Herefordshire Council may have to borrow £40m to help build incinerator

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.

Comments (15)

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11:30am Thu 5 Dec 13

bobby47 says...

Of course some fool around the Cabinet bloody table could shout, 'let's not help build it.' That'll sort the puzzling knotty bloody connundrum out pretty much straight away.
Good Lord are we committed to this? Well I don't bloody care if we are. They can come waving this that and the other, shouting 'haebus corpus' and 'you've signed this' and I'd tell them to clear off. Go bother some other County. We ain't at home to plans, schemes and gimmicks that require us to dip into our last bloody hundred thousand.
Tell them to get stuffed. We'll burn our own paper waste, thank you very much. Bloody forty million quid! Good grief!
Buggar the ticking of the green boxes. By the bloody time this little slice of pleasure is built, there'll be buggar all left to burn anyway.
Tell them to clear off. We ain't at home to anymore of this codswallop.
Of course some fool around the Cabinet bloody table could shout, 'let's not help build it.' That'll sort the puzzling knotty bloody connundrum out pretty much straight away. Good Lord are we committed to this? Well I don't bloody care if we are. They can come waving this that and the other, shouting 'haebus corpus' and 'you've signed this' and I'd tell them to clear off. Go bother some other County. We ain't at home to plans, schemes and gimmicks that require us to dip into our last bloody hundred thousand. Tell them to get stuffed. We'll burn our own paper waste, thank you very much. Bloody forty million quid! Good grief! Buggar the ticking of the green boxes. By the bloody time this little slice of pleasure is built, there'll be buggar all left to burn anyway. Tell them to clear off. We ain't at home to anymore of this codswallop. bobby47

1:18pm Thu 5 Dec 13

Everywhere says...

Oh dear ! I nearly did a Mrs Brown......! And typed my true feelings ....!
Oh dear ! I nearly did a Mrs Brown......! And typed my true feelings ....! Everywhere

10:11pm Thu 5 Dec 13

dippyhippy says...

I have read this article very carefully, and conclude that there are three ways in which the council could jump - other than in the Lugg.

Option1. The decision has yet to be made - so let common sense prevail, and decide that we can't afford it.

Option 2. They hope that cash strapped Worcester will blink first, and say they can't afford to put up their share - an eye watering 125 million pounds, therefore rendering the deal impossible to go through with.

Option 3. Worcester pull out, because they don't have the money, so Hereford decides to make the grand gesture of paying for it all.

Just for the record, I'm with option 1.
I have read this article very carefully, and conclude that there are three ways in which the council could jump - other than in the Lugg. Option1. The decision has yet to be made - so let common sense prevail, and decide that we can't afford it. Option 2. They hope that cash strapped Worcester will blink first, and say they can't afford to put up their share - an eye watering 125 million pounds, therefore rendering the deal impossible to go through with. Option 3. Worcester pull out, because they don't have the money, so Hereford decides to make the grand gesture of paying for it all. Just for the record, I'm with option 1. dippyhippy

11:12pm Thu 5 Dec 13

Mrfade says...

£40 million is just the beginning. We were always told that it would cost £120 million to build, but the figure in the Outline Business Case was £160 million. This was always denied.

However the capitol cost is now £166 million. Overall cost is £1.6 billion as stated in the current Herefordshire document. I repeat £40 million is just the beginning.
£40 million is just the beginning. We were always told that it would cost £120 million to build, but the figure in the Outline Business Case was £160 million. This was always denied. However the capitol cost is now £166 million. Overall cost is £1.6 billion as stated in the current Herefordshire document. I repeat £40 million is just the beginning. Mrfade

9:27am Fri 6 Dec 13

megilleland says...

Mercia Waste is owned by two Spanish companies. The money spent by this council won't even stay in this country. Together with the existing PFI contract we are been taken to the cleaners!
Mercia Waste is owned by two Spanish companies. The money spent by this council won't even stay in this country. Together with the existing PFI contract we are been taken to the cleaners! megilleland

9:35am Fri 6 Dec 13

Everywhere says...

megilleland wrote:
Mercia Waste is owned by two Spanish companies. The money spent by this council won't even stay in this country. Together with the existing PFI contract we are been taken to the cleaners!
AGAIN ....!
[quote][p][bold]megilleland[/bold] wrote: Mercia Waste is owned by two Spanish companies. The money spent by this council won't even stay in this country. Together with the existing PFI contract we are been taken to the cleaners![/p][/quote]AGAIN ....! Everywhere

7:30pm Fri 6 Dec 13

denon says...

If you don't agree to this incenerator you Herefordshire lot can stop sending your rubbish to Throckmorton in Wworcestershire and recyclable s in Norton Worcestershire.
Find dumps in your own county. We are fed up with you sending lorry loads of Herefordshire garbagethrough our to Worcestershire.villa
ges and lanes.
If you don't agree to this incenerator you Herefordshire lot can stop sending your rubbish to Throckmorton in Wworcestershire and recyclable s in Norton Worcestershire. Find dumps in your own county. We are fed up with you sending lorry loads of Herefordshire garbagethrough our to Worcestershire.villa ges and lanes. denon

7:45pm Fri 6 Dec 13

Everywhere says...

Denon , bit harsh , hope you have a peaceful weekend and your heart rate lowers
Denon , bit harsh , hope you have a peaceful weekend and your heart rate lowers Everywhere

6:23am Sat 7 Dec 13

denon says...

You just see the campaign I will stir up in Worcestershire if you don't agree to the incinerator. It our County thee independents and tories can the wallow in your own garbage.....seems appropriate ....tyou wanted to break away from Worcestershire well keep your own rubbish.
You just see the campaign I will stir up in Worcestershire if you don't agree to the incinerator. It our County thee independents and tories can the wallow in your own garbage.....seems appropriate ....tyou wanted to break away from Worcestershire well keep your own rubbish. denon

11:12am Sat 7 Dec 13

dippyhippy says...

Blimey Denon!
Someone got out of the wrong side of bed this morning!!
Blimey Denon! Someone got out of the wrong side of bed this morning!! dippyhippy

1:28pm Sat 7 Dec 13

denon says...

No i didn't ...its you lot in little herefordshire denial...keep your own rubbish and see how much that will cost you
No i didn't ...its you lot in little herefordshire denial...keep your own rubbish and see how much that will cost you denon

2:45pm Sat 7 Dec 13

denon says...

I am fed up of subsidising Herefordshire Waste disposal both with cash and environmental pollution at Throckmorton
I am fed up of subsidising Herefordshire Waste disposal both with cash and environmental pollution at Throckmorton denon

7:26am Mon 9 Dec 13

WYSIATI says...

Looks to me like we're somewhere between a rock and a hard place.

It sounds attractive to throw the scheme out but we keep on producing the waste and pretty soon the fines will be added on top for not treating the waste in accordance with the law - that means no more throwing it in the landfill which happens to be over in Worcestershire.

It's a long term project and there will be costs - these days there are no cheap or free options (though everybody producing less waste is the closest thing to that - but that's up to us not the council).

A state of the art plant producing electricity is a reliable well tried and proven option, it can work well with material recycling and can offer a long-term solution. Setting it up will cost money. Running this sort of infrastructure in the private sector inevitably will cost but that's what successive Governments have decided we need (and if you ever went to one of the old public sector incinerators you could see why they might think that).

It's a small county, managing our own waste alone would be much more expensive, no easy option here.
Looks to me like we're somewhere between a rock and a hard place. It sounds attractive to throw the scheme out but we keep on producing the waste and pretty soon the fines will be added on top for not treating the waste in accordance with the law - that means no more throwing it in the landfill which happens to be over in Worcestershire. It's a long term project and there will be costs - these days there are no cheap or free options (though everybody producing less waste is the closest thing to that - but that's up to us not the council). A state of the art plant producing electricity is a reliable well tried and proven option, it can work well with material recycling and can offer a long-term solution. Setting it up will cost money. Running this sort of infrastructure in the private sector inevitably will cost but that's what successive Governments have decided we need (and if you ever went to one of the old public sector incinerators you could see why they might think that). It's a small county, managing our own waste alone would be much more expensive, no easy option here. WYSIATI

7:36am Tue 10 Dec 13

denon says...

So managing your waste alone would be much more expensive, means we in Worcestershire are subsidising you lot as we did from 1974/98...time for retribution
So managing your waste alone would be much more expensive, means we in Worcestershire are subsidising you lot as we did from 1974/98...time for retribution denon

7:56pm Wed 11 Dec 13

Mr.Herefordian says...

Yes you have denon thanks sucker!.
Yes you have denon thanks sucker!. Mr.Herefordian

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