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Councils look at new way of financing £300m contract to save cash long-term
Bradford Council is considering a new way of financing a £300 million waste contract in the city which would save the authority millions over the life of the 25-year deal.
Both Bradford and Calderdale councils are seeking to invest their own cash – a total of £40 million – by borrowing the money at a lower interest rate than the commercial finance rates available to firm Pennine Resource Recovery.
This would then reap rewards for the authorities through a reduction to the charge per tonne of waste delivered to the new facility, and enable savings of approximately £1 million a year across the two councils.
Members of Bradford Council’s executive will determine next week whether to make a £30.8 million contribution to the planned new waste treatment plant in Bowling Back Lane. Calderdale’s contribution would be £9.2 million based on the percentage of waste each authority will send to the plant, and has already been agreed by councillors in the neighbouring authority.
Any recommendation by Bradford Council’s executive will also have to be approved by the full Council through the budget process at its meeting on February 28.
Councillor Andrew Thornton, Bradford Council’s executive member for environment, sport and sustainability, said: “While the project could be funded entirely commercially, by making a capital contribution, even if we have to borrow the money, we can reduce our annual payments for the project.”
The plant, which will provide a long-term waste treatment solution for both councils, is expected to process 193,000 tonnes of council waste per year, help deliver at least 50 per cent recycling by 2020, and divert at least 90 per cent of waste away from landfill.
Calderdale Council’s cabinet member for economy and environment, Councillor Barry Collins, said: “This investment could lead to major cost savings for council tax payers in both local authorities.
“We know that the new plant will bring us lots of advantages in avoiding landfill.”
Pennine Resource Recovery was appointed at the end of 2011 as the preferred bidder for the joint project.
Planning permission for the facility incorporating resource recovery and energy recovery technologies was granted last year. Contract closure is expected this summer.
The proposed capital contribution would only be paid at the point when the plant becomes operational in 2016, so there would be no risk to the authorities during the construction phase.
Members of the executive are expected to recommend the move as part of a capital investment plan at a meeting on Tuesday, February 26, from 10.30am in City Hall, Bradford.