Costain's £300m waste PFI delayed due to funding problems

Costain is facing delays on a £300m contract in Manchester because the banks have still not signed off the deal.

The contract forms part of a £3bn waste PFI project which is a joint venture between John Laing and waste contractor Viridor for Greater Manchester Waste Disposal Authority (GMWDA),

Banks backing the project are still to complete the credit approvals process and the client admitted that upheavals in the world’s financial markets had “impacted directly on our project”.

GMWDA named Costain as its preferred contractor to build five mechanical biological treatment plants, two materials recovery facilities, four composting plants, five transfer loading stations and 17 waste recycling centres.

The construction will span 28 sites and was scheduled for 2011 completion.

The client said it was committed to reaching financial close on the PFI deal, and had already secured the majority of capital funding.

GMWDA chair Councillor Swanwick said: “We are ready to sign the contract as soon as the banks have completed their processes of approval. We have a timeline from the sponsors and funders with milestones in place for this close.

“This is the largest waste services contract to be let in western Europe. The complexity of the project and sheer volume of documentation, coupled with the unforeseen credit crisis, means that some delay is not unexpected.”

He added that GMWDA was aiming for the earliest possible close.

A Costain spokesman said: “We are satisfied with the current progress.”