Veolia confident of avoiding Sheffield waste contract cancellation

Veolia is ‘confident’ that it can reach a compromise agreement with Sheffield City Council over its waste management contract with the city, a significant step forward for the French waste management company after the council had threatened to cancel the contract back in January over concerns over its lack of value for money.

The council’s stance seems to have softened and on Monday (31 July), according to Reuters, Veolia chief executive Antoine Frerot said: “Negotiations are continuing with Sheffield. I am rather confident we can find an agreement in the next few months.”

Currently, Veolia is responsible for collecting and disposing of waste, running household waste recycling centres, and managing and operating the council’s incineration facility under the terms of the contract that is expected to cost the city £28 million in 2017/18, and employs 280 people in Sheffield.

Frerot said that a compromise could potentially be found over a lower price, possibly extending the contract so that payments could be spread out over a longer time, or handling waste from other areas to increase revenues.

Frerot went on to warn that any cancellation of the contract would force Veolia to seek compensation over depreciation costs of its investment and lost earnings.

Back from the brink

While nothing is agreed yet, it would mark quite a turnaround from back in January, when the council voted to end the £1.3-billion contract with Veolia, agreed in 2001 and due to expire in 2036, in April 2018 and put the contract out to tender.

In the face of budgetary pressures, the council had judged that the contract had not brought about the required savings, and sought to move to seven-year waste contracts, with extensions of three years and requirement for bidders to demonstrate how they would make greater efficiency savings, for greater flexibility and sought to receive a higher proportion of revenues from the city’s Energy from Waste facility.

At the time, Cllr Bryan Lodge, cabinet member for the environment at Sheffield City Council, had said the council had to find the “best-value solution”, adding: “Our contract with Veolia, which was signed 16 years ago, is no longer meeting our needs and is no longer compatible with tough financial landscape in which the government is forcing us to operate.”

When it rains, it pours

The uncertainty surrounding the future of the Veolia and Sheffield partnership has been compounded by a recent dispute between Veolia and the GMB union over the reporting of a leaked e-mail between senior Veolia staff, which allegedly revealed that Veolia had been diverting recyclable waste from its household waste recycling centres (HWRC) to its incinerator in Sheffield to make up for a 50,000-tonne shortfall in residual waste needed to run the incinerator and provide district heating for the city, an accusation that Veolia said was ‘false and entirely incorrect’.

GMB claimed that Veolia took the decision to divert waste to the incinerator in 2011 and that the company knew this was leading to ‘year-on-year’ reductions in Sheffield’s recycling rates.

Branded a ‘scandal’ by GMB, the union took particular issue with the fact that its members at Veolia’s recycling plant are given a bonus if recycling targets are met – something far less likely to happen if accusations are correct.

Veolia has denied the accusations and stated that it was urgently seeking an opportunity to discuss the matter with GMB.

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