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Manchester waste PFI nears financial close after delays

Europe’s largest waste management deal finally looks to be heading towards financial close, one year behind schedule.

The Greater Manchester Waste Disposal Authority (GMWDA) announced on Monday that it was aiming to wrap up negotiations for its 25-year, £3.3bn PFI contract with infrastructure investor John Laing and waste contractor Viridor within three to four weeks.

GMWDA originally chose the Viridor Laing joint venture as preferred bidder in January 2007. Financial close was originally scheduled for summer 2007.

This was later put back until the end of 2007.

But the complexity of the deal, which serves Greater Manchester’s 10 local authorities and requires the construction of 28 new waste handling facilities, has meant every deadline to date has been missed.

The problems have been exacerbated by the credit crunch, with banks providing tougher lending terms for the privately financed deal. There has also been a downturn in the recyclable materials market.

“The complexity of the project and sheer volume of the documentation, coupled with the unforeseen credit crisis, [means that] some delay is not unexpected,” said GMWDA chairman Neil Swannick.

Costain is Viridor Laing’s preferred bidder for the £330M contract to build five mechanical biological treatment plants, two incinerators, four composting plants, five transfer loading stations and 17 recycling centres.

The contractor signed a £7M advance works order in January so it could begin detailed design work. But it cannot start construction of facilities until the deal between GMWDA and Viridor Laing is signed.

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