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Veolia ES Southwark Ltd PFI and Contract Information 21 st May 2010 Presented by; Simon Bussell, Managing Director.

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Presentation on theme: "Veolia ES Southwark Ltd PFI and Contract Information 21 st May 2010 Presented by; Simon Bussell, Managing Director."— Presentation transcript:

1 Veolia ES Southwark Ltd PFI and Contract Information 21 st May 2010 Presented by; Simon Bussell, Managing Director

2 No.1 waste services in the UK Circa 12,500 employees A fleet of over 5,000 vehicles Work with over 130 local authorities providing refuse, recycling, st cleansing, landscapes and disposal contracts Serves over 75,000 commercial and industrial customers 46 treatment and disposal facilities Veolia Environmental Services United Kingdom

3 UK Waste volumes 335.1m tonnes p.a. (2008) 324.7m tonnes p.a. (2013) 33.42m tonnes p.a Municipal (2008/09) % Composition (2008/09 UK) 10% - Incineration 53% - Landfill 36% - Recycling Our market

4 Market Trends Waste market estimated at £8 billion and growing at 7% per annum. Approximately 5,000 players in a quickly consolidating market with top five players holding 43%. UK reliant on landfill as a disposal option although Landfill Tax is currently £48 per tonne and due to rise to £72 from April Increasing levels of legislation – driven by the EU – Landfill Directive. Municipal recycling rate has moved from 6% to 27% in the last ten years and in England is now 38%.

5 NIMBY is a dominant feature in the market Planning and consent procedures are slow and arduous Inadequate infrastructure to meet proposed targets (estimated £10bn to £12bn to bridge the gap) Majority of focus on municipal waste – 33 million tonnes (10% of total waste) – in future attention will be on commercial and industrial waste Carbon agenda PFI Project Finance Initiative and PPP are current hot spots Market Trends

6 oCapacity gap : 8.9 million tonnes of residual waste treatment in 2012/13 oRequires capital expenditure £5-6bn, of which £3-4bn may be through PFI procurement oDEFRA was given a further £2bn of funding through PFI credits (equivalent to £700m per annum) oOff-Balance sheet Procurement of Infrastructure and related Services in a long term concession – type contract oAppropriate risk transfer – Payments performance based oFive projects closed in 2006/07, another 5 before April 08, peak deal flow likely to be 15 in 2011/12 Waste PFI Introduction to Waste PFI Capacity gap : 8.9 million tonnes of residual waste treatment in 2012/13 Requires capital expenditure £5-6bn, of which £3-4bn may be through PFI procurement DEFRA was given a further £2bn of funding through PFI credits (equivalent to £700m per annum) Off-Balance sheet Procurement of Infrastructure and related Services in a long term concession – type contract Appropriate risk transfer – Payments performance based In total, five projects closed in 2006/07, another 5 before April 08, peak deal flow likely to be 15 in 2011/12

7 Waste Infrastructure Development Programme (WIDP) Need for Private Sector Expertise Finance Evolution of a PPP/PFI marketplace for Municipal Waste Sector Procurement via Local Authorities 48 Waste Disposal Authorities in England and Wales. UK Waste Requirements

8 Recent developments / issues in Waste PFIs o The Competitive Dialogue Process o still early stages o price information at ISOS o too long before ISDS o no time enough during IDSD o Engagement of planning process during procurement o Involvement of planners early – Synchronize Contract procurement and Development Plan o Background work in advance o Pre application work before PB? o Bid costs increasing o BREAM o Standardisation of contracts : SOPC4 – Common approach on keys risks (planning, delays...) o New technologies

9 Recent developments / issues in Waste PFIs o Guidance re desegregation vs. Integrated Contracts oTwo tier Authorities o Interface issues with residual waste contract o Responsibility, costs, complexity o Evaluation of topics such as o carbon reduction efficiency o HEALTH & SAFETY o Architecture o Construction and engineering issues o Interest in Waste Market o Indexation (industry indexes vs RPI) o Time/info required for the preparation of bids o Risks (ground conditions) o CAPEX is the biggest risk

10 Proven PPP/PFI Integrated Contracts Veolia is a key player in the PPP/PFI Integrated market with 9 contracts handling 3.1m tonnes of waste and recyclables Birmingham City Council Sheffield City Council Hampshire County Council East Sussex County and Brighton & Hove City Councils (PFI) 03 Nottinghamshire County Council (PFI) 06 Shropshire County Council (PFI) 07 London Borough of Southwark (PFI) 08 West Berkshire (PFI) 08 Merseyside (PFI) 09

11 Shropshire Proposed Facilities o ERF Facility (90,000 tpa) o Composting Facility (60,000 tpa) o Integrated Waste Management Facilities East Sussex Facilities o MRF Facility (80,000 tpa) East Sussex Proposed Facilities oERF Facility (210,00 tpa) oComposting Facility (46,000 tpa) West Berkshire Proposed Facilities o MRF Facility (20,000 tpa) o Composting Facility (30,000 tpa) o Integrated Waste Management Facilities Southwark Proposed Facilities o MBT Facility (110,000 tpa) o MRF Facility (85,000 tpa) Sheffield Birmingham Hampshire Nottinghamshire Facilities oMRF Facility (85,000 tpa) Nottinghamshire Proposed Facilities o ERF Facility (180,000 tpa) Merseyside Facilities o MRF Facility (25,000 tpa) Merseyside Proposed Facilities o MRF Facility (65,000 tpa) Municipal Services Integrated/PFI/PPP

12 Veolia ERF - Marchwood Veolia ERF - Portsmouth Veolia ERF - Newhaven Veolia ERF - Chineham New Facilities in PFI/PPP era

13 PFI Pipeline between now and 2012/13 Suffolk Staffordshire Leeds Leicestershire Hertfordshire South London Waste Partnership Essex West Midlands North London Waste Authority West London Waste Authority

14 Veolia ES Southwark Ltd Business Description 25-year PFI contract from 11th Feb 2008 Central London: Population 251,300 Socially and economically diverse borough Properties 129,889 (2009) - of which 60,000 is social housing, 90% high rise 161,423 (2031) Contract Value - £665m PFI grant – £34.5m New Labour Administration

15 Recycling, treatment & disposal of circa 120k tpa contract waste, rising to 150k tpa in 2031 Collections of: Household waste inc bulky and clinical wastes Dry recyclables and garden waste Contract Recycling targets: 30% by March % by March LBS aspiration of 50%. Extensive waste minimisation, education and communications/PR obligation 181 VES staff inc 160 TUPE transfer, rising to 240+ staff with introduction of Old Kent Road IWMF in late 2011 Business Description

16 Map & Key Milestones Existing Manor Place Depot to end of 2011 Old Kent Road IWMF operational from Q4 2011/Q Planning consent granted 16 th February 2010 Construction from May/June 2010 Equipment from early-mid 2011 Commissioning / operational – Q4 2011/Q 2012 Recruitment of process and training of additional 60+ staff from mid 2011 Recycling target – 30% in 2010/11 Switch to borough wide co-mingled (clear sack or bin) collections Q3/Q ,500 tpa residual waste to Energy Recovery (SELCHP) rising to 60,000 tpa from 2015 Implementation of District Heating Network from SELCHP to serve 40,000 Southwark Council houses as part of OKR planning obligation

17 Existing Waste Management Facilities Manor Place Depot

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19 Planned Facilities Old Kent Road IWMF OKR IWMF to incorporate: MBT – residual waste (87.5ktpa) MRF – dry recycs (87.5ktpa) WTS – bulky and street cleansing wastes (40ktpa) HWRRC – public delivered bulky wastes Municipal depot – for collection fleet Resource Centre – visitor centre, mess-room and offices

20 Planned Facilities Old Kent Road IWMF layout

21 Development Plans 1.OKR IWMF oThe Development oSRF oThird party inputs 2.SELCHP oDistrict Heating Network oBulking bays 3.Recycling Collections oEstates Recycling Collections oCo- mingled recycling collections oKitchen Waste 4.Elephant and Castle (E&C) Development 5.MIMS 6.Workshops


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