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Viridor confident on risk share deals

Viridor has said it is confident that local authorities will be willing to share more risk in waste management contracts with the company.

Parent company Pennon Group’s director of finance, Susan Davy, said Viridor was aiming to split more of the revenue in its contracts due to volatile secondary material markets.

Davy (pictured) told a Pennon Capital Markets event in London that the company was “looking at getting the balance right on managing the risk on prices”.

Pennon’s chief executive Christopher Loughlin added that he was confident councils would “come to the table” to discuss such deals because they had limited alternatives.

“The local authorities have a closed selection of facilities. If we walk away, they have to do something else that would cost them as well including sending it to landfill,” he said.

The directors were asked what their thoughts were on the European Commission’s circular economy package and whether the higher recycling targets proposed could be achieved without an incinerator tax.

Despite the company’s strategy of expanding its energy-from-waste facilities, it said it would not be concerned if such a tax was introduced because it would more directly affect councils.

Viridor aims to reduce its number of active landfill sites from 17 to three by 2020.

In August, Biffa said it had driven a shift to shared-revenue contracts because its corporate governance had dictated that it will not bid on council contracts without such a clause.

London Borough of Bromley head of waste services John Woodruff said councils preferred fixed-price agreements because they offered more certainty.

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