Veolia expects to reach a compromise with the Sheffield City Council over its waste handling contract in the coming months, following the announcement that the Council was seeking to end its contract with the environmental services firm 20 years early.
The Council threatened to cancel the 2001-2036 contract in January this year. Under the contract, Veolia is responsible for collecting and disposing of waste, running household waste recycling centres, managing and operating the Energy Recovery Facility at Bernard Road and the district heating network, bulky item collections and the collection and disposal of abandoned vehicles.
At the time, Councillor Bryan Lodge, cabinet member for the environment at Sheffield City Council, said the council needed to find a “best-value solution” that ensures a quality waste service for Sheffield taxpayers.
“Negotiations are continuing with Sheffield. I am rather confident we can find an agreement in the next months.”
He said: “Our contract with Veolia, which was signed 16 years ago, is no longer meeting our needs and is no longer compatible with the tough financial landscape in which the Government is forcing us to operate.”
Veolia chief executive Antoine Frerot said on Monday (31 July), according to Reuters, “Negotiations are continuing with Sheffield. I am rather confident we can find an agreement in the next months.”
Frerot said that Veolia had told the city that cancelling the contract would lead to a claim for compensation for the depreciation costs of the investment as well as for earnings on which it missed out.
A Reuters source at Sheffield city management said the contract costs the city about £30m per year.
Waste handling costs in Sheffield are among the lowest in Britain, Frerot said, adding that the city wants to reduce the cost of the contract significantly to help ease the pressure on its budget.
According to Veolia, a compromise could take the form of a lower price, possibly by extending the contract duration so that the investments are depreciated over a longer period.
Mr Frerot said that treating waste from other areas in the Sheffield facilities could also be a way to reduce costs.