Worcestershire County Council and Herefordshire Council have varied their 25-year waste PPP contract with Mercia Waste Management to reflect the contractor's proposals to develop an energy-from-waste plant at Hartlebury, England.
Law firm Eversheds has advised both councils on the variation of their £120 million waste PPP plant. The plant has a total cost during the life of the project of £926 million
A report requested by Worcestershire and Herefordshire councils recommended that Worcestershire council provide a £125 million loan through prudential borrowing, while Herefordshire loan £40 million in order to develop the facility. Prudential borrowing requires that councils' borrowing can be serviced from their revenue resources.
This would substitute expensive bank financing, according to the report. The prudential borrowing option is recommended as the best value for money ahead of several financing options outlined in the report. It states that this would be £128 million cheaper than continuing to send waste to landfill without an EfW plant.
The plant is being developed by Mercia Waste Management in partnership with its sister company Severn Waste Services under a 25-year, PFI funded waste management contract signed in 1999. Mercia is a joint venture between Urbaser Ltd (ACS Group) and FCC Environment (FCC Group).
Until 2013 work didn't start on the facility due wrangling over PFI funding options.
The contract variation is the culmination of many years detailed work to deliver a sustainable waste management solution for the area in light of the earlier planning failure for a similar plant proposed for Kidderminster. The EfW will be built by Hitachi Zosen Inova. The plant will treat around 200,000 tonnes of residual waste each year and generate electricity for the grid.