Interserve and the Shanks Group have announced a joint venture (JV) to build a new waste treatment facility for the residents of Derby and Derbyshire.

The 27-year project, with Derby City and Derbyshire County Councils, is a £950m Public Private Partnership (PPP) contract.

The project will be delivered by Resource Recovery Solutions (Derbyshire) Ltd (RRS), a special purpose vehicle (SPV), which has agreed funding terms on the transaction and will now begin construction of the new facility.

RRS has been providing interim waste management services to the residents of Derby and Derbyshire since 2009, working with the councils to secure planning permission for the new facility.

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Interserve will begin building the £145m Mechanical Biological Treatment (MBT) facility and an on-site gasification plant in Sinfin, south Derby, which waste management specialist Shanks will operate, alongside Derby's existing waste management facilities.

The new facility is expected to divert up to 98% of residents' residual waste from landfill, while also generating enough green electricity to power approximately 14,000 homes. This electricity will be supplied to the national grid, offsetting the cost of the waste treatment to the Councils.

Non-recourse debt funding of up to £195m is being raised by RRS through the UK Green Investment Bank and two leading international banks; BayernLB and Sumitomo Mitsui Banking Corporation.

The new facility is expected to be completed by April 2017, at which point Shanks and Interserve will each inject £18m of subordinated debt into the SPV.

(CD/JP)