A long-term waste management contract between Derby City Council, Derbyshire County Council and Resource Recovery Solutions (Derbyshire) Ltd (RRS) has been brought to an early end.
The termination of the contract means that the facility will temporarily cease to accept waste.
However the task of building and operating a gasification waste treatment facility in Sinfin will continue, the council says.
Banks funding the project issued a legal notice – a “No Liquid Market” notice – which brings the contract to an end 14 days after being served and the councils have not disputed the notice.
It follows months of negotiations after the councils asked the banks to step in and get the delayed facility up-and-running. The plant was due to open in 2017.
Contingency measures have been put in place by the councils to make sure waste that residents cannot recycle or choose not to recycle continues to be dealt with, and that recycling centres and waste transfer stations continue to operate.
These services will continue to be run by waste management company Renewi under a new two-year contract, the councils revealed.
RRS is a 50:50 partnership between Renewi and with national construction firm Interserve. Interserve was responsible for building the waste treatment facility.
In the immediate future, work will continue on the facility to determine its condition and capability. This work will also be carried out by Renewi and will allow the councils to ascertain what measures need to be in place for the facility to become fully operational.
It’s clear to us that the contract with RRS has reached the end of the line so we’re not disputing this notice which formally ends the contract as of today. But this does not mean the end of the project
Councillor Simon Spencer, Derbyshire County Council’s cabinet member for Highways Transport and Infrastructure, said: “We gave RRS every opportunity to get the waste treatment centre up-and-running.
“The fact that the plant has still not passed certified performance tests is clearly of enormous concern to us and the project’s funders have been unable to come up with a solution that everyone is satisfied with.”
Councillor Chris Poulter, Leader of Derby City Council, added: “It’s clear to us that the contract with RRS has reached the end of the line so we’re not disputing this notice which formally ends the contract as of today. But this does not mean the end of the project.
“Though it’s disappointing to have ended up in this position, we’ve been preparing for the possibility of the contract coming to an end for some time now.
“We have put contingency measures in place to make sure that our day-to-day waste and recycling services will continue.
“We need a facility to give us certainty about the future cost of dealing with Derby and Derbyshire’s waste. We remain committed to fully completing the plant and we’re confident there is the industry expertise available in the market to help us achieve this.”
Funding for the facility had been loaned to RRS by the UK Green Infrastructure Platform and three leading international banks; Sumitomo Mitsui Banking Corporation and Shinsei Bank from Japan and Bayerische Landesbank from Germany.
The councils will now enter negotiations to pay the banks an “estimated fair value” for the plant that will be worked up by an independent expert, taking into account all of the costs of rectifying ongoing issues at the plant, and the costs of providing the services to meet the agreed contract standards.
Both councils says they “remain confident” that the waste treatment facility still offers the best value for money for householders in Derby and Derbyshire compared to the alternatives available.
The completed facility aims to divert 190,000 tonnes of waste per year away from landfill by heat-treating waste to produce a gas which is then burned to create enough electricity to power 14,000 homes.
The news comes as the councils just last week issued a formal notice called a Prior Information Notice (PIN) to make suitable trade organisations aware of a potential opportunity to take over their current contract with RRS.