Waste management company Shanks Group plc is set to pay £5 million in extra costs after a four-month delay to its £100-million South Kirkby waste plant.

The residual waste treatment facility has been constructed as part of a 25-year, £750-million private finance initiative (PFI) contract with Wakefield Council but has yet to hit full operation.

The plant’s 65,000 tonne anaerobic digestion (AD) facility has not yet begun operation due to the liquidation of its supplier, Imtech Water, Waste and Energy Ltd, in August this year.

Shanks expects the facility to be ready to treat remaining waste next month, which will bring the plant up to full operation.

In the company’s interim results for the six months ending 30 September, Shanks announced that the delay has led to ‘liquidated damages and other related expenses of up to £5 million’, which ‘will be reported as an exceptional item, £4.6 million in the first half’.

The report reads: ‘Our Wakefield facility is largely complete and operational but will enter full service around four months late due to the insolvency of the constructor of the AD facility on the site. The project and operational teams have worked hard to minimise the impact of this event that was beyond our control.’

Delays at the South Kirkby facility have previously caused Wakefield Council to push back a new co-mingled collection service after ‘vital recycling equipment’ due to be installed at the plant was held up in North America after becoming stuck in the frozen Hudson River.

No extra cost to council

Shanks has confirmed that there has been no additional cost to Wakefield Council, and that it takes responsibility for all construction delay and risk, including additional landfill tax.

The £4.6 million in damages will be paid to a separate entity established as part of the PFI deal with the council, Wakefield Waste PFI Limited, which will then start paying back the project’s funders.

During development, Shanks said that the plant would have the capacity to process up to 230,000 tonnes of municipal waste every year, increasing the council’s landfill diversion rate towards 90 per cent. It will also generate roughly three quarters of its own energy needs from the waste it processes.

Despite the delay in completing the plant, all other facilities, including mechanical treatment and sorting, a materials recovery facility (MRF) and an ‘air-controlled composting plant’, are already operational, and all waste collected by Wakefield Council is being treated at the new plant.

Plastic bottles, cans and tins are removed from waste and sent for recycling, before the remaining waste is turned into refuse-derived fuel on site and sent to Ferrybridge power station in Knottingley, West Yorkshire.

Shanks working to minimise impact of delay

Commenting on the delay, Peter Eglinton, Managing Director of Shanks Waste Management, said: “Our project and operational teams are working exceptionally hard to minimise the impact of the delay to the anaerobic digestion facility, which unfortunately is beyond our control.

“We are very much looking forward to entering full service next month and to operating one of the most sophisticated waste-to-product facilities in the UK.”

Cllr Maureen Cummings, Cabinet Member for Environment and Communities, added: “I can assure residents that the Shanks waste treatment facility is up and running and handling all the district’s rubbish. Once the anaerobic digestion facility is operational, we will see even more of the district’s waste diverted from landfill.

“I would ask all residents and businesses to continue to help us by ensuring they recycle the right items. Anyone who is unsure about what can be recycled can find out everything they need know on our website.”

Find out more about Shanks’s work with Wakefield Council.