Private Finance Initiative
A Private Finance Initiative (PFI) is a way of financing public sector projects through the private sector. PFIs alleviate the government and taxpayers of the immediate burden of coming up with the capital for these projects. Under a private finance initiative, the private company handles the up-front costs instead of the public sector[1].
The project is then leased to the public and the government authority makes annual payments to the private company. These contracts are typically given to construction firms and can last as long as 30 years or more.[2]
Overview
In its desire to stimulate investment in waste infrastructure and underpin the diversion of BMW waste from Landfill, the Government supported/subsidized a range of treatment technologies on a number of sites that were procured by Waste Disposal Authorities needing this infrastructure through a dedicated long term Private Finance Initiative (PFI). This arrangement has now ceased and several schemes which had their funding agreed later had it removed after DEFRA assessed [3] that the BMW targets could be met with the infrastructure funded to date.
Fast forward circa two decades later and some of these PFI projects are currently being considered by Waste Disposal Authorities for movement out of the PFI arrangement after consideration of the cost benefit of continuing with the contract. Indeed several have now removed themselves form the PFI model (i.e. Lancashire) or have had closed with major restructure (i.e. Sheffield and Greater Manchester).
PFI Projects in England
The table below is an extract from DEFRA data [4] summarizing the residual waste projects that are/were PFI projects within England. Additional commentary/notes have also been added (an alternative PPP process and associated projects are listed on the PPP page):
Location | Project Site | Classification | Status | Capacity[7] (tpa) | Plant Type | Comment |
|---|---|---|---|---|---|---|
Bolton | Raikes Lane | PFI | Operational | 86 | EfW | Viridor Laing consortium GMCA contract terminated 2017, now Suez from June 2019 for 7 years |
Cambridgeshire | Waterbeach | PFI | Operational[8] | 200 | MBT | Amey Cespa site with variable performance reported, planning being pursued for new EfW on the site |
Cornwall | St. Dennis | PFI | Operational | 240 | EfW | Suez site (Cornwall ERC) part of an integrated contract with Cornwall to 2039 |
ELWA 1 | Frog Island | PFI | Operational | 180 | MBT | Renewi site servicing ELWA, recently reported financial difficulty |
ELWA 2 | Jenkins Lane | PFI | Operational | 180 | MBT | Renewi site servicing ELWA, recently reported financial difficulty |
East Sussex | Newhaven | PFI | Operational | 234 | EfW | Servicing East Sussex County Council and Brighton and Hove City Council |
Essex | Courtauld Road | PFI | Operational[8] | 417 | MBT | Developed and operated by partners Urbaser Balfour Beatty servicing Essex County Council and Southend, ceased deliveries in June 2020[9]and to be demolished[10] |
Greater Manchester | Longley Lane | PFI | Operational | 110 | MBT | Viridor Laing consortium PFI contract with GMCA terminated 2017, now Suez from June 2019 for 7 years |
Greater Manchester | Runcorn Phase 1 | PFI | Operational | 325 | MBT | Viridor bought out Laing in Nov 2018 and continues to operate under contract with GMCA to 2035[11] |
Greater Manchester | N. Manchester | PFI | Operational | 65 | MBT | Viridor Laing consortium PFI contract with GMCA terminated 2017, now Suez from June 2019 for 7 years |
Greater Manchester | Oldham | PFI | Operational | 99 | MBT | Viridor Laing consortium PFI contract with GMCA terminated 2017, now Suez from June 2019 for 7 years |
Greater Manchester | Salford | PFI | Operational | 73 | MBT | Viridor Laing consortium PFI contract with GMCA terminated 2017, now Suez from June 2019 for 7 years |
Greater Manchester | Stockport | PFI | Operational | 92 | MBT | Viridor Laing consortium PFI contract with GMCA terminated 2017, now Suez from June 2019 for 7 years |
Kirklees | Vine Street | PFI | Operational | 127 | EfW | Suez operated site primarily for Kirklees |
Leeds | Cross Green | PFI | Operational | 165 | EfW | Site developed by Veolia on behalf of Leeds City Council under a 25 year contract to 2037 |
Leicstershire | Mowmacre Hill | PFI | Operational | 120 | MBT[12] | Integrated contract delivered by Biffa for Leicester City Council for 25 years from 2002 |
LB Southwark | Old Kent Road | PFI | Operational | 100 | MBT[13] | Suez integrated facility servicing Southwark |
Shropshire | Battlefield Enterprise Park | PFI | Operational | 90 | EfW | Site developed by Veolia as part of a 25 year contract with Shropshire |
South Tyne & Wear | Teeside Lines 4&5 | PFI | Operational | 256 | EfW | Suez facility[14] serving Stockton, Middlesbrough, Redcar & Cleveland and Northumberland and the South Tyne & Wear Partnership |
South Devon | Devonport | PFI | Operational | 245 | EfW | MVV Umwelt facility serving South West Devon Waste Partnership under a 25 year contract |
South Yorkshire | Bolton Road, Manvers | PFI | Operational | 286 | MBT | Renewi partnership with SSE delivering integrated MBT and AD facility to Barnsley, Doncaster and Rotherham Waste Partnership to 2040 |
Staffordshire | Four Ashes | PFI | Operational | 325 | EfW | Veolia operated site for Staffordshire County Council, 25 year contract from July 2010, with inputs also from Sandwell, Warkwickshire and Walsall |
Suffolk | Great Blakenham | PFI[15] | Operational | 269 | EfW | Suez facility delivered primarily for Suffolk under 25 year contract, with later deal for cross-border tonnage from Norfolk |
Surrey | Charlton Lane Eco Park | PFI | In Construction | 60 | EfW | Suez integrated AD and Gasification facility for Surrey has had delays in commissioning the latter, now forecast Q1 2020 |
Wakefield | South Kirby | PFI | Operational | 146 | MBT | Renewi integrated contract for Wakefield City Council |
PFI Projects in Scotland
The following table lists the PFI projects that are or were in place in Scotland dealing with the countries Residual Waste.
Location | Project Site | Classification | Status | Capacity (tpa) | Plant Type | Comment |
|---|---|---|---|---|---|---|
Dumfries | Eco Deco Plant | PFI | Terminated | 65 | MBT | Contract ended in Sept 2018. Asset transferred to Dumfries and Galloway Council [16] |
Dundee | Baldovie EfW | PFI | Operational | 120 | EfW | MVV Site for Dundee City Council and Angus Council. Contract covers the operation of the existing EfW facility not the new Dundee EfW CHP Facility being built next door.[17] |
PFI Projects in Wales
There is currently only one Residual Waste PFI in Wales and that is in Wrexham; the detials of which are shown in the Table below.
Location | Project Site | Classification | Status | Capacity (tpa) | Plant Type | Comment |
|---|---|---|---|---|---|---|
Wrexham | Wrexham Eco Recycling Park | PFI | Operational | 75 | MBT | Produces RDF which is sent to Ferrybridge Multifuel 1 (FM1). Contract with Wrexham County Borough Council.[18] |
References:
- --
- Investopedia
- DEFRA Waste Infrastructure Delivery Programme
- DEFRA Residual Waste Treatment Infrastructure Project List dated 31st December 2016 but noted as last updated 29th March 2019 (edited with press updates)
- The capacity has been reproduced from the DEFRA data, but has not been verified in this table, and in some cases is known not to be up to date
- In original data site was listed as In Construction this has been changed to Operational.
- Letsrecycle Article
- Letsrecycle Article
- As part of the restructuring of the PFI contract, with option to extend
- The technology utilized under the contract is the only one in the UK and is known as a 'Ball Mill'
- Integrated site includes a Gasification facility which is in extended commissioning
- This site comprises a number of facilities in the same general area
- Discussions within Suffolk around re-financing reported in 2018 (Letsrecycle article November 2018)
- BBC News Item
- Scottish Government
- Letsrecycle Article
