FTSE 100 water group Pennon has signed a 25-year Residual Waste Treatment Services Design, Build, Finance and Operate contract with Glasgow City Council, a key part of the group's growth strategy in Scotland, it said.
The contract, signed through Pennon's subsidiary Viridor (Glasgow), will see the group recycle and treat Glasgow's residual municipal waste through the financing, construction and operation of a new Recycling and Renewable Energy Centre at the Council's own site in the south of the city.
Viridor's services include the construction and operation of recycling plants and other plants which generate energy from the residual waste which can't be recycled.
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The contract, which is subject to building approval, requires the treatment of between 175,000 and 200,000 tonnes per annum of waste and is designed to achieve around 90% landfill diversion. Viridor expects to secure planning consent by early 2013.
The project will see Viridor make a capital investment of £160m, funded from internal funds. It is expected to be earnings enhancing in its first full year of operation.
"The Glasgow Renewable Energy and Recycling Centre will make a major contribution to Scotland's ambitious Zero Waste Plan. It is a further important step in the roll out of Viridor's service contract pipeline and represents a key part of Viridor's growth strategy in Scotland," said Viridor's Chief Executive Colin Drummond.
By 2016, when the plants are expected to come on stream, Viridor expects to have around 1.8m tonnes of thermal treatment capacity and over 250MW of renewable energy capacity.
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