HEREFORDSHIRE Council’s general overview and scrutiny committee is to debate the £40m waste management loan option on Tuesday (Dec 10).

Recommendations from that meeting will be put to the cabinet debate over the loan next Thursday (Dec 12).

The net present cost of the option cabinet is expected to authorise is £700m over the full asset life of the Hartlebury plant.

Cabinet is being asked to authorise “all necessary steps” to  obtain the £40m from the Public Works Loans Board.

That £40m will then be loaned to Mercia Waste to build the plant pitched as crucial to the Joint Waste Management Contract (JWMC) shared between Herefordshire Council and Worcestershire County Council (WCC).

Equally cash-strapped and cuts slashed WCC would have to loan £125m.

Loan costs will be paid by Mercia until 2022/23 contract close, leaving an outstanding loan balance of £31m. Loan repayment costs will continue to be financed from the waste disposal budget until 2041/41.

Under the terms of this variation to the JWMC, Mercia will construct, finance and be responsible for the operations and maintenance of the plant pitched as ready to take waste from early 2017.

With any kind of Private Finance Initiative project effectively ruled out, both council’s would provide all debt finance in place of a commercial bank at a commercial bank rate, with no need to re-finance the debt in 2023.

Click here for background on the incinerator plans.

Herefordshire Council is currently managing a debt close to £200 million and brought down only by the use of reserve funds.

In August, the Hereford Times revealed that the council was on course to borrow another £34m over the 2013/14 financial year, with at least half of that sum found through short-term loans from other local authorities.

As at July last year, the council’s overall borrowing debt had topped £173m but would have been higher had reserve funds not been used.

A final decision on the £40m loan lies with the full council.

For more see next week’s Hereford Times.