Composting group TEG has received the first small payment from its anticipated �35m local authority contract in Manchester, providing a good indication that the deal will be signed off, as promised, in March.

Preston-based TEG’s ‘silo cage’ technology produces compost from waste collected from local authorities, food and catering companies, abattoirs and from industries such as agriculture, water and oil. TEG sells cages to local authorities (LAs) and private operators and can also manage the supply of waste and facilities under a longer-term contract, selling the compost on or giving it to farmers for free. So far it has won a number of private contracts around the UK and public-sector contracts with Swansea and Gwynedd LAs.

But of most interest is a colossal �3bn contract doled out by the Greater Manchester Waste Disposal Authority (GMWDA), where a consortium of infrastructure developer Laing and waste management specialist Viridor is the preferred bidder. TEG has been selected by Viridor to build and supply four of its silo cages over a three-year period, for which it will receive a �35m slice of the cake.

The drawback so far has been that the Manchester authority has delayed the financial close of this contract a number of times due to various factors and the current expected date is March. The most recent development is that the authority has agreed an ‘advance works order’ with the consortium for the suppliers such as TEG to start working on their designs and to ‘prevent further delays to the installation programmes’, meaning TEG will receive �525,000.

First tipped by Growth Company Investor at 49.5p in 2004, TEG has been the subject of much hype and expectation. Its shares soared to a peak of over 140p last April but have been much sold since due to the delays from the Manchester PFI. They currently represent a speculative punt on the recycling sector.