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Viridor tackles Manchester contract issues

Viridor is working with partner companies to respond to financial challenges faced by councils signed to its flagship Manchester contract.

A trading update from parent company Pennon says construction contractor Costain is making modifications at some facilities servicing the 25-year, £3.8bn private finance initiative (PFI) contract with Greater Manchester Waste Disposal Authority (GMWDA).

Viridor and infrastructure firm John Laing signed the deal with England’s largest waste authority in 2009, with Costain overseeing execution of the development programme.

The last two meetings of the GMWDA have gone into private sessions to discuss the future of the contract.

In response to suggestions that the deal may be cut short, the authority and Viridor issued a joint statement in December saying they were working together to respond to “significant financial challenges” faced by the authority’s nine member councils.

Pennon’s statement now adds: “Modifications are being undertaken and funded at a handful of sites by the original construction contractor Costain to ensure the facilities operate effectively for the mix and profile of waste arisings.

“Diversion of waste from landfill remains ahead of contractual commitments, and Viridor and its partners are keen to ensure this progress is able to continue.”

In 2014, MRW reported that Costain was working on faults at four Manchester sites. The company said it would not be bidding for future deals in the waste sector.

In the new trading update, Pennon says its 12 energy recovery facilities are on track to hit the target of around £100m of ebitda in 2016-17.

Glasgow’s Recycling and Renewable Energy Centre is being completed by a team assembled by Viridor, which will work with an engineering, procurement and construction (EPC) contractor.

The Glasgow-based firm Doosan Babcock is currently finalising an assessment and project plan at the site. This follows the decision last year to terminate the EPC contract with Interserve due to repeated delays in the completion of the facility.

Pennon group chief executive Chris Loughlin said: “Our water and waste businesses are performing well, and we are on track to deliver a good set of results for the full year 2016-17.”

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