Manchester to terminate its PFI contract with Viridor Laing consortium

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Manchester to terminate its PFI contract with Viridor Laing consortium

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The Greater Manchester Waste Disposal Authority (GMWDA) has chosen to terminate its PFI contract with the Viridor Laing consortium.

GMWDA indicated last year that it was ‘not satisfied’ with the contract and was looking to make ‘significant cost savings and efficiencies’ and now, it has decided to terminate the contract 17 years early

In 2005, GMWDA put to tender the contract to deliver the project - a complete overhaul of waste management for the 1.3 million tonnes of waste generated in Greater Manchester each year.

In 2009, GMWDA signed a 25-year private finance initiative deal with the Viridor Laing consortium for the Greater Manchester’s £3.8 billion (US$4.9 billion) waste management overhaul. At the time it was one of the UK’s largest PFI deals.The contract encompassed a £631 million construction programme of large-scale developments, taking in 43 schemes at 27 locations.

The deal has seen the consortium handle around waste a year generated by Bolton, Bury, Manchester, Oldham, Rochdale, Salford, Stockport, Tameside and Trafford councils, with a total population of around 2.3 million.

Viridor and Laing have stated that discussions and negotiations are now expected to progress over the coming weeks as they work with GMWDA to ascertain the implications. There are provisions in the PFI Contract for compensation to be paid to Viridor and John Laing on termination.

The book value of Viridor's investment in the Greater Manchester project as at March 2016 is £72.3 million, of which Viridor Laing (Greater Manchester) Limited represents £36.8 million.

Pennon Group, the parent company of Viridor, claimed that the Authority’s exit from the contract is due to ‘financial challenges’ caused by prolonged austerity.

The project had picked up awards including The Public Private Finance 2010 Best Waste Project Award and Judges Innovation Award, The Green Apple Award for Environmental Best Practice 2009 and Project Finance’s European Waste Deal of the year 2009

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