In an article entitled Site issues put Merseyside PFI at risk of £405m delay LetsRecycle (the waste and recycling news service) reports that: Merseyside’s £3 billion waste PFI contract could be delayed by up to three years at a cost of £405 million because of problems acquiring sites for waste facilities.
The article cites a report issued to members of the Merseyside Waste Disposal Authority (MWDA) at its June 27 annual general meeting, telling them that progress on acquiring the sites needed to build two 325,000 tonne-a-year capacity energy recovery facilities had reached an “impasse”.
It is believed that there is reluctance on the part of some, or all, of the MWDA’s constituent councils to have on of the waste treatment facilities built within their boundaries. Two of the councils in the MWDA have passed resolutions stating that they would not build certain types of waste facilities.
Quantifying the impacts of the delay, the MWDA report warned that the current popularity of PFI-funded waste contracts among councils meant that, if the MWDA contract was delayed, “then the MWDA runs the risk of withdrawal of bidders from the procurement process, and turning their resources to procurements that they consider ‘more deliverable'”. In particular, the report cited the effect delays would have on “additional costs” for bidders, as well as “the prospects of sites not being available on which to deliver bidders solutions”. Within the report, the MWDA’s financial advisors Ernst & Young also outlined the cost implications of a three year delay in securing the waste treatment sites.
Firstly, they warned that if the sites are not secured, the project will not achieve financial close by its 2010 target date, and, as a result it could lose the PFI funding it was awarded in July 2007, with Defra instead allocating resources to a “deliverable project”.