International Review of Waste Management Policy - Department of ...

certainty in respect of waste being delivered to the facility, not necessarily with
guaranteed minimum tonnages, and not necessarily guaranteed for excessively
lengthy periods. However, the nature of such contracts, and the payment
mechanisms included within them, is usually such as to reduce the risk associated
with the development to a significant degree.
Much depends upon the procurement route chosen, but the reduction in risk to which
the developer is exposed serves two important purposes:
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a) it makes the development less risky from the financial point of view,
increasing the likelihood that the development does, indeed, go ahead;
and
b) if it does receive the necessary financial backing, it is likely, other
things being equal, to reduce the cost of the facility to the procuring
party. Having said this, the costs will be significantly affected by the
approach to procurement used.
In the current context, for Ireland, these considerations are of some significance. The
context is one where there is an urgent need to develop facilities.
If bidders are asked to tender for facilities with no substantive guarantee attaching to
the supply of waste into the facility, effectively, they are being asked to absorb the
risk related to the supply of waste into the facility. It is not clear what the role of a
tendering process is in this context, since the development shades into being a
merchant investment, where the developer simply introduces a facility into a
competitive market place.
Competition for the market would enable greater certainty to be given to developers,
in the context of managed procurements, as to the supply of material into a given
facility. This ought to rationalise the development of facilities, and make tenders
attractive to a range of bidders, not least those who see less merit in taking
significant commercial risks in developing facilities. This is likely to be of particular
significance at the current time with access to credit severely constrained, and those
offering credit seeking to de-risk their investments as far as possible. Ongoing UK
experience with public private partnership (PPP) projects provides some sobering
experience in this regard. 93
3.6.4 Managing the Transition
The issue of who has what right to control the flow of which wastes into what facilities
is a matter of legal disputes at present. However, more broadly, the issues currently
giving rise to considerable disquiet, angst and no little uncertainty appear to focus
upon (based on our discussions with various bodies):
93 See, for example, The Observer (2009) Treasury Set to Bail Out Second Recession-hit PFI, 10 May
2009, http://www.guardian.co.uk/business/2009/may/10/pfi-vt-bail-out-treasury and letsrecycle.com
(2009) Delight at greater Manchester PFI deal Close,
http://www.letsrecycle.com/do/ecco.py/view_item?listid=38&listcatid=218&listitemid=51746 .