not resolved.

Of course, all large contract negotiations are suffering from the much tougher bank lending rules which have been in place since the credit crunch really began to bite in the summer. The contractors bidding have found that the banks have been pulling back on their borrowing and at the very least their interest rates will have no doubt been revised. At a contract value in the region of reported £3 billion, and said to be the largest municipal waste contract in Europe, the GMWDA deal must be extremely hard to clinch.

The latest News (from LetsRecycle.com) about the Manchester PFI contract, at the start of December was that the banks were completing final formalities with a hoped for Christmas signing. The Waster has not seen an announcement so far, so we will hopefully receive the good news as one of the first events in the UK waste management scene in 2009!

The Manchester contract, and many others, need signing soon and then to move into the construction stage for the new facilities planned and much needed in order for the UK recycling and waste diversion targets to be met in the years to come.

One of the highlights for the Waster (who has been described as “born to landfill”) was a German research paper reported in April to be recommending the use of landfill as a carbon sink, as in carbon sequestration/storage. The posting was titled “Carbon Storage – A Renaissance for Landfill?”. How refreshing it was for a landfill lover like the Waster to be told that landfilling should be increased and encouraged and certainly not reduced. Wonderful! More of it please!

Autumn news showed the waste industry to be remarkably resilient to the economic slowdown, although landfill operators were, and still are, reporting the current remarkable rarity of once ever-present construction waste vehicles arriving at their landfill gates.

Of course part of the reduction might be due to better management of waste at the construction sites themselves, and in particular this may have had a small effect after the introduction, in the spring by the UK government, of a new legal requirement. The new rule is that all large construction sites produce Site Waste Management Plans (SWMPs) for every site from now on.

However, the lack of much SWMP activity reportedly being seen from the construction industry in setting up these plans shows that it is the economic slowdown rather than much better construction site waste minimisation and recycling that is the predominant effect here!

All in all, the UK waste management industry continues in the path set for it by the politicians in the 1986 Maastricht Treaty. Don’t forget that ALL EU member nation policy on waste-related legislation is derived from the EU commission and through qualified majority voting (unanimity in these matters is a thing of the past). The Waster is UK based and from his point of view the waste legislation has nothing directly to do with public health or environmental health issues in the UK.

In effect this means that the degree to which EU targets are set and goals derived make no allowance for national differences, bear no relationship to what might be more or less sustainable from a climate change perspective, and make no allowance for cost/benefit to local communities.

The Waster’s view is that this is nowhere more obvious than in the last of the big news events of the year. That is the autumn’s big and ever-rising cost of recycling due to the economic slowdown. How can it be right that policy is so inflexible that the ratepayers have to pick up whatever bill the waste industry incurs when the raw materials price falls through the floor?

In any other market there would be a market self-correction when the recyclers reduced their output to match the value gained from the recycled materials. In fact, the recycling market is bound to create these huge fluctuations as it is so distorted by inflexible EU policy.

As the Waster has been around for a long time, he continues to see it as remarkable that the current waste policies have lasted for as long as they have in their current form and ever increasingly are being built with huge investment into the fabric of our nation.

The concern must be how well technically they are based, when MBT in all its forms is put forward as better than incineration by our policy makers. Given public hostility in the UK to incineration it may be convenient to neglect the fact that no proper primary research has been done into the long-term impacts of MBT residues which receive only scant drying or composting treatment in order to declassify them from being organic waste. This allows this supposedly processed material to be sent to landfill without, on paper, contributing the the organic waste sent to landfill. This must surely be bending the rules beyond the point of forgiveness, purely for convenience?

Furthermore, why all the obsession we see with the carbon cycle within the waste regulators and impacts – to the almost complete neglect of consideration of the nitrogen cycle?

Both must be got right for a healthy environment and both need very careful consideration. However, the Waster is not aware of any recent research into the fate of nitrogen from waste residues, which he considers must be highly neglectful.

As we said earlier, the Waster does have a long memory, and he does remember that the UK only signed up to the Landfill Directive after resisting doing so for 11 years, in exchange for a deal with the Spanish on fishing quotas!

We did not know then what that had to do with sound waste management or environmental protection, and that has not changed.

So, the Waster will continue through 2009 to take a critical view of the waste scene as it implements EU legislation, and will plea for ALL aspects of policy to be founded on sound principles, rather than embarking on huge investments in waste technology in waste processing without good research to back up politically convenient theory.

Those were the main issues for the Wastersblog in 2008, and that ends our look back at the year 2008.

Your comments on this blog posting will, as always, be highly welcomed. Don’t be shy – comment away! (Email me direct if you have any problems with the commenting system on the blog site. All previous problems you might have experienced with the comments system have been rectified.)

The Waster would like to take this opportunity to wish all his readers a happy and prosperous new year.