Greater Manchester & Viridor PFI Contract “Mutually Terminated”

The Greater Manchester Waste Disposal Authority (GMWDA) and Viridor Laing (Greater Manchester) Ltd (VLGM) will mutually terminate its recycling and waste management PFI contract from 29th September 2017, it has been confirmed.

The 25-year PFI contract was signed in April 2009 and was the largest ever combined waste and energy project. The Authority announced in May that it was seeking an exit from the PFI because of “financial challenges due to prolonged austerity”.

GMWDA confirmed today (24 August) that “significant efficiency savings and operational improvements” have been sought from the PFI to ensure mitigation of the predicted rise in the levy from this year.

It said, whilst a range of efficiency savings options have been explored in partnership with VLGM and their sub-contractor Viridor, what it calls “constraints” within the new EU Procurement Regulations (2014) have meant that the savings identified cannot be taken forward through the existing contractual arrangements.

“It is with some regret that GMWDA and VLGM have mutually agreed to terminate the Recycling and Waste Management PFI Contract from 29th September 2017.”

Coupled with what it calls some “technical and operational challenges” in the contract, the Authority said, “it is with some regret that GMWDA and VLGM have mutually agreed to terminate the Recycling and Waste Management PFI Contract from 29th September 2017.”

“Whilst this decision has not been taken lightly,” Councillor Nigel Murphy, chair, Greater Manchester Waste Disposal Authority said in statement, “GMWDA will work closely with all stakeholders to provide updates as quickly as possible.

With the support of Viridor, interim arrangements have been agreed to enable GMWDA to continue to provide recycling and waste processing and treatment while GMWDA procures new recycling and waste services.”

The Authority has assured that kerbside collection and HWRC services will continue as “normal” for residents of Greater Manchester. It says it remains committed to protecting front-line public services, “maximising recycling and minimising waste whilst achieving the required savings for authority partners.”

Terms

Viridor’s parent group, Pennon, released a statement revealing some of the terms.

Residual waste will continue to be treated at the Runcorn Energy Recovery Facility, which Viridor will continue to operate for the remainder of the original 25-year contract with no significant operational changes.

“GMWDA has indicated that the recycling and reprocessing operations will be subject to a reprocurement process, commencing later in 2017,” the statement says. “In the meantime, expectations are that Viridor will continue to provide these services for a period of not less than 18 months. Viridor will also be eligible to bid for the new contract.”

It added: “For the joint venture entities, Viridor Laing (Greater Manchester) Holdings Limited and INEOS Runcorn (TPS) Holdings Limited, Pennon anticipates at this stage a net one-off nonmaterial impact to the income statement in 2017/18.

This takes into account a reduction in the book value investment in joint ventures and an expected one-off gain on joint venture profit after tax. A fuller update will be provided in due course when all agreements are finalised.”


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