21st Aug 2014 06:45
LONDON (Alliance News) - A joint venture between Interserve PLC and Shanks Group PLC has agreed funding terms to commence construction of its 27-year Public Private Partnership contract with Derby City and Derbyshire County Councils, said the companies Thursday.
The contract is set to generate estimated revenues of GBP950 million and will see Resource Recovery Solutions (Derbyshire) Ltd, a special purpose vehicle, build and operate a new waste treatment facility in the city.
The company has now agreed funding terms on the transaction, allowing it to begin construction on the site.
Having secured the funding, support services and construction group Interserve said that it can commence construction of a Mechanical Biological Treatment facility and an on-site gasification facility, which waste to product business, Shanks Group will operate alongside Derby's existing waste management facilities.
The new facility, which is set for completion in April 2017, is expected to divert up to 98% of residents' residual waste from landfill, while also generating enough green electricity to power approximately 14,000 homes, said the companies. This electricity will be supplied to the national grid, offsetting the cost of the waste treatment to the Councils.
RRS has been providing interim waste management services to the residents of Derby and Derbyshire since 2009, the company has been working with the councils to secure planning permission for the new facility, said Interserve.
Non-recourse debt funding of up to GBP195 million is being raised by RRS through the UK Green Investment Bank and two leading international banks; BayernLB and Sumitomo Mitsui Banking Corporation. Upon completion of the project Interserve and Shanks Gorup will each inject GBP18 million of subordinated debt into the special purpose vehicle.
"This facility will help both councils significantly increase their recycling rates, reduce the amount of waste being sent to landfill sites and boost Derbyshire's local economy," said Adrian Ringrose, chief executive of Interserve.
Peter Dilnot, Group CEO of Shanks Group added, "The Derby contract is an important part of our growth strategy for the UK Municipal Division and the introduction of gasification technology also adds an important dimension to the Group's portfolio of clean waste-to-product technologies."
By Alice Attwood; [email protected]; @AliceAtAlliance
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