Renewi is looking to withdraw from its PFI waste contract with Dumfries & Galloway Council, saying it is losing money and cannot match landfill diversion or recycling targets.
In a statement, the company said: “The Dumfries & Galloway PFI project is unable to address the needs of Waste (Scotland) Regulations that set demanding new requirements regarding landfill diversion and recycling from 2021.
“Renewi has been working with the council and other stakeholders for a number of years to determine how this 15-year-old PFI waste project and the related operating contract could be amended to meet the requirements of Waste (Scotland) Regulations. However, despite these discussions, a workable solution compliant with the regulations has not been found.”
Renewi, formerly Shanks, has kicked off discussions to terminate the operating contract, which is held between Renewi UK Services and Shanks Dumfries & Galloway, to take effect in the next financial year.
James Priestley, managing director of Renewi’s municipal division, said: “Terminating the operating contract is not a decision we have taken lightly and we will work with the council, our employees and our other stakeholders to ensure a seamless transition.
“While our termination discussions are taking place, we will continue to ensure a high-quality and efficient service to the council and the residents of Dumfries & Galloway. This decisive action is in line with our strategy to manage our portfolio of UK assets actively to reduce future risk.”
The company says its municipal division is unaffected by the termination, although the announcement coincided with a total write-down of £73m on local authority contracts including Wakefield and Barnsley, Doncaster and Rotherham (BDR). But the business had been struggling previously, and recent company updates have reported performance “largely in line with revised expectations for the year, delivering operational progress against its recovery plans”.
A council statement on a BBC report said: “The council’s overriding aim is to continue to ensure that its waste collection and disposal service, which is a priority for its residents and businesses in the region, is maintained and complies with all legal requirements. To this end the council will work with Shanks Dumfries & Galloway to secure continuity of service.
“The council wishes to reassure the public that there will be no change to the current service provision, and wheeled bins and waste containers will continue to be collected as normal.”
MRW has previously reported that Newham Council, which in 2016-17 had the lowest recycling rate in England, has criticised the PFI deal between East London Waste Authority and Renewi for being “expensive and inflexible”.
Renewi on D&G - press release
”Renewi is in discussions with D&G Council and other stakeholders to initiate the termination of its PFI operating contract that has made a loss of approximately £3m in the year ending 31 March 2018. It was signed almost 15 years ago and is unable to address the needs of the Waste (Scotland) Regulations that set demanding new requirements regarding landfill diversion and recycling from 2021. We currently expect the proposed termination of the operating contract to become effective in the next financial year and we will accordingly take an additional onerous contract provision of approximately £8m and a non-cash impairment of £1m in the year ending 31 March 2018 in respect of this.”
- UPDATED 1730, 9 March: Waste (Scotland) Regulations replacing earlier reference to Zero Waste Scotland.