An external view of the MBT plant in Dumfries
Dumfries & Galloway (D&G) council has said it will advise on its contingency plans “in the coming week” in response to what it described as an “irresponsible threat” from Renewi to suspend the waste management services it provides.
But for its part, the contractor has said that it is facing a loss-making contract which cannot meet new legal requirements being imposed in Scotland so a new contractor needs to be found quickly, and the authority and contracting body are not moving fast enough.
The south-west Scottish council, with a population of around 150,000, was responding to Renewi PLC, which said the authority has “refused to discuss the termination and associated transfer of services” in the four months since its announcement in March 2018 that it wants to leave the contract.
Subcontractor
The council signed a 25-year PFI-backed waste management contract with the project company, which was a subsidiary of the Shanks Group – which later re-branded as Renewi – in November 2004 (see letsrecycle.com story).
The contract was signed with the subsidiary Shanks Dumfries & Galloway Ltd and subsequently, the operating contract was allocated by Shanks Dumfries & Galloway Ltd to Renewi UK Services Ltd.
The contract, signed in 2004, has various different aspects
As part of the £270m contract, Renewi was to process around 95,000 tonnes of municipal solid waste and under the contract, Renewi also had to operate, complete and restore the council’s landfill sites as well as run the council’s civic amenity sites.
This also included building and running the MBT plant in Dumfries.
In its latest published annual reports, for March 2017, Shanks Dumfries and Galloway Ltd said that it processed 87,058 tonnes in the financial year 2016-17, and diverted 60% of this (52,202) from landfill. This was down from 67% (58,035) tonnes the year before.
In 2010, however, John Laing Investments entered the equation when it acquired 80% of the shares and 100% of the loan stock of the subsidiary set up, Shanks Dumfries and Galloway Limited.
Future risk
In March 2018, Renewi announced its intention to end the contract 10 years early, explaining that after making a £3 million loss in the year ending March 2018, it is pulling out to avoid “future risk”.
And, it noted that it had been talking to the local authority 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.”
Renewi at the time also pointed to Scotland’s “demanding waste legislation”, the Waste (Scotland) Regulations, which banned the use of Landfill from 2021, as one reason for having to pull out of the work (see letsrecycle.com story).
Shanks and Gansewinkel merged last year to form Renewi, seven years after Shanks sold the subsidiary involved in the contract to John Laing Investments
‘Meaningful discussion’
Now, four months after the announcement, Renewi says there has been no “meaningful discussions” in relation to ending the contract, and threatened a suspension of operations unless this is rectified.
“Renewi has repeatedly sought to engage with D&G and the associated ProjectCo [now owned by John Laing Investments] on the termination of the contract and the transfer of services to a new provider,” the Renewi statement said.
It continued: “D&G has refused to discuss the termination and associated transfer of services, and, four months since formal notification, ProjectCo has yet to confirm an outcome of the re-tender process.
“Whilst Renewi has sought to withdraw from the contract responsibly and with the minimum of disruption to residents and employees, in the absence of meaningful progress in engaging an alternative provider, Renewi has regrettably no choice but to suspend services in Dumfries and Galloway from 3 August if sufficient and meaningful progress is not made by this date.”
‘Extremely surprised’
The council said it was “extremely surprised” at the Renewi statement, and said that throughout the four months since Renewi’s decision to end the contract early, “the Council has been in dialogue with its contractor, Shanks Dumfries and Galloway Limited”.
The statement said: “Whilst the Council cannot comment on discussions between Renewi UK Services Ltd and Shanks Dumfries and Galloway Ltd, the Council has been advised by Shanks Dumfries and Galloway Ltd that they have had weekly contact with Renewi UK Services. The Council is disappointed that Renewi has chosen to unilaterally accelerate the timetable by proposing to take this irresponsible action.”
Assurances
Renewi CEO Peter Dilnot said the company’s focus is on securing an orderly transition
D&G also looked to reassure residents in its statement, explaining that the council “remains responsible” for weekly kerbside collections and is “planning for these to continue as normal”.
Explaining its assessment of how the contract operates, the council noted: “Renewi and Shanks Dumfries and Galloway have a Service Agreement in terms of which the operation and maintenance of waste sites, which are the responsibility of Shanks Dumfries and Galloway under the PFI Contract, have been subcontracted to Renewi. The Council say it is not a party to that Service Agreement.”
Renewi CEO Peter Dilnot, told letsrecycle.com: “Our overall objective is to secure a responsible and orderly transition in a reasonable timeline.”
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Source: letsrecycle.com General
