The Greater Manchester Waste Disposal Authority (GMWDA) signed off on a 25-year private finance initiative contract with Viridor Laing after the Treasury provided a£120m loan towards the£635m construction programme.
The unit was set up in March to lend to private finance initiative projects already out for procurement but struggling to reach financial close as they are unable to raise sufficient finance on the debt markets.
The unit is expected to lend between£1bn and£2bn this year.
A£180m loan was also provided by the taxpayer-funded European Investment Bank , while the nine local authorities involved in GMWDA provided£40m of funding. Commercial banks, including the Bank of Ireland and Lloyds TSB , also provided finance.
The GMWDA project, under negotiation for two years, is the largest municipal waste contract in Western Europe.
Treasury minister Angela Eagle said the announcement “demonstrates the government’s commitment to ensuring vital infrastructure projects can go ahead as planned, in spite of the current financial market conditions.”
Neil Swannick (Lab), chair of the GMWDA, said he was delighted to have finalised the contract.
Under the deal, Viridor Laing will build up to 23 waste treatment plants including a mechanical biological treatment plant with anaerobic digestion, a materials recovery facility and a combined heat and power plant.
The consortium will also upgrade a network of 25 household waste recycling centres.
Material that cannot be recycled will be processed into a fuel for use by north-west industrial chemicals producer Ineos Chlor.
The GMWDA hopes that the project will increase recycling levels to 50% of all waste by 2015 as well as creating 5,000 ‘green collar’ jobs.
There are currently 110 other PFI projects out to tender that could benefit from Treasury assistance.
These include a number of local authority-led waste infrastructure and school building projects.