Resource or input risk

Solid waste collection, disposal, landfill and recycling Solid waste collection, disposal, landfill and recycling

Description (What is the Risk)

The risk that the supply of sufficient quantities of waste required for the expected output of the facility is interrupted or the cost increases.

Risk Allocation (Who typically bears the risk)

Allocation: Public Private Shared
Rationale

The Private Partner bears the principal responsibility to ensure an uninterrupted supply of inputs/resources for the project and to manage the costs of those inputs.

If the Contracting Authority cannot supply contracted tonnages of waste the Private Partner may be required to procure substitute waste.

The Private Partner must use reasonable endeavours to secure substitute waste at a price which is demonstrated to the Contracting Authority's satisfaction as being reasonably obtainable on market and arm's length terms for contracts of the nature and tenor proposed.

Mitigation Measures (What can be done to minimize the risk)

The Contracting Authority will be allowed to monitor the supply of required resources, and may allow for the Private Partner to substitute resources if necessary.

Where the contractor secures substitute waste then the Contracting Authority shall pay the difference or losses incurred by the Private Partner.

Government Support Arrangements (What other government measures may be needed to be taken)

Monthly payments to the Private Partner may include certain calculations that could alleviate uncontrollable cost increases due to increases in waste costs/reduced gatefee that would otherwise be borne by the Private Partner.

Comparison with Emerging Market

If Contracting Authority takes risk on delivery of waste then it will also take risk on the characteristics of the waste too. It needs to be confident that it can manage this risk, or pass it to third party supplier.

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