The UK government has stepped in to secure the financial close of Europe’s largest waste-to-energy scheme after a two year delay partly stemming from debt scarcity.
A syndicate of commercial banks had refused to sign off on the scheme, a private finance initiative project involving the construction of recycling facilities and a 130MW incinerator to treat 1.3m tonnes of Greater Manchester’s household waste a year.
Now, £640m has been raised to build the facilities from a syndicate comprising the Treasury's £2bn infrastructure unit (which lent £120 million), the European Investment Bank, Bank of Ireland, the state controlled Lloyds Banking Group, and two foreign-owned banks, SMBC and BBVA.
The infrastructure unit was set up last month to bail out PFI projects during the credit crunch, and is expected to help fund other giant deals including the M25 motorway widening.
“If it had not been for the government loan we probably would not have closed the deal yet,” Colin Drummond, chief executive of Pennon subsidiary, Viridor, said.
The Greater Manchester contract was won by utilities firm Pennon and construction services firm John Laing, who became preferred bidders back in January 2007.
The scheme should generate over 5,000 jobs.