Tuesday, June 4, 2024

News: £750m PFI waste contract to be taken over

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Renewi plc is getting rid of the loss-making contract at the 220,000 sq ft "BDR" waste facility in Rotherham.

It comes as Biffa, a leader in UK sustainable waste management, entered into an agreement to acquire Renewi’s municipal business in the UK. An alternative could have seen the facility handed back to the council.

The waste treatment facility at Brookfield's Park, which became fully operational in 2015, takes around 250,000 tonnes a year and creates a material suitable for recovery and recycling and includes Mechanical Biological Treatment (MBT) and Anaerobic Digestion (AD) facilities. More than 97% of the waste received is diverted from landfill.

Barnsley, Doncaster and Rotherham (BDR) Councils secured £77m through the Private Finance Initiative (PFI) for the scheme and the operators signed a 25 year contract worth in excess of £750m with the councils for the treatment of black bag waste.

Renewi has struggled with its UK municipal waste contracts, which it described as a "cash drag on the group – with a total cash outflow of approximately €28m over the last 24 months."

A strategic review of the business began last year with bosses looking to withdraw completely from the UK market. The company was formed when Shanks plc completed a merger with Dutch waste service provider and raw material and energy supplier, Van Gansewinkel Groep B.V., in 2017.

The deal covers five contracts and will have a net cost of €57m to Renewi but will free them from "unpredictable UK Municipal liabilities" and "Onerous Contract Provisions (OCPs)."

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In a statement, Renewi said: "The contracts were entered into more than ten years ago, by a Renewi predecessor; they are break-even or structurally loss-making and, in the absence of a legislative shift or significant changes in market conditions, can be neither prematurely terminated nor renegotiated by Renewi."

Michael Topham, CEO, Biffa, said: “The addition of these five contracts to our existing contracts in West Sussex, Leicester and Somerset further establishes our reputation as a trusted provider of complex, long-term waste treatment contracts to local governments.

“Our combined expertise will position us well for the future as we seek to help local governments deliver their net zero targets. We look forward to welcoming the Renewi UK team to Biffa and to working with our new customers in due course."

As part of the deal, around 550 Renewi staff will now become part of the Biffa group.

The five contracts are with the Barnsley, Doncaster and Rotherham (BDR) Waste Partnership, Cumbria County Council, Wakefield Council, East London Waste Authority and Argyle & Bute Council.

Renewi website
Biffa website

Images: BDR Waste Partnership

6 comments:

Anonymous,  June 4, 2024 at 5:35 PM  

What a waste!

Anonymous,  June 5, 2024 at 12:19 AM  

A biffa and after story

Anonymous,  June 5, 2024 at 12:16 PM  

The project wants binning

Anonymous,  June 5, 2024 at 2:17 PM  

PFIs one of Labours fine ideas.Oh well probably 5 years coming up for them to make Tories screw ups look minor!

Anonymous,  June 6, 2024 at 7:03 AM  

Minor? Really?

Anonymous,  June 11, 2024 at 8:11 AM  

Minor as in Covid, Partygate, NHS waiting lists, Mental Health services melt down, Maternity service scandals, massive shortage of nurses, midwives, dentists, road and rail chaos, worst economic performance in developed world, sexual scandal after sexual scandal, etc etc?

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