The Treasury’s infrastructure fund has been utilised for the first time to bail out Greater Manchester’s £3.8bn private-finance initiative waste management contract – the largest of its kind in Europe.
Greater Manchester Waste Disposal Authority (GMWDA) has finally signed the 25-year contract with Viridor Laing (Manchester) following months of delay amid financial uncertainty. Approximately £125M will be provided by the fund, specifically set up to rescue PFI projects which have fallen victim to the decline in bank lending due to the credit crunch.
The contract will create at least 5,000 jobs for a construction programme over the next five years. Costain has been awarded the £397M contract to design and build the waste treatment infrastructure.
The project aims to provide a revolutionary integrated solution for the 1.3Mt of municipal waste handled by the authority each year.
Environment minister Hilary Benn said: ‘Diverting 1Mt of waste through these world class waste facilities will be a major step in reaching our 2013 and 2020 landfill targets.’
The contract will utilise a range of technologies, including mechanical biological treatment with anaerobic digestion and a materials recovery facility. In addition, Greater Manchester’s network of 25 household waste recycling centres will be increased and updated.
Cllr Michael Young, vice chair of the GMWDA, said: ‘We are extremely pleased to have progressed through this private finance initiative during the difficult final stages and we can now work towards putting our plans in place and concentrate on making recycling easier for Greater Manchester residents.’
The Treasury’s infrastructure finance unit joined a syndicate of commercial banks and European investment banks to enable the scheme to achieve financial close.