Merseyside Waste Disposal Authority

What is Private Finance Intiative (PFI) funding?

PFI is a method of funding long term public sector contracts. Previously this type of initiative has been undertaken to provide new schools and hospitals. In terms of waste management, PFI exists in the most part to finance the building of new waste facilities and new waste contracts.

MWDA has secured £90m in PFI funding from DEFRA (the Department for Environment, Food and Rural Affairs). This was awarded in 2007.

Why has Merseyside decided on the PFI option?

Merseyside needs to find more effective ways of dealing with its waste and avoiding the use of landfill. To do this MWDA will be developing a range of new waste facilities, including new recycling centres, waste sorting facilities and major new facilities for processing waste.

A long term contract such as a PFI contract provides a way of funding the investment we need, while allowing a sufficiently long pay-back period to make it affordable.

Under a PFI contract key risks associated with the project (from construction cost risk to meeting long-term contract targets) can be transferred to the private sector contractor.

If we do nothing the costs of continuing to rely on landfill will become prohibitive and we may be liable to fines if we don’t meet our landfill diversion targets.

The PFI option is considered to be the best way of mitigating many of these risks.