An innovative financing model
Presented by SITA UK
CONTEXT
In the United Kingdom, 80% of municipal waste goes to the tip. This practice needs to change in order to comply with the European directive enacted in 2005. Accordingly, the British counties are seeking the expertise of the private sector through the Private Finance Initiative (PFI) process, which is developing partnerships between the public and private sectors. This represents real opportunities for SITA UK, but the required investments are very large. It was therefore essential to respond to the deconsolidation objectives set by SUEZ by creating a new PFI model.
INNOVATION
This new PFI structure is based on a partnership between SITA UK and two financial investors. In this way, SITA UK’s balance sheet does not carry the investments and debts of PFI projects, despite its being the sole operator. The challenge consisted in finding finance for this plant for which no building permit had even been obtained. What is more, the project was partly financed by the European Investment Bank (EIB). This was a major first for a PFI in the waste sector.
RESULTS
The County of Cornwall signed a 30-year contract giving SITA UK exclusive rights to all waste and waste processing. Thanks to this PFI model, SITA UK is developing rapidly, at the same time encouraging the hiring of 220 people previously employed by the county as well helping protect the environment. Signed in October 2006, this contract has already been duplicated in December 2006 for the County of Northumberland. But this model can also be used for other Group activities requiring major investments.
