Articles have been published in both the Hull Daily Mail and the Yorkshire Post indicating that the Government is considering ‘bending the rules’ to allow PFI money to pay for WRG without going through the usual competitive tendering process. With the cost of the proposed waste incinerator having risen to £144 million Hull and East Riding Councils are desperate to renegotiate their joint contract with WRG. The original contract prevents the councils from seeking Whitehall funding through a Private Finance Initiative (PFI).
The Hull Daily Mail reports that:
When the region’s two councils first put forward plans to burn non-recyclable household waste almost 10 years ago, the expected cost of constructing a facility was about £30m.
The article quotes veteran campaigner Barry Robinson:
This huge cost is just the latest reason why this monstrosity should not be built. We should also be asking why the councils are proposing to pay a waste company to burn our rubbish when, at the same time, we are recycling more than ever.
Further details are revealed in the Yorkshire Post:
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.
Most disturbingly, the article continues:
There are still problems 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.
I have drawn the attention of the two senior (director-level) Defra officers involved in the PFI bid, to many serious weaknesses in the documents involved. They seem not a jot fazed.
I believe that we need to mount a ‘Name and Shame’ them, campaign.
From Round 4 – Hull and East Riding OBC Review
(41-page .pdf available upon request)
Risk Management A risk register was initiated in March 2008 and has been used to identify risk and record action plans for risk management. The register was extensively reviewed and updated in September 2008. One of the highest impact risks facing the project is that by renegotiating parts of the contract with WRG rather than re-procuring the services the Councils could in theory face a challenge. An interested party could argue that the changes amounted to a “substantial change” and therefore necessitated a new procurement under EU procurement regulations.
The Councils have taken legal advice from Pinsents and consider that the risk of a successful change is very small. It would require:
a) an interested party to make the challenge, and
b) the challenge to be made in time, and
c) the courts acceptance that the challenge is valid.
The Councils have concluded that the probability of all these conditions holding true us very low. Furthermore the alternative option (i.e. re-procurement brings with the almost certain prospect of litigation from WRG. A detailed paper analysing this issues is included in the OBC Risk Allocation