Japanese and German lenders pull plug on funds

sinfin efw derby plant

Interserve has formally been binned from its last energy-from-waste project.

Its Resource Recovery Solutions (RRS) joint venture carrying out work on the plant at Derby was told on Friday afternoon that a contract between the team and Derby city and Derbyshire county councils had been terminated.

Banks funding the project issued a legal notice – called a No Liquid Market notice – pulling the plug on the scheme.

RRS, which also includes waste management specialist Renewi, signed a 27 year deal worth £950m with the local authorities five years ago which, as well as building the £145m plant at Sinfin (pictured), also included work to operate and manage nine household waste recycling centres and manage a further two waste transfer stations.

But Interserve, which has had sole responsibility for building the plant, has bust the original spring 2017 deadline and still not handed it over – despite entering the commissioning phase in January last year.

Now RRS’s consortium of Japanese and German lenders has said enough is enough – although the councils have asked Renewi to take a look at the plant to find out what needs to be done to make it fully operational.

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Funding for the facility had been loaned to RRS by the UK Green Infrastructure Platform and Sumitomo Mitsui Banking Corporation and Shinsei Bank from Japan and Bayerische Landesbank from Germany.

Chris Poulter, leader of Derby city council, said: “It’s clear to us that the contract with RRS has reached the end of the line so we’re not disputing this notice which formally ends the contract. But this does not mean the end of the project.

“Though it’s disappointing to have ended up in this position, we’ve been preparing for the possibility of the contract coming to an end for some time now.”

At the end of last month the councils begun steps to replace RRS on the job.

The councils issued a Prior Information Notice alerting rivals to the “possible end of [our] long term waste management contract with Resource Recovery Solutions”.

The Sinfin plant will stop accepting waste on a temporary basis but the councils have said it will be completed.

Chris Tyerman, director for infrastructure and engineering services at Interserve, said the firm was “disappointed” in the decision, which it believes has been made “prematurely”.

Renewi will now carry out work to find out its condition and capability while the same firm is also carrying out the deal to manage the waste recycling centres and transfer stations under a new two-year contract.

In June, Renewi told investors in its annual report that it has “provided for the complete termination of the PPP contract” because of “the failure of our partner, Interserve, to commission the [Sinfin] facility”.

Renewi said this would mean a €64m (£57m) writedown of its investment in the facility and extra provisions for the costs of exiting – which it said were the biggest reasons why the firm lost €98m (£89m) in 2018.

And the firm also said it was owed €11.6m (£10.4m) by Interserve “but which remains outstanding”.

The plant has been dogged by a series of problems, including issues with the biofilter and the need to carry out remedial work on windows. Locals have also complained about smells and an infestation of flies.