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

2. Veolia Environmental Services United Kingdom
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 2

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

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 2013.
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. Market Trends 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

6. Introduction to Introduction to Waste PFI 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
Five projects closed in 2006/07, another 5 before April 08, peak deal flow likely to be 15 in 2011/12
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. UK Waste Requirements
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.

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

9. Waste PFIs Recent developments / issues in
Guidance re desegregation vs. Integrated Contracts
Two tier Authorities
Interface issues with residual waste contract
Responsibility, costs, complexity
Evaluation of topics such as
carbon reduction efficiency
HEALTH & SAFETY
Architecture
Construction and engineering issues
Interest in Waste Market
Indexation (industry indexes vs RPI)
Time/info required for the preparation of bids
Risks (ground conditions)
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. Municipal Services Integrated/PFI/PPP Merseyside Facilities
MRF Facility (25,000 tpa)
Merseyside Proposed Facilities
MRF Facility (65,000 tpa)
Nottinghamshire Facilities
MRF Facility (85,000 tpa)
Nottinghamshire Proposed Facilities
ERF Facility (180,000 tpa)
Sheffield
Shropshire Proposed Facilities
ERF Facility (90,000 tpa)
Composting Facility (60,000 tpa)
Integrated Waste Management Facilities
Birmingham
Southwark Proposed Facilities
MBT Facility (110,000 tpa)
MRF Facility (85,000 tpa)
Hampshire
West Berkshire Proposed Facilities
MRF Facility (20,000 tpa)
Composting Facility (30,000 tpa)
Integrated Waste Management Facilities
East Sussex Facilities
MRF Facility (80,000 tpa)
East Sussex Proposed Facilities
ERF Facility (210,00 tpa)
Composting Facility (46,000 tpa)

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

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

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. Business Description
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 2011
44% 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

16. Map & Key Milestones 2010-12 Existing Manor Place Depot to end of 2011
Old Kent Road IWMF operational from Q4 2011/Q1 2012
Planning consent granted 16th 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/Q4 2011
28,500 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

18. Existing Waste Management Facilities Manor Place Depot

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 OKR IWMF SELCHP Recycling Collections
The Development
SRF
Third party inputs
SELCHP
District Heating Network
Bulking bays
Recycling Collections
Estates Recycling Collections
Co- mingled recycling collections
Kitchen Waste
Elephant and Castle (E&C) Development
MIMS
Workshops