"We are delighted to have moved one crucial step closer to introducing one of the most innovative and sustainable strategies for managing waste in the country. The competition was strong but we are confident that the tender from Veolia offers the best solution in terms of environmental benefits, cost and technical considerations"
Cllr Lisa Rajan, Southwark Council's executive member for environment and transport
Veolia has been awarded preferred bidder status by Southwark Council for the council’s integrated waste management contract.
The company beat 4 other companies that had been in the frame from the ‘Invitation to Negotiate’ (ITN) stage of the PFI process and the decision on this 25-year contract was made after a detailed evaluation of the proposals submitted.
Currently about a quarter of Southwark’s rubbish is sent to the South East London Combined Heat and Power (SELCHP) incinerator plant in Lewisham, where it is incinerated and electricity is generated.
The remaining wastes, around 90, 000 tonnes every year, is sent to landfill in Essex. That amount needs to be dramatically reduced as by 2020 Southwark will be able to send less than 25,000 tonnes to landfill.
Veolia has proposed a fully integrated strategy for waste recycling and recovery which includes relocating all waste management activities to purpose built state-of-the-art facilities at the former gas works site on the Old Kent Road by 2011.
The contract will provide a new and improved household waste recycling site, enhanced collection services, sorting of separated recyclable materials, and mechanical and biological treatment (MBT) of all residual waste.
Southwark Council secured £34.5m in January 2005 through the government's Private Finance Initiative (PFI) to fund a 25-year integrated contract which aims to recycle half of all rubbish and divert three quarters of its expected 205,000 tonnes of waste away from landfill by 2020.
The Veolia proposals also leave the door open for the inclusion of further innovative new waste processing technologies as they become technically and commercially viable.
The competition
The four companies involved in the negotiation process were:
- Biffa Waste Services Limited;
- Cory Environmental Management Limited;
- Onyx Aurora Limited (now Veolia Environmental Services Aurora Limited); and
- Shanks Group plc.
In Sept 06 bids were received from both Cory and Veolia. Each company submitted two bids. The first bid met the ITN requirements to use MBT as part of the solution and a second bid, which did not use MBT technology (non-MBT). Neither submitted a variant bid which was an option under the council’s tender conditions.
Both waste management companies proposed to use the former gasworks site on the Old Kent Road for a range of facilities.
The non-MBT bids received involved energy from waste using SELCHP in the case of Veolia and the proposed Belvedere plant in the case of Cory.
Influence of the London Mayor
Cory's proposed Belvedere Efw facility
Southwark Council recognises that all of the solutions offered would required planning consent and as such there are inherent risks associated with any waste management facility, according to a report to the Southwark Executive in February.
However the council considered that, in particular relation to both non-MBT solutions, there is a potential greater difficulty in obtaining planning permission for building the necessary capital infrastructure.
This has been strongly influenced by the proposed powers for the Mayor of London to determine certain applications for planning permission, according the February report.
The London Mayor, Ken Livingstone has already strongly voiced his opinions on energy from waste facilities as he feels that they detract from recycling potential and he has also been involved in legal issues with the West London Waste Disposal Authority (WLWDA).
This followed a direction given by the Mayor which required the WLWDA to properly consider the Mayor’s municipal waste strategy, and to ensure that when they tender for a new waste contract they choose the most energy efficient ways of dealing with the waste and not simply incinerating it.
Mr Livingstone has also criticised Southwark council regarding the potential to use energy from waste facilities through the PFI contract (see MoreThanWaste article).
Southwark consider that the recent indications by the Mayor “imply that it is less likely that a non-MBT Bid will be seen by the Mayor to comply with wider London policy or strategy. This centres around interpretation of policies on preference for alternative technologies, and the level of reliance on incineration capacity”.
A further risk is seen as the acquisition of the Old Kent Road land of the former gas works as this is prominent in the Veolia proposal. A delay in the acquisition could cause a delay in the implementation of the new facilities and would likely require interim measures to be brought in. Under the contract the council appears to be responsible for the land acquisition.
The council is expecting to finalise and sign the contract this Autumn
Southwark’s waste management strategy
The Council’s Waste Management Strategy (2003-2021) sets out the Council’s proposals for moving Southwark towards more sustainable waste management
The key features of the Council’s Waste Management Strategy in 2003 are:
- A reduction in the amount of Municipal Solid Waste generated in Southwark to below 3% by 2005, and below 2% by 2010
- Achievement of 30% recycling and composting standards for household waste by 2010/11 and 40% by 2015/16 and 50% standards by 2020/21;
- Recovery of value from 45% of Municipal Solid Waste by 2010/11, 67% by 2015/16 and 75% by 2020/21.
Comments
Cllr Lisa Rajan, Southwark Council's executive member for environment and transport, said:
"We are delighted to have moved one crucial step closer to introducing one of the most innovative and sustainable strategies for managing waste in the country.
"The competition was strong but we are confident that the tender from Veolia offers the best solution in terms of environmental benefits, cost and technical considerations.
"We look forward to working closely with them on this groundbreaking project and developing a fully integrated waste management service that works best for the borough's quarter of a million residents."
The council anticipates that the contract will be signed in Autumn 2007.