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Council takes out loan to save money on PFI incinerator

Suffolk County Council is set to save £10.4m by refinancing its share of an incinerator built by Suez.

The council will borrow £10.2m to reduce the capital cost for which it is responsible, with the gate fee also being lowered.

Suffolk entered a PFI contract with Suez in 2010 for the design, build, financing and operation of the Great Blakenham incinerator (pictured) with the gate fee set to reflect both capital and operating costs.

Borrowing the money cheaply through the Treasury’s Public Works Loan Board will allow Suffolk to pay off part of the capital cost more economically than it would through the gate fee.

This deal will be structured to ensure there is no perverse incentive to burn recyclable material.

A cabinet report could not give an exact saving but estimated it at £10.4m for the remainder of the contract to 2039.

The report said the reduced gate fee would not encourage the burning of recyclables as “the financial benefit secured by the partial refinancing…will not be tonnage dependent”.

It is the second time the council has restructured the PFI. It refinanced £37.8m of the facility’s capital construction cost in 2015, equivalent to 22.6% of the total, and the new refinancing would increase this to 28.6%.

Cabinet member for waste Paul West said: “This opportunity to take advantage of a second refinancing agreement on the contract for the energy-from-waste facility offers the council the chance to save £10.4m over the next 21 years, without affecting the services that we provide for residents.

“Discussions with our long-term partners Suez and Defra leading up to this proposal have been positive, and we now need to consider if we are happy to explore the savings on offer.”

Great Blakenham exports enough electricity to the grid for 30,000 homes and has helped Suffolk to reduce its use of landfill to only 1% of waste, the council said.

 

Readers' comments (1)

  • Laughable if it weren't so serious.Reduction, reuse, recycling, composting are cheaper than incineration, less carbon-intensive and don't cause Deaths Brought Forward. https://friendsoftheearth.uk/groups/derby/709

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