The Northern Territory's container deposit scheme is back on track but beverage company Coca-Cola Amatil says it will raise prices of its products to cover extra costs.

The granting of an exemption from federal law means that beverage companies must again repay deposits of 10 cents a bottle or can recycled through the Territory system.

In its last meeting before next month's election, the Federal Executive Council (ExCo) ratified the exemption for the Territory under the Commonwealth's Mutual Recognition Act.

The Territory Government had foreshadowed that the scheme may have to be abandoned if the exemption was not granted.

It has been spending about a million dollars a month to keep the recycling scheme running after it was successfully challenged by beverage companies in the Federal Court of Australia last year.

Coca-Cola Amatil, Schweppes and Lion had argued that the Territory scheme was in breach of federal law.

Business commentators at the time said they believed the companies took the action to discourage any moves towards similar recycling schemes in other states and territories.

Following the legal setback, the Territory sought a permanent exemption through COAG from the federal law.

South Australia already enjoys a permanent exemption and a successful container deposit and recycling scheme has been operating there since 1977.

The ExCo exemption means that beverage companies must again repay deposits of 10 cents per bottle or can recycled through the Territory system.

More than 35 million containers were returned for recycling in the first 12 months of the container deposit system in the Territory.

The ExCo exemption will take effect within days.

Coca-Cola Amatil says it has not been formally notified by the Territory Government that the original container deposit scheme will resume.

Environment Minister Peter Chandler said the Territory Government's spending of a million a month to keep the scheme running while waiting to be granted the legal exemption showed its commitment to the future of the popular environmental measure.

"It was quite an achievement to secure the agreement of all state Premiers and the ACT Chief Minister to support our bid for exemption," he said.

However, a Darwin cash-for-cans operator says the Territory Government has saved a deposit scheme that does not work.

Greg Meyer, who runs the Can Man, says he preferred how the scheme was run over the last few months when the Government picked up the costs of the system, rather than waiting for payment from beverage companies.

"They are asking me to go back to a scheme where I lose money, and it doesn't work," he said.

"They've sent us back to the bad old days; they've sent us back to the salt mines.

"They've unloaded it all off themselves and dropped it all back on to us and, you know, they come out there smelling of roses."

Under the system, recycling operators are required to separate returned items by manufacturer rather than material type, increasing the number of splits needed and inflating costs.

Mr Chandler says he plans to "tweak" the cash for cans scheme.

He says his focus will turn to making it more efficient by reducing the number of splits of collected containers.

"If you talk to any of the collection depots, it is a really simple process for them now," he said.

"Unfortunately though, we have to go back to the clunky system we had because that is what COAG has agreed to.

"What we need to do as a Government is move towards amending that legislation to smooth out those wrinkles."



