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Delays send waste plant costs soaring to £144m
DELAYS in building a controversial waste incinerator for Hull and the East Riding have led to the costs soaring to a whopping £144m.
The cost of the incinerator at Saltend, to the east of Hull, is dramatically higher than the 30m smaller scheme originally proposed for Foster Street.
The Foster Street scheme was rejected by the Government in 2003 after a massive protest campaign.
Waste disposal firm WRG, which has a 25-year contract with Hull and East Riding Councils, won planning permission for a larger incinerator at Saltend nearly two years ago – but the funding is still not in place.
Hull and East Riding councils hope around 72m of the cost will be paid by the Government's private finance initiative (PFI).
The rest would be paid by WRG although the councils would still have to make annual payments to the waste company over 25 years.
According to leaked documents, the councils' preferred option is to keep the present contract with WRG and get PFI credits to build the incinerator which will burn 240,000 tonnes of waste a year. This is said to be the most cost-effective plan.
WRG's contract would be extended by another five years to March 2030 "to assist with affordability". If it wins Treasury approval, it is hoped construction would begin in April next year, building taking three years to complete.
A second option, being pursued by the councils as a contingency, would be a so-called reprocurement PFI bid where the existing contract would be terminated and a new one drawn up. This would take much longer, cost more and be likely to be "drawn out and litigious".
A third option would see the councils borrowing money at a preferential rate and paying the loan back directly over 25 years. However this would mean the risk lying with the councils and if the incinerator failed to operate or the contractor went bust "the councils could be left in a situation where they have invested 144m but have no viable asset in return".
However there are still problems with the first option as allowing WRG – which has the option on the land at Saltend and planning permission for the plant – to be the sole bidder could open the councils to the risk of a legal challenge from another waste company.
The documents admit: "Granting of PFI credits in a perceived sole bidder situation is unusual."
However the Government has considered the councils' "unique" position and suggested they pursue both PFI options. As a council source put it: "The Government is bending the rules to try and make this work."
The councils have a tight timescale to follow and must submit its outline business case to the Waste Infrastructure Development Board, a body reporting to the Government, by the end of the month.
The Treasury Board that considers PFI bids should give its verdict next February.
Campaigner John Dennis of the pressure group Hull and Holderness Opposing the Incinerator said: "I think they are in a real old tangle with the money. We don't need such a big plant with improved rates of recycling and falling amounts of waste."
Meanwhile WRG has still not reapplied to the Environment Agency for a new licence to operate the plant at Saltend.
In January the Environment Agency withdrew its pollution prevention and control permit for the facility after an appeal by opponents of the plant.
The intervention followed a successful legal challenge by Friends of the Earth over a licence for a similar facility in Newhaven, Sussex.
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Wednesday 08 February 2012
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