Thurrock Council is withholding £120,000 owed to Nordic Recycling and has called in a bond valued at £119,000 from the recently terminated MRF contract, it has been revealed.
The council has activated an option to call in a bond with the Bank of Scotland for £119,000, saying Nordic breached its contract when it was put into liquidation in July. According to the council, the bond could be called in at any time until 12 April 2017, in full or in part, should the contractor (Nordic) fail to deliver the specified services.
Thurrock’s head of environment Michael Heath confirmed that the authority would be seeking to claim full payment for the losses incurred as a result of the terminated contract. Thurrock believes parent company Suez UK may be liable to pick up the extra costs for waste collection.
Heath told MRW: “We are seeking legal counsel on the matter to recover any costs that we are able, including from the liquidator.
“It’s is going to cost an extra £650,000 a year [to process the waste], at a time when we are trying to make savings. The council has made provision for it but it’s not something which is in our control. Council has had to divert resources from other areas to pay for the extra cost.”
The council has frozen payments due to the liquidated firm.
Nordic ceased operations at its 100,000-tonne-a-year Port of Tilbury MRF facility in July blaming poor trading conditions for the closure. Thurrock had sent approximately 13,000 tonnes to the MRF prior to its closure.
Thurrock paid £15 per tonne on a seven-year fixed contract with Nordic which was due to expire in April 2017. But the council has now made new arrangements with Bywaters which is processing material at £55 per tonne on an 18-month agreement at its MRF plant in Bow, east London.
Asked by MRW about the lower cost of the previous contract, Heath said: “£15 was a very good deal, there’s no doubt about that, but it was a deal which is signed in good faith. I am aware that other nearby boroughs are paying £25 per tonne and that the market may have moved on from there but this contract appears to have been deliberately abandoned.”
A statement issued on behalf of Suez UK said: “Nordic Recycling Limited (NRL) is in the process of appointing an insolvency practitioner and this process is expected to be concluded later this month (August).
“As such, Suez is not in a position to comment further until the formal insolvency process has been concluded.”