Greater Manchester Waste PPP Project achieves financial close with help of GBP 182m EIB loan
The European Investment Bank (EIB) is lending GBP 182 million (EUR 200 million) to assist the Greater Manchester Waste Disposal Authority to build and maintain an integrated waste management service for the treatment and disposal of municipal waste. The project will be structured as a partnership between the public and private sectors and the EIB will make loans to Viridor Laing (Greater Manchester) and Ineos Runcorn TPS, the two special purpose vehicles established to manage this project.
The successful implementation of the Greater Manchester Waste project will have a positive environmental impact on the communities living in and around Manchester, because it will allow for the phasing out of the practice of landfilling untreated waste. Moreover, by adopting an integrated waste management service, Greater Manchester aims to increase recycling and composting levels in the region which historically have been low compared to the national average.
Meeting EU environmental standards
Simon Brooks, EIB Vice President responsible for lending activity in the UK, said, “We are delighted to help this landmark project. Not only will Greater Manchester residents see the environmental benefits of the project in their daily lives, but the project represents an important step for the UK on the road to meeting national and EU-wide waste and recycling targets.”
The project will contribute directly to the UK’s commitment to achieving 50% recycling/composting and a 65% diversion from landfill by 2020 in accordance with EU requirements. This is of particular importance for Greater Manchester which is the largest of England’s six statutory waste disposal authorities, accounting for five percent of national waste. As a result, the EIB’s participation in the financing programme has been particularly welcomed by the UK Department for Food, Environment and Rural Affairs (DEFRA). In addition, the project boasts high energy efficiency as the proposed EfW plant which will form part of the project will produce steam and electricity that will be used by the near-by Ineos/Runcorn chemical site.
Supporting UK Public Private Partnerships during the financial crisis
The Greater Manchester Waste project is one of the first examples a partnership between public and private partners in the waste sector. The UK representative on the EIB Management Committee also reinforced the Bank’s commitment to supporting Private Finance Initiative (PFI) projects in this difficult financial environment, “The EIB has a long and successful history of supporting UK PFI projects. We recognise the value that the PFI structure can bring to major infrastructure projects, and our determination to support the sector is in no way diminished by the current financial conditions.”
Both the EIB loans totalling GBP 182 million and the distribution of waste management tasks will be split between Viridor Laing and Ineos Runcorn TPS. Viridor Laing will receive GBP 100 million of EIB funds to ensure the complete treatment of the municipal waste provided by the Manchester authority, including the production of Solid Recovered Fuel (SRF) from the refuse. Ineos Runcorn TPS will benefit from an EIB loan of GBP 82 million to incinerate the Solid Recovered Fuel received from Viridor Laing. The private partners were chosen following an international procurement procedure.
Further financing will be provided by other banks, including Bank of Ireland (GBP 95 million), BBVA (GBP 55 million), Lloyds Banking Group (GBP 55 million) and SMBC (GBP 40 million). In addition, HM Treasury's Infrastructure Finance Unit has joined the syndicate of commercial banks and the EIB to enable the Greater Manchester Waste Disposal Authority's PFI scheme to achieve Financial Close. The Unit was established recently to enable PFI projects which will create jobs and deliver vital infrastructure to proceed. This is the first transaction completed by the Unit.
The EIB in the UK
The European Investment Bank (EIB) is the European Union’s long-term financing institution which supports projects promoting European objectives. The EIB made its first loan in the UK in 1973 and since then the EIB has lent almost EUR 70 billion to support the UK economy. In the five years from 2004 to 2008 alone, the EIB financed key investment in the UK to the tune of EUR 18.9 billion (GBP 13.3 billion).
In 2008 alone the Bank allocated EUR 3.8 billion (GBP 3 billion) for UK projects ranging from investment helping UK regional development, to protecting the environment, promoting clean and secure energy sources, improving education facilities, promoting the development of national and regional transport, and supporting the activities of small and medium sized enterprises. Financing in the UK accounted for over 7% of the EIB’s overall EU lending in 2008.