Latest Public Sector News

03.05.19

Scottish council paid out £7m to terminate PFI waste deal

Dumfries and Galloway Council paid out nearly £6.9m to terminate a private finance initiative (PFI) waste deal with a private contractor.

The Scottish local authority entered into a 25-year PFI contract to deliver its waste services in 2004, but the contract was ended 11 years early in September 2018.

Now, a BBC Freedom of Information (FOI) request has revealed that Dumfries and Galloway Council paid a ‘termination sum’ of £6,873,434 despite it being the private partner who had wanted to conclude the contract.

The council initially refused to release the information, but following an appeal to the Information Commissioner, the BBC has managed to reveal some of the details relating to the case through its FOI request.

The private company involved had reportedly sought to terminate the contract last year because it was suffering an annual loss of about £3m.

After the waste deal was terminated, a range of assets were transferred to the local authority, including an Eco Deco waste treatment plant, eight recycling centres, five closed landfill sites, and two transfer stations.

The council said it was “commonplace” for most contracts such as this to have clauses relating to early termination to the extent they are almost a “prerequisite” of such long-term deals as circumstances can change significantly during its life-span.

Dumfries and Galloway said work was ongoing to look at options for a “new model of delivery” and said this could go before councillors later this year.

Top image: Billy McCrorie

 

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