Defra Pulls PFI Funding For Waste Projects

allertonIn a shock move, the department of environment, food and rural affairs (Defra) has pulled funding from the remaining energy from waste (EfW) projects under procurement

It is understood that the government has decided to withdraw the provisional funding for the three remaining EfW projects still under procurement, after it yesterday (21 Feb) announced that funding is no longer available for a £300m, 25-year contract to deal with household waste across Bradford and Calderdale, Allerton Waste recovery Park project and the proposed Merseyside EfW projects.

The government said the move has “significantly reduced” the likelihood of the projects now going ahead.

Bradford And Calderdale

Bradford and Calderdale councils received the “unexpected news” from Defra late yesterday afternoon, being told that more than £60m in Private Finance Initiative (PFI) credits available for the building of waste treatment plants had been withdrawn.

David Green, Bradford Council – “The Government has not consulted us or given us any prior notice of its decision. I will be seeking a meeting with ministers to ask them to explain their position.”

The credits had been vital to the affordability of the scheme – essentially subsidising the capital costs of the project.

The decision has been made only weeks before the contract was due to be signed with a consortium, Pennine Resource Recovery, which had expected to start construction of an energy-from-waste plant in Bowling Back Lane, Bradford, within months.

In a letter to the chief executives of both authorities, Lord de Mauley, parliamentary under secretary of state at DEFRA, says the Government has assessed the amount of residual waste treatment infrastructure required nationally to meet EU landfill directive targets.

As a result, he states: “Ministers have decided to withdraw the provisional allocation of waste infrastructure credits to the three remaining projects still in procurement” – one of which is the Bradford and Calderdale scheme.

The decision is expected to have a massive impact on the planned waste management project, which was intended to provide a long-term waste treatment solution for both councils from April 2016 and was expected to process 193,000 tonnes of council waste per year.

Councillor Andrew Thornton, Bradford Council’s executive member for environment, sport and sustainability, said: “The PFI credit contribution was intrinsic to the scheme and DEFRA has been involved every step of the way. The Government had not given us any indication that these PFI credits would not be available and we are just a few months away from starting construction on site.”

Bradford Council leader David Green said last night: “The Government has not consulted us or given us any prior notice of its decision. I will be seeking a meeting with ministers to ask them to explain their position.”

Merseyside

The Merseyside Recycling and Waste Authority (MRWA) planned develop of EfW facilities under a 25-year waste treatment contract using £60m in PFI credits.

The facilities would have covered the treatment of 450,000 tonnes of waste every year.

The two remaining candidates for the projects were proposing to build EfW facilities.

Covanta announced it would build its facility at Ince Marshes in Cheshire, while SITA proposed a facility at the Wilton International site in Teesside.

Allerton Waste Recovery Park

Plans for a £1.4bn waste recovery plant in North Yorkshire are also in jeopardy after the government announced it was no longer intending to authorise PFI credits to pay for the Allerton Waste Recovery Park, North Yorkshire County Council.

Cllr John Weighell, North Yorkshire County Council – “This announcement has come as a complete surprise to us”

The council has reacted with “dismay and surprise” and is seeking an urgent meeting with government.

“This announcement has come as a complete surprise to us,” said Councillor John Weighell, the leader of North Yorkshire County Council.

“We have been repeatedly assured throughout the procurement process of Defra’s commitment to PFI credits. To be informed now, after the granting of planning consent and the decision of the government not to call in the planning application for a public inquiry, that the funding commitment is being withdrawn is frankly baffling and disappointing.

“We have undergone a lengthy procurement process of more than five years, and Defra has been closely involved in that process – even to the extent of providing a permanent liaison officer at senior level. At no stage in that period, during which there have been continuing assessments to ensure that the scheme remains viable, value for money, and necessary, has any issue been raised by the government.

“There have been repeated indications from government throughout this period that the scheme will be funded through PFI.

“To make this unexpected announcement, without consulting us and without warning, is extremely disappointing.”

The council emphasises that the government’s decision does not necessarily signal the end of the scheme.

“The treatment solutions included in the Allerton Waste Recovery Park scheme would allow us to move away from having to rely on landfill to deal with the household waste that remains after waste reduction, reuse and recycling activities have taken place,” said a spokesman.

“We will now examine all the options available to us, to determine how to move forward in the light of this announcement by Defra.”

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