Case study: Alternative funcing mechanisms as part of a waste management strategy Presentations Brochure (PDF 1.75 MB)

Alternative funding mechanisms as part of a waste management strategyPhillip Russell, Head of Wastes ManagementWest Sussex County CouncilG:\\\\Env & Dev\\\\WM\\\\MRMC Project\\\\WD80 40-1 Presentations\\\\RWM Sept 09Alternative funding mechanisms as part of a waste management strategyPurposeOutline approach to service provision by WSCCLessons learnedAlternative funding mechanisms as part of a waste management strategyAlternative funding mechanisms as part of a waste management strategyRecycled & Composted40%Energy Recovered0.6%Landfill59.4%Prevention 30,000 t2008/9 Approx 420,000 tonnesAlternative funding mechanisms as part of a waste management strategy“By working in partnership, West Sussex local authorities will reduce landfill by being leaders in waste prevention and recycling and by turning rubbish into resources.”Alternative funding mechanisms as part of a waste management strategyHousehold waste handled under two major services:1.Recycling and Wastes Handling Contract (RWHC) known as ‘Reclaim’ (2004)2.Materials Resource Management Contract (MRMC) (2009)Alternative funding mechanisms as part of a waste management strategyFirst ContractDBFO then PFIExternal Legal, Financial and Technical AdvisersVery much at ‘cutting edge’ little national guidance availableStrength of partnership approachTook 4 years to developCapex £45m £0.5 bn revenue 25 year lifeWesthampnett HWRSBeforeAfterAlternative funding mechanisms as part of a waste management strategyAlternative funding mechanisms as part of a waste management strategyCurrent Collection ArrangementsAlternative funding mechanisms as part of a waste management strategyAlternative funding mechanisms as part of a waste management strategyAlternative funding mechanisms as part of a waste management strategyHousehold waste handled under two major services:1.Recycling and Wastes Handling Contract (RWHC) known as ‘Reclaim’ (2004)2.Materials Resource Management Contract (MRMC) (2009)Alternative funding mechanisms as part of a waste management strategyFuture Arrangements2015 – The Vision MRMMRM Inputs55%Reclaim Recycling45%Landfill11%*Fuel26%*Bio Treatment18%** % of total wasteAlternative funding mechanisms as part of a waste management strategyMRM Strategy DevelopmentProcess:? Built on existing Joint Municipal Waste Management Strategy ? Qualitative? Quantitative ? Adopted by all Waste Authorities? Post adoption – any changes have to get buy-in from all stakeholdersAlternative funding mechanisms as part of a waste management strategyStarted 2004 – same advisers – subsequent to competitionFlexible options for funding stated in OJEUTwin track approach on documentation (SOPC4) Bidders always informedPFI Process ruled the project out (Planning and lack of commercial interest)Alternative funding mechanisms as part of a waste management strategyNo option but PB (PPP too expensive)Hybrid idea conceived 2005Members/Risk, don’t pay till it is built and worksHybrid option further developedDue diligenceAlternative funding mechanisms as part of a waste management strategyAlternative funding mechanisms as part of a waste management strategyReceptionHallDigestionMechanical SeparationCombined Heat & PowerWet Pre-TreatmentCleaning &Preparation RDFThermal Treatment(via Trigger)RecyclatesMarketRDF = Refuse Derived FuelAlternative funding mechanisms as part of a waste management strategy•Aim to award contract -Autumn 09•Biffa Submitted planning – 8 May 09•Operational (subject to consents) - Spring 2012Alternative funding mechanisms as part of a waste management strategyInfrastructure costs funded using staged Prudential Funds for the lower risk items (Approx 60%) with private sector funding the higher risk elements (Approx 40%) Funding of higher risk items split i.e 34% of the total Capex funded by senior debt and 6% by equity Bank 'club deal' helps to further reduce riskSenior debt repaid when satisfactory performance reached. Equity repaid once full performance achievedAlternative funding mechanisms as part of a waste management strategyLessons 1/2Director, Resources on boardStrong advisers Prudential borrowing codeDistrict AuditorOn balance sheet once prudential funding paidPrivate sector risk for major maintenance costsAlternative funding mechanisms as part of a waste management strategyLessons 2/2Can’t always plan for unknowns eg financial climateGood member supportKeep everyone informedBuild in as much flexibility as possibleWelcome involvement of WIDP BUTWish that WIDP had been in place 10 years ago þÿ