"This change of approach is one of a number of steps which Defra is taking to ensure that England will meet its EU Landfill Diversion targets on a timely and cost-effective basis"
John Burns, Director of WIP
Based on experience so far, a more streamlined process for applying to Defra for waste PFI credits has been announced today.
The new revised system will include "award rounds" rather than the acceptance of applications at any time of the year. The award rounds system is used by other government departments and will result in time windows for the submission of applications.
However the Defra PFI rules issued in 2006 continue to apply.
Waste-to-EnergyFacility, Flanders (Indevar)
PFI has proved to play a crucial role in enabling many local authorities to finance the estimated £11bn of infrastructure required. This level of investment is necessary to establish sufficient waste treatment facilities to ensure that the UK meets its targets for reducing dependence on landfill.
Defra's new Waste Infrastructure Delivery Programme (part of the Waste Implementation Programme) will manage the allocation of PFI credits to the waste investment sector. WIDP comprises a partnership of expertise from the Partnership UK (PUK), and 4ps organisations working together with Defra, to deliver this programme and providing support to all procurements within the programme. Support applies whether local authority funding is through PFI credits or otherwise.
The old system of PFI applications at any time made assessment of the comparative contribution of each case to the overall PFI programme difficult to judge. The new arrangement is intended to address this and encourage a partnership approach. It is anticipated that a partnership approach should produce increased value for money and other delivery benefits.
Privatisation will focus on a number of criteria including scale, deliverability, readiness and environmental objectives.
Director of Defra's Waste Implementation Programme John Burns has written to all local authority chief executives to explain how the system will operate.
Key changes
* The introduction of a new process of Award Rounds for Local Authorities to use when submitting an Outline Business Case for PFI credits.
* The requirement for Local Authorities to complete a new Planning Health checklist when submitting their OBC.
* Eligibility will be based in part on compliance with published PFI criteria, and in part on additional criteria which will enable a managed pipeline of investments to be procured, supporting the acceleration of Infrastructure delivery whilst offering value for money.
The strategy is to learn from the experience of earlier submissions and application of the knowledge so gained to future submission "waves". It is also important to match procurements to the capacity requirements of the waste treatment market as it expands.
Defra indicates that it expects that the "deal-flow will progressively ramp up to a peak in 2010/11 before declining. It will give confidence to the supply side of the market that there will be sufficient projects coming forward in an orderly process to justify investment in bidding and supply capacity."
The strategy is also expected to encourage new entrants to the waste market helping to remove the constraint of having only a limited number of players involved in bidding. This should in turn encourage more competition in bidding and help to build momentum into the programme.
John Burns commented:
"This change of approach is one of a number of steps which Defra is taking to ensure that England will meet its EU Landfill Diversion targets on a timely and cost-effective basis."
Further information on the new procedures and the PFI process in general can be found on the Defra website.