MCTP- Phase III 2011
Project Appraisal
Integrated Solid Waste Management Project
Hubli –Dharwad Karnataka
SUBMITTED BY:
Darpan Jain
Imkongla Jamir
Praveen Kumar
Mohmmad A. Bukhari
Asangba Chuba Ao
ISWM Project 2011
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TABLE OF CONTENTS
PAGES
1.0
OVERVIEW OF THE PROJECT .................................................................... ERROR! BOOKMARK NOT DEFINED.
1.1
1.2
2.0
SALIENT FEATURES OF THE PROJECT .......................................................................................................................... 5
PROJECT FINANCIALS ............................................................................................................................................. 6
PROJECT EVALUATION ................................................................................................................................ 10
2.1 FINANCIAL RESULTS AND INTERPRETATION ..............................................................................................................11
2.2 ECONOMIC ANALYSIS………………………………………………………………………………………………………………………………..13
3.0
FINAL RECOMMENDATION………………………………………………………………………………………………………………… 13
LIST OF TABLES
TABLE 1:
CALCULATION OFOPERATIONAL COST ESTIMATES ...................................................... ERROR! BOOKMARK NOT DEFINED.
TABLE 2:
ESTIMATION OFCAPITAL COSTS.............................................................................. ERROR! BOOKMARK NOT DEFINED.
TABLE 1: OPERATIONAL ESTIMATE FOR PROCESSING FACILITY………………………………………………………………..8
TABLE 4: ESTIMATE FOR LANDFILL OPERATIONS…………………………………………………………………………………………………….9
TABLE 5: ESTIMATE OF CAPITAL EXPENDITURE( PACKAGE -II)………………………………………………………………………………..10
TABLE 6: RESULTS FROM DIFFERENT POINTS OF VIEW…………………………………………………………………………………………..12
TABLE 7: TWO WAY SENSITIVITY ANALYSIS FOR PACKAGE-I…………………………………………………………………………………..12
TABLE 8: TWO WAY SENSITIVITY ANALYSIS OF NPV(PACKAGEII)……………………………………………………………………………13
ISWM Project 2011
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1.0
Overview of the Project
a. Project Background: - With the notification of Municipal Solid Waste
(Management and Handling) rules, 2000 it is incumbent upon all the local bodies
to ensure compliance with the criteria as laid down in the rules within stipulated
time. However owing to variety of reasons the Urban Local bodies have not been
able to meet the deadline. The situation is more serious in big municipal areas
where inefficient and inadequate solid waste management systems are leading to
problems of health, sanitation and environmental degradation.
b. Project location:-Hubli-Dharwad are the twin cities located in Dharwad district
of Karnataka State. The twin cities are the second most populated urban
agglomeration in the State of Karnataka after Bangalore. They are located at a
distance of about 430 Kms from Bangalore, the capital of Karnataka state. The
location of the city on NH4 makes it easily accessible from Bangalore and Pune,
two of the most industrialized centers in the country. The city is governed by the
Hubli-Dharwad Municipal Corporation (HDMC).The area covered by this
Corporation is 202.28 Sq.Kms covering 67 Wards.
c. Current Status: - The present population as per census 2011 provisional figures
is around 9.45 lakhs. Nearly 13% of the population lives in slums. The
approximate quantity of Municipal Solid Waste generated is 400 TPD from a
population of 9.45 lakhs distributed in 67 wards. According to the figures
available with HDMC, the per capita generation of waste is estimated 350-450
g/capita/day. Most of the Solid waste is being dumped in an open dump yard with
an area of about (22 acres in Hubli) and (16 acres in Dharwad). Vermi
Composting is being carried out on rudimentary basis on an estimated 10TPD of
waste. Currently, HDMC is responsible for the street sweeping and collection
from 26 wards and the balance 41 wards are contracted out. The SWM works are
carried out 887 sanitary workers or Poura Karmikas (PK) on the rolls of HDMC
ISWM Project 2011
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and about 1429 workers from the private contractors. HDMC has also privatized
the collection of MSW from the 6 markets existing within its jurisdiction. The
MSW is transported in 16 dumper placer vehicles, 3 open trucks, 4 tipper trucks
belonging to HDMC and 75 contracted tractor trolleys. Drain cleaning is carried
out by 3 sucking cum jetting machines available with the HDMC. HDMC spends
about Rs 1.82 Crore per month on account of SWM (Rs.21.84 Crores per annum)
d. Need for the Project: - An assessment was carried out against the compliance
criteria as laid down in the schedule II and schedule III of Municipal Solid Waste
(Management and Handling) rules, 2000 and it was found that the present system
is deficient on most of the parameters. Hence in order to implement an efficient,
environmentally sound and financially sustainable municipal solid waste
management system, which is compliant with Municipal Solid Waste
(Management and Handling) rules, 2000 and leads to significant improvements in
cleanliness and hygiene conditions in the respective cities it was seen that
substantial investment was required to set up proper solid waste management
infrastructure. Also professional management using latest technology was
required to ensure compliance with the rules. Thus HDMC embarked on a project
to develop a MSW management strategy and action plan for collection,
transportation, treatment and disposal of MSW through Private Sector
Participation (PSP) on Public Private Partnership (PPP) framework.
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1.1
Salient features of the Project :-
Nature of the project
Integrated
Solid
Waste
Management
Project (ISWMP) under two contracts, Part
I consisting of, City sanitation activities
viz., door to door collection, segregation,
secondary storage, transportation , street
sweeping, drain cleaning, cleaning of open
spaces, cleaning of office buildings and
premises and cleaning of public toilets and
Part II consisting of processing and disposal
of MSW
Implementation Methodology
Under Private Sector Participation (PSP)
Location of proposed site for
Shivalli (Government land), around 23 km
processing and disposal facility
from Hubli and 30 km from Dharwad
Size of the project
Total area of the facility
Collection, Transportation area to be
400 MT/D
67.20 acres
202.28 Sq.Kms (67 Municipal wards)
covered
Population to be catered to
9.45 lakhs; ~1.90 lakhs households
Number of workers required
2009 excluding 122 supervisory staff
Equipments/ tools/PPEs required as per Pushcarts - 742
DMA Normative standards
Tricycles
-
132
Power requirement
Auto tippers - 174
7600
7600 KWh
day,
750kVA connected
Tippers
– 38/ /day,
750kVA connected
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Diesel requirement
1950 liter / day in the processing facility;
3364 liters/ day for transportation of MSW
Water consumption
Maximum 50 KLD
Environmental controls required
ETP, Air monitoring station, Monitoring
borewells, weather monitoring station
Water pollution control system
Estimated Total Project Cost
1.2
ETP of 50 KLD capacity
Rs. 101 crore
Project Financials:-
Part-I City sanitation activities viz., door to door collection, segregation, secondary storage,
transportation , street sweeping, drain cleaning, cleaning of open spaces, cleaning of office
buildings and premises and cleaning of public toilets and
Table 1- Calculation of operational cost estimates
Sl #
1
2
3
4
5
6
7
8
9
10
11
12
13
Summary of Operating Expenses
Unit Rate
Description
Qty
(Rs)
Workers/Loaders/Sweepers
1825
164
Supervisor
122
168
Driver
184
164
Brooms
6640
100
Face Mask
3650
80
Ghamela
1825
400
Gum Boot
1947
600
Hand Gloves
7300
100
Metal Tray
3320
350
Uniform
4262
800
Fuel
3363.755495
39
Veh. Maintenance Cost
1
5774240
Hire Charges (tipper
trucks)
38
2184
Total (Rs)
ISWM Project 2011
Multi.
Annual Rate
Factor
(Rs)
365
109244500
365
7481040
365
11014240
1
664000
1
292000
1
730000
1
1168200
1
730000
1
1162000
2
6819200
365 47883059.46
1
5774240
365
30292080
223254559.5
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Table 2 Estimation of Capital Costs
The estimated initial capital expenditure for creating the necessary assets for the part I of the
project is approximately Rs 16.97 crores.
Estimated Capital Expenditure
Sl Description
Total Total Incl
#
1
2
3
4
5
6
7
8
9
10
11
12
Pushcart Bins
Push cart
Tri Cycle
Tricycle Bins
Auto Tipper
Metal Tray
3.0 Cum Containers
4.5 Cum Containers
Twin Container Dumper Placer
Compactors
Drain Cleaning / Jetting M/c
Mechanized Sweeper Trucks
Total
3,870
645
114
912
151
2,390
331
88
33
9
4
4
Unit
15%
Rate
contingency
4,451
742
132
1,049
174
2,749
381
102
38
10
4
4
300
6,000
17,000
300
210,000
350
45,000
55,000
1,240,000
2,800,000
1,500,000
5,000,000
Amount
1,335,300
4,452,000
2,244,000
314,700
36,540,000
962,150
17,145,000
5,610,000
47,120,000
28,000,000
6,000,000
20,000,000
169,723,150
The operator needs to spend an additional Rs 2.97 crores for constructing the two transfer
stations, the details of which are provided in the appended financial calculations.
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Part II Estimates for Processing and Landfill Operations
The Processing and Landfill operations are estimated to cost Rs 364 / Tonne. A detailed
break-up of the estimates as applicable are provided below.
Operational Estimate for Processing Facility
The operational estimate for the processing plant is Rs 333.7 per tonne as detailed in the
table below
Table 3
No
Description
Cost
/
Month
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Manpower Expenses – General
Manpower Expenses - Support Staff
Manpower Expenses- Security
Packing Expenses (64 MT /day )
Raw material Consumable Expenses
General Expenses
Staff Welfare Expenses
Repairs to machinery
Repairs to vehicles
Repairs to Buildings
Fuel to vehicles
Oil& Lubricants
Electricity Charges
Office , Admin& Licensing charges
Total Cost
ISWM Project 2011
350,000
345,000
76,000
672,000
215,000
63,900
25,000
100,000
100,000
46,000
1,711,125
100,000
150,000
50,000
4,004,025
Cost Per
Ton
29.2
28.8
6.3
56.0
17.9
5.3
2.1
8.3
8.3
3.8
142.6
8.3
12.5
4.2
333.7
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Estimate for Landfill operations
The landfill operations are estimated to cost Rs 30.3 / Tonne as detailed in the table given
below
Table 4
Sl #
1
2
3
4
Details
Tipper
Dozer
Compactor
Casual Man Power cost per
No.s
HSD
Cost/day Cost
Cost /Ton
(Hours)
Oil/hr
12
8
6
3
5
10
15
0
2460
3280
3690
2700
73800
98400
110700
8100
6.2
8.2
9.2
0.7
5
1
1
1
0
0
0
0
6000
1000
0
0
30000
30000
1000
10000
2.5
2.5
0.1
0.8
1
1
0
0
0
0
1000
1000
0.1
0.1
/Month of MSW
Month
5
6
7
8
Drivers Charges for month
Soil Cover Charges
Testing Charges
Leachate Maintenance
Charges
9
10
Misc Expenses
Chemicals & Fly Control
Agents
Total
30.3
Estimate of Capital Expenditure (package-II)
It is estimated that the Part II of the project involving the waste processing and
landfill operations will involve a capital expenditure of approximately 84.31
crores, the details of which are provided in the appended financial calculations.
The operator will need to incur this capex over the life of the project in five
phases as shown below.
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Table 5
Estimate of Capital Expenditure
Phase
Year
Hard Cost %
Hard Cost
Tech & Consult Fee
Contingency
Total Cost
IDC
Total Outflow
2.0
(Rs Cr)
1
0
40.0%
31.79
0.50
1.00
33.29
3.33
36.62
2
5
15.0%
11.92
0
0
11.92
0
11.92
3
10
15.0%
11.92
0
0
11.92
0
11.92
4
15
10.0%
7.95
0
0
7.95
0
7.95
5
20
20.0%
15.90
0
0
15.90
0
15.90
Project Evaluation
Assumptions:-
Some of the important assumptions which have been taken in the project evaluation are
as follows:-

The project is on build own operate transfer (boot) basis with a debt equity ratio
of 70:30

The rate of inflation is taken as 5%

The rate of growth of waste per capita is taken as 1.3% and population growth
being around 1.7%, the annual rate of growth of waste is taken as 3%.
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
The quantity of waste in year 1 is assumed at 400 tonne per day. In sensitivity
analysis the quantity of waste has been varied to see the impact on project
viability indicators.

The bid parameter for both the packages is tipping fee i.e Rs. Per tonne of waste
handled by the private partner. This

Other project parameters are listed in the project evaluation worksheet.
Decision Criteria
A Project is viable financially if
NPV is positive and IRR is greater than 12%;

ADSCR is greater than 1

If Net Benefit is greater than Opportunity cost of funds
2.1 Financial Results and Interpretation
From the evaluation of the project (both the packages) it is seen that the annual debt
service coverage ratio for the project is greater than 1. It means that each year the net
cash flow is greater than the repayment due. Thus the project cash flows are able to pay
for the repayment of loan which has been availed.
Also following is the table of results of both the packages from different point of view:-
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Table 6
Financial
NPV(investment)
IRR(investment)
NPV(equity
IRR(equity)
Indicators
real
real
)
real
real
Package-I
1.15 cr
14.11%
1.15 cr
18%
Package-II
8.99 cr
15.47%
7.96 cr
18%
The results show that from both banker’s i.e. investment point of view as well as the
owner’s (equity) point of view the project is viable as net present value at 12% rate is
positive. Also the internal rate of return for the project is more than 14%which shows that
the project generates sufficient returns for the investor. Sensitivity analysis to the project
NPV has also been done by changing the project parameters to see the impact. The tables
below shows some of the results of the analysis carried out
Table 7 Package-I Two way sensitivity analysis of NPV to waste quantity and
operating expenses
NPV
Quantity
of waste
available
in tons
per day
360
370
380
390
400
410
420
430
440
450
460
470
480
490
1420
3.64
4.05
4.46
4.87
5.28
5.69
6.10
6.50
6.91
7.32
7.73
8.14
8.55
8.96
1440
2.96
3.35
3.74
4.13
4.52
4.91
5.30
5.69
6.08
6.47
6.86
7.25
7.64
8.03
ISWM Project 2011
1460
2.28
2.65
3.02
3.39
3.77
4.14
4.51
4.88
5.25
5.62
5.99
6.36
6.74
7.11
1480
1.60
1.95
2.30
2.66
3.01
3.36
3.71
4.07
4.42
4.77
5.12
5.48
5.83
6.18
Operating expenses
1500 1520 1529.14 1549.14
0.92
0.24
-0.07
-0.75
1.25
0.55
0.23
-0.47
1.59
0.87
0.54
-0.18
1.92
1.18
0.85
0.11
2.25
1.50
1.15
0.40
2.59
1.81
1.46
0.68
2.92
2.13
1.76
0.97
3.25
2.44
2.07
1.26
3.59
2.76
2.38
1.54
3.92
3.07
2.68
1.83
4.25
3.38
2.99
2.12
4.59
3.70
3.29
2.40
4.92
4.01
3.60
2.69
5.25
4.33
3.91
2.98
1569.14
-1.43
-1.16
-0.90
-0.63
-0.36
-0.09
0.18
0.44
0.71
0.98
1.25
1.52
1.78
2.05
1589.14
-2.11
-1.86
-1.61
-1.37
-1.12
-0.87
-0.62
-0.37
-0.12
0.13
0.38
0.63
0.88
1.13
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Table 8
Pack-II, Two way sensitivity analysis of NPV to waste quantity and
construction costs
NPV
CONST
RUCTI
ON
COST
2.2
WASTE QUANTITY HANDLED
360
380
420
440
400
13.06
17.04 21.02
25.01
28.99
10.58
14.57 18.55
22.53
26.52
8.11
12.09 16.07
20.06
24.04
460
32.97
30.50
28.02
480
36.96
34.48
32.01
500
40.94
38.47
35.99
1.65
-0.83
-2.96
-5.78
5.63
3.16
1.02
-1.79
9.62
7.14
5.01
2.19
13.60
11.12
8.99
6.17
17.58
15.11
12.97
10.16
21.57
19.09
16.96
14.14
25.55
23.07
20.94
18.12
29.53
27.06
24.92
22.11
33.52
31.04
28.91
26.09
-8.25
-10.73
-13.20
-4.27
-6.74
-9.22
-0.28
-2.76
-5.23
3.70
1.22
-1.25
7.68
5.21
2.73
11.67
9.19
6.72
15.65
13.17
10.70
19.63
17.16
14.68
23.62
21.14
18.67
60
65
70
320
5.09
2.62
0.14
340
9.07
6.60
4.12
75
80
84.31
90
-2.33
-4.81
-6.95
-9.76
95
100
105
-12.23
-14.71
-17.18
Economic Analysis
The economic analysis of both the packages has been done using the conversion factors
which are assumed. The analysis shows that the project has high economic NPV and also
high EIRR. For package-I, the NPV is 30.8 cr and EIRR is 56% .For package-II, the NPV
is 50.2 cr and EIRR is 29%.
3.0 FINAL RECOMMENDATION
As the financial and economic analysis of the project generates acceptable and attractive
returns, the project is viable and recommended. Also the sensitivity of the project
viability to certain parameters shows the robustness of the project and changes in design
which may be incorporated in the bid and concession document.
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