To receive an update on the Waste Contract prior to consideration by Cabinet on 4 October 2013.

To outline the current position with regard to the negotiations over the variation to the Integrated Waste Management Contract and the processes that will be followed to enable Cabinet to make a decision on the 4 October 2013.

The Director for Environment, Communities and Corporate introduced the report, with the following comments: it had been anticipated that a detailed report on the options in terms of delivering an Energy from Waste (EfW) facility would have been presented to the Cabinets of Herefordshire Council and Worcestershire County Council during September 2013; this timetable had subsequently slipped, with the Cabinets now due to meet on 4 October 2013; and there might be an opportunity for Committee Members to look at the detailed Cabinet report once published.

The Head of Special Projects provided an overview of the current position, the principal points included:

1.       Cabinet, on 13 December 2012, had agreed to find alternative methods of finance for the EfW plant proposal.

2.       Herefordshire and Worcestershire were in the process of negotiating with Mercia Waste Management (MWM) and the Cabinet report would be brought forward with a number of options.

3.       The councils were in conversation with central government, particularly DEFRA, and clarifications had been sought on a number of issues.

4.       There was more work to be done in response to DEFRA and there was sensitivity analysis being undertaken on the options on behalf of the two partner authorities. Additionally, Herefordshire Council had engaged KPMG to provide independent advice on value for money of the options for Herefordshire alone.

5.       Referring to an example in Wakefield, it was commented that the timescale for the delivery of this project was not unusual.

6.       It was reported that MWM had been granted planning permission for an EfW facility at Hartlebury in 2012.  Following this, MWM had undertaken competitive tendering to secure an engineering, procurement and construction (EPC) contract for the plant and had identified a preferred contractor.  In parallel, the councils were in negotiation with MWM on the terms of the variation to the Integrated Waste Management Contract.

7.       Going forward, work would be finalised on the options with due diligence undertaken by financial, legal and technical advisors.  The options would be presented to Cabinet with an assessment of the ability to meet the parameters identified in the 13 December 2012 report.

8.       It was intended that the Cabinet report would be available during the week commencing 23 September 2013.  On 4 October 2013, a joint presentation would be made in Worcester to both Cabinets, with the opportunity for Cabinet Members to question the advisors; this session would be open to the public but would not include public participation.  Herefordshire Council’s Cabinet would return to Hereford, with each authority making its own decision independently and concurrently during that afternoon; the KPMG report would inform Herefordshire’s deliberations.

9.       Subject to approval of the variation by the Cabinet, it was anticipated that financial close would be at the end of the calendar year.

The Head of Special Projects advised that work was still being undertaken on the figures associated with the options but he did report that the termination of the contract would result in the loss of PFI credits worth £1.4  ...  view the full minutes text for item 27