Regional Landfill Facility still on the cards, but delayed
16 October 2020
The COVID-19 lockdown has directly impacted the South African economy, bringing with it unforeseeable and unprecedented repercussions for both public and private organisations. Not only has it had devastating and crosscutting negative impacts on businesses, but it also changed the way in which businesses have to navigate into a new economic landscape. Many businesses are now faced with unavoidable and irrecoverable job losses and a discontinuation of various projects.
The proposed Public-Private Partnership (PPP) between the Garden Route District Municipality (GRDM) and Eden Waste Management (RF) (Pty), which includes Interwaste as the lead sponsor, is one such project directly impacted by the economic repercussions of the COVID-19 pandemic. Interwaste has recently informed GRDM that it has to pull out from the Garden Route District Municipal Regional Waste Management Facility PPP project.
Municipal Manager for GRDM, Mr Monde Stratu, is of the firm view that various options will be explored to save the project as the GRDM and PPP funders have all invested millions of Rand to get to this advanced stage of the project. “We have advised both National and Provincial Treasury, The Development Bank of Southern Africa (DBSA) and the participating municipalities about the situation,” said Stratu.
The GRDM is currently investigating the following options:
- District to build its own regional landfill facility with capital injections (grants and investments)
- Involving earlier interested parties
- Leasing out the regional landfill site and facility to a private company to operate
- Reserved bidder options
GRDM has in the meantime come to an agreement with PetroSA to extend its use of their landfill facility till the end of December 2021.
Reasons for withdrawal from PPP Agreement
Before the final signatures of the PPP Agreement between the two parties could take place the lead shareholder of the Special Purpose Vehicle (SPV), Eden Waste Management Propriety Ltd (Private Partner), informed GRDM that they have withdrawn their partnership and as lead shareholder from the SPV. The other shareholders left in the SPV indicated that they are not willing to go forth with the PPP process.
The letter received from the lead shareholder indicated that “In light of the COVID-19 pandemic and the unprecedented challenges and constraints it has had on their business, their board has determined that:
- It is paramount to preserve their existing business and not to jeopardise the jobs and livelihoods that are supported by their business;
- In light of the economic constraints and the ongoing uncertainty as to the future outlook, it is impossible for them to provide the proposed equity investment to ensure the funding of the concomitant debt obligations required in respect of the Project as currently envisaged; and
- To proceed with the Project as currently envisaged may compromise their financial position in the future, and consequently, having regard to their fiduciary duties and their obligations as directors in the company the only reasonable decision for Interwaste Proprietary Limited is to withdraw its participation as a shareholder in the Private Party, Eden Waste Management Proprietary Limited, in respect of the Garden Route Regional Waste Management Facility and Alternative Technology Public, Private Partnership Project.”
GRDM is confident that an amicable solution to this crisis will be found, with the assistance of all stakeholders, including the Provincial and National Treasury.