Waste in Essex will either be disposed of by Resources from Waste comprising Shanks, Costain and John Laing Investments or the Urbaser/Balfour Beatty consortium.
Essex County Council and Southend-On-Sea Council drew up the shortlist and have invited the two consortiums to deliver their final tenders.
The two councils are working together on the 25 year plan and will announce their preferred bidder early next year and award the contract that spring. Some £100m of PFI credits have been allocated to the project to improve the way waste is treated.
The project will include the development of a facility to treat up to 377,000 tonnes of residual municipal waste every year.
Essex County Council Cabinet Member for Waste & Recycling, County Councillor Kevin Bentley, said: “The Essex Waste Partnership is working hard to ensure that we deliver an improved, sustainable and cost-effective waste management solution for our residents. With the high quality proposals that are now being offered to the Partnership we are confident that the next stage of the process will achieve this.”