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Sheffield considers scrapping Veolia contract

Sheffield City Council is considering scrapping its 35-year waste contract with Veolia, saying the deal is “no longer meeting [its] needs”.

The contract, signed in 2001 and set to expire in 2036, includes the operation of the city’s energy-from-waste (EfW) facility on Bernard Road (pictured) and associated district energy scheme.

It also covers collection and disposal of waste, running household waste recycling centres, bulky item collections and the collection and disposal of abandoned vehicles.

Proposals to review the deal are set to be discussed by the council’s cabinet on 18 January, when members will consider alternative solutions to provide waste services in the city.

The proposals say: “Despite significant work with Veolia in the past five years, it has not been possible to achieve the level of savings required to ensure [the contract] can operate within the council’s reducing budget.”

It suggests that finding a new provider could allow the council to benefit from an increased share of income from the 225,000-tonne capacity EfW plant and make efficiency savings in the collection service.

In place of the Veolia deal, the proposals suggest the council tenders separately for each waste service.

These comprise a seven-year collection contract, a five-year EfW plant operation deal and a two-year district energy network contract.

Bryan Lodge, council cabinet member for the environment, said: “It is no secret that we are operating in very tough financial times and we have to do things differently.

“Our contract with Veolia, which was signed 16 years ago, is no longer meeting our needs and is no longer compatible with the tough financial landscape in which the Government is forcing us to operate.

“In last year’s budget, we set out crucial savings targets but, unfortunately, we have been unable to achieve these savings from the existing contract. We need to find a best-value solution that ensures a quality waste service for Sheffield taxpayers.

“We also know that Veolia currently employs around 180 people in Sheffield. We are committed to consulting with the affected workforce on any proposed changes if they are approved by cabinet next week.”

If the cabinet agrees that the deal should be ended, the contract with Veolia will continue with services unchanged until a new service provider is in place.

However, at the meeting, members will also consider changes to the waste services provided.

The main changes proposed include replacing the blue box with an additional recycling bin; charging for new and replacement black bins and green bins; and changing collection times from 7am to 4pm Monday-Friday, to 6am to 9pm.

Other proposals include: collecting bins at flats on weekends between 7am and 4pm, introducing the collection of plastic bottles for recycling at flats and the introduction of shared black bins or recycling bins.

There are no plans to introduce three-weekly collections of waste, and most changes would not take place until a new contractor had been found.

Lodge said: “We are confident that, by making changes to our waste policy, we can continue to provide a high-quality service to residents – and provide better value for money at the same time.”

Veolia spokesperson it would “do its upmost” to support the company’s employees who may be concerned by the council’s statement.

A spokesperson said: “We are proud to stand by our operational record in Sheffield in delivering sustainable environmental performance and value for money whilst minimising risk to the client.

”Veolia has also always been happy to discuss different service options with the council over the course of our partnership and will continue to work with the authority to deliver efficient services.

“Since the start of this contract in 2001, we have worked with Sheffield City Council to ensure the city has become a leader in UK landfill diversion performance and increased recycling fivefold.

“We have also developed a state-of-the-art energy recovery facility and an award-winning district heat network on behalf of the Council that maximises energy recovery and heat generation to the benefit of local residents and businesses.”

Readers' comments (3)

  • At last someone in a Senior City is seeing the light.

    With Gate Fees due to reach £zero per tonne in months (they are already being quoted that by some companies that can make Renewable Fuels - Biofuels - from Waste) a position that was actually discussed with previous Councillors in Sheffield between 2004 and 2010, and was also addressed to the Chief Executive Officer at the time in meetings, and a position which would have saved the City Council 16 years of 225,000 tonnes of waste and an average Fee of £80-00 per tonne, which is a total of £288 Million Squandered and Wasted Council Tax Payers' money that could have been used for really serious developments and benefits in Sheffield -- what a disgrace.

    The Council should have taken note of these prior meetings then as their heads are now on the line.

    The Council Tax Payers were kept adrift and away from these discussions that took place in the City Council Offices and proposed using the Waste after recycling to make a Cheap and Clean Biofuel for Road Transport in the area a clean fuel to replace by augmentation Diesel in Buses and then finally a complete replacement fuel.

    It is not too late for all around the country and the EU (wider still as far as Europe generally and to Asia the Municipalities world-wide are viewing this same proposal because the revenue stream from the sale of the Biofuels is so large that within five years the projected plant (to convert the organic waste to the Biofuels here) would provide an income stream of nearly £40 Million a year.

    Come on Sheffield join in this approach, have a serious rethink at this and as a result clean up the fumes from transport in the City.

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  • Paul Jackson

    This is an interesting position for SCC to take but not unexpected. It points to the issues with the PFI approach over the past 20 years or so.

    There are 2 observations for me:
    1 - 25yr or 35yr solutions were ill founded - the market has and will change so much over that time. Many of the solutions provided have outdated technology or commercial frameworks and many councils will become disadvantaged. It is true that companies like Veolia fund these projects at the outset - however the returns they make, especially in the latter years, are very high and not in the publics best interest

    2 - Despite the marketing spin by the operators of these plants, Veolia et al, they are in fact just operators. The assets are owned, and the solutions determined, by the Council. The operator holds the asset until the end of the term and then it reverts back to the council. Whilst I am sure that Veolia contractual position is very strong, and SCC options may be limited, the asset belongs to the city - and it is this last 1/2 of the contract term where Veolia makes the highest return - maybe they should just share some of that return

    I think we may see more of this in time

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  • Just an overview on Julius' comments which are poorly researched, and based on assumptions;

    The Energy Recovery Facility initial goal was to reduce the cost of waste disposal, which the service offered by the contracted company currently does a price less than landfill cost, and also divert waste from Landfill (was still a big issue at that time).

    The next thing is that Sheffield's residents do not produce 225,000 Tonnes of waste, they produce around 80,000 tonnes the rest of the waste processed is made up of waste supplied by other councils and also commercial waste brought in.

    I would also like to add is that the council receive a profit share, which is a major improvement over disposing to landfill, and receiving nothing back..

    Another comment is the capital cost to build these facilities (Recent development cost £150 million), and also the high maintenance costs, means that unless the council has large sums of money at there disposal to finance the project the private investor has to commit large sums which can only be returned over long periods - 35 years

    If you consider the agreement of what Sheffield Council has as opposed to other councils locally which pay purely for disposal (at a higher rate the Sheffield Council, and with no profit share of the money made by disposal) I think they are in a good position, and the only way to improve this would be running/operating/financing

    The council in terms of the ERF has a good deal (which was highlighted in Julius comment) in regards of the rest of the contract that is open to discussion and isn't as clear cut in my opinion.

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