The Municipal Division operates waste treatment facilities for UK and Canadian city and county councils. It represents around 11% of Renewi’s revenues.
The waste treatment facilities form part of long-term PFI or PPP contracts between Renewi and the associated council, usually lasting 25 years. These contracts are established primarily to divert waste away from landfill in a cost-effective and sustainable way.
The contract provides guaranteed volumes under agreed terms, typically with some form of price indexation. However, the contracts are not always linked to the variable cost of the disposal of processed off-take and changes in this market can result in margin pressure. To mitigate this, offtake contracts are predominantly secured under long term contracts.
Renewi runs six municipal contracts in the UK using a range of technologies. The contracts are with Argyll and Bute, Wakefield, Barnsley Doncaster and Rotherham (BDR), Derby, Elstow and East London (ELWA) councils. All of these contracts, except Derby, are in full operation. Further detail on challenges in the Derby contract is provided in the following sections.
In Canada, Renewi manages three municipal contracts – Surrey, Ottawa and London (Ontario).
The Municipal Division is focused on running and optimising these existing contracts, rather than bidding for new ones.