Case Study of Solid Waste Management in
a Municipal Town
Group No. – 10
A.
B.
C.
D.
E.
F.
Anupam Kumar, B-20
Jayant Narlikar, A-02
Lokesh Kr. Singh, A-34
Dr. Pratima, A-09
Prawin Kr. Toppo,B-40
Rajesh Kr. Sharma, A-29
0
Table of Content
Topic
Page No.
1. Need Analysis
2. Overview of the Project
2.1 Scope of Work
2.2 Capital Grant and Concession
2.3 Components of the Project
2.4 Penalties for non-compliance
2
2
3
3
4
7
3. Investment and Operational Models
8
4. Enabling Environment
9
5. Risk Analysis of the Project
11
6. Assumptions for analyzing Models
12
7. Decision Criterion
12
8. Financial Analysis
12
9. Recommendation
13
1
1. Need Analysis:
An increase in the population of the city is leading to an increase in the waste
generation. In the absence of an effective door to door collection of waste, a filthy
and unhealthy condition is prevailing in the municipal area of Aakriti Municipal
Corporation. The system of collection of waste being sporadic and inefficient, much
of the solid waste remains uncollected and the entire population is not being
covered. There is no scientific method of waste disposal. The waste is being
disposed by open dumping and open burning. The heaps of dumped waste are
posing problems to environment and health. It is creating public nuisance as a
result of littering and foul smell. The risk of chronic respiratory diseases including
cancers due to exposure to dust and hazardous compounds generated through
open burning cannot be denied. There is choking of sewerage system due to plastic
bags and other garbage. Due to these problems in the existing system the
Municipal Corporation felt the need for an integrated solid waste management
project with the involvement of a private partner. Constraints of mobilizing the
required financial and technical resources as well as for better delivery of services,
involvement of private partner was being considered. Focus was on the 3R’s of
ISWM (i.e.) Reduce, Reuse and Recycle. Most of the waste generated could be
diverted for material and resource recovery thus leading to a substantial reduction
in the volume of waste generated and the recovered material and resources could
be utilized to generate revenue. Thus, the resources in the waste could be
extracted and reused and at the same time, safe processing and disposal of wastes
with a minimum impact on the environment.
2. Overview of the Project
Managing the solid waste in a municipal area is a challenging task for the
municipal authorities. It reflects the concerns of the municipal corporation towards
its people. Aakriti Municipal Corporation (AMC) has taken the initiative towards solid
waste management under the JnNURM programme. M/S KLM International was
appointed by the AMC in July 2009 to prepare the Detailed Project Report (DPR) for
establishing Integrated Solid Waste Management System (ISWM) in Aakriti. ABC
India ltd was appointed as Transaction Advisor cum Project Management Consultant
(TA cum PMC) to assist AMC in the implementation of ISWM.
2
The Project was envisaged to be under PPP framework, for which AMC was to
select a private developer. It was to be the responsibility of the private developer
(concessionaire) to collect, transport, process and dispose of Municipal Solid Waste
(MSW) and to that end to design, develop, part-finance, construct, operate and
maintain the ISWM facilities. The main task for the concessionaire was to establish
a viable and environmentally sustainable IMSWM system in compliance with the
MSW (Management & Handling) Rules, 2000, CPHEEO (Central Public Health and
Environmental Organization) Manual and other relevant guidelines issued by the
competent authorities.
2.1 Scope of the Work 1. Door-to-Door collection of MSW.
2. Primary storage of collected door-to-door MSW.
3. Secondary collection and transportation of waste, street sweeping waste and
de-silting of drains, spraying bleaching powder in drains.
4. Collection of the user charges on behalf of AMC as determined by the AMC
from time to time.
5. Construction and operation and maintenance of the waste processing facility
with composting as one of the main processes. The concessionaire shall have
to restrict the quantity of rejects going to sanitary land fill (SLF) to 20% or
less.
6. Construction and operation and maintenance of the SLF.
7. Collection, transportation, processing and disposal of the MSW littered within
the AMC area at the time of commencement of the collection and
transportation services.
8. Assist AMC in public education/awareness related to MSW.
9. In consultation with AMC, develop and implement a public complaint system
operational for at least eight hours a day.
2.2 Capital Grant and Concession For the above, capital grant was to be provided to the concessionaire.
However, no capital grant would be provided towards the capital expenditure
incurred by the concessionaire on equipments and machinery for setting up the
processing plant for composting and brick making. AMC was to provide land for
transfer stations, landfill site and processing plant.
AMC was to provide the existing equipments/vehicles (for collection and
transportation activities) to the concessionaire for the purpose of the project. The
concession period for the project was to be 30 years including construction period.
3
The concessionaire was to collect the user charges from households,
industry, shops and others on behalf of AMC. The revenue collected from user
charges was to go to the AMC.
The concessionaire would have the right to retain the revenue generated from1. Sale of compost, bricks, recyclables or any other products of the processing
plant.
2. Sale of recyclables.
3. Carbon credits.
4. Advertisement revenue from transfer stations, landfill sites, bins etc.
AMC might pay tipping fee per MT of the MSW collected and solid waste to the
concessionaire depending upon the final outcome of the bid negotiation.
Concessionaire was to be responsible for maintaining clearances/ approvals/
permissions required for the entire concession period. Concessionaire was not to
collect bio-medical waste, hazardous waste and radioactive waste.
The financial proposal of the bidders was to be evaluated on the basis of-
The capital support sought one time and
Year wise tipping fee per MT for 30 year period, if sought from AMC.
The maximum capital support to be provided was not to exceed grant
sanctioned for the project under JnNURM which was Rs. 51.39 Crore.
The value of tipping fees per MT was to be inclusive of all direct and indirect
costs and taxes incurred to carry out work as defined under scope of work.
2.3 Components of the Project 1. Storage at primary point of waste generation
a) At the household level the concessionaire was to provide 2 containers of
10.0 liters each for biodegradable and non-biodegradable. Total number
of such containers would be 4,17,139.
b) For the hotels and restaurants the concessionaire was to provide a set of
covered 120 liters bins with wheels. Total number of such bins would be
200 bins each of green and black colour.
c) For the public places the concessionaire was to provide 100 liters twin-bin
set (for biodegradable and non-biodegradable). Total number of such bins
would be 300 pairs.
4
d) The AMC was to construct 150 dhalaos as the neighbourhood collection
centres.
2. Door-to-Door collectiona) For door-to-door collection 840 tricycles, each having 6 containers of 35
liters would be required for 39 wards. Of the 6 containers 4 would be for
biodegradable waste and 2 would be for non-biodegradable waste.
b) In the areas with wide road network 45 mini tippers with a capacity of
1.5m3 would be needed in 16 wards.
c) From the market areas and vegetable markets the collection of waste
would be at least twice a day.
d) Workers deployed in the collection of waste would have to be provided
with uniforms, gloves and other equipments.
3. Collection of waste from street sweepinga) The concessionaire was to deploy equipments to collect waste from
street sweeping. Approximate length of roads in AMC is 558.95 km.
b) The street sweeping would take place daily in all the areas of
habitation and on alternate days in other areas as per the defined
schedule.
c) Prime roads (approx 10% of total road length) would be required to be
cleaned by using the street sweeping machine while other areas would
be cleaned manually. Two such street sweeping machines would be
required.
d) At least one wheelbarrow should be provided between two sweepers. A
total of 470 such wheelbarrows would be required.
e) Street sweeping was to take place once a day in residential areas and
twice a day in commercial areas.
4. Secondary storage of wastea) MSW at secondary collection locations was to be stored in closed
containers
b) Distance between two secondary waste collection locations would not be
more than 500m.
c) Total area of AMC is approximately 175 sq km. Thus, secondary waste
collection location would be at minimum of 455 number of locations in 55
wards.
d) At each location separate closed container (refuse collector bins/dumper
placer containers) would be put for biodegradable waste (in green bin)
and non-biodegradable waste (in black bin).
e) 1110 refuse collector bins (984 bins of 1.1m3 and 126 bins of 0.6m3) and
230 dumper placer containers (of 2.5m3) would be required for the
secondary storage of waste.
5
f) All containers would be placed on concrete or asphalted flooring.
5. Transportation of wastea) MSW from the secondary storage points was to be first brought to the 4
transfer stations and from there was to be transported to the Integrated
Solid Waste Management site.
b) At the four transfer stations, waste from 8.0m3 refuge collector trucks
and dumper placer was to be reloaded on to the bigger compactor trucks.
c) 22 refuse collector trucks and 23 dumper placers would be required for
transporting MSW from the secondary storage locations to the transfer
stations
d) For collection of waste from hotel/restaurants 4 refuse collector trucks of
6m3 capacity would be required.
e) For collection of waste from litter bins 4 tipper trucks of 6m3 would be
required.
f) For transporting waste from transfer stations to Integrated Solid Waste
Management site, 23 large haulage trucks of 10m3 capacity would be
required.
g) Two cattle lifting vehicles and two dead animal lifting vans would be
required for lifting stray cattle and dead animal.
h) Tipper trucks available with the AMC would be used for transporting
construction and demolition waste from the site to the ISWM site. Other
vehicles with the AMC would also be utilized by the concessionaire for
transportation purpose.
i) In addition, 2 multipurpose high jetting machine auto-mounted would also
be required.
6. Workshop for maintenanceAMC has an existing workshop on 2 hectares of land which is in a dilapidated
condition. This would be developed in a proper workshop for the maintenance
of vehicles used in the transportation of MSW in the municipal area by the
concessionaire.
7. Processing of waste- For the processing of the MSW the concessionaire would
construct
a) A sanitary landfill where not more than 20% of the rejects of the MSW
transported to the ISWM site would be landfilled.
b) A compost plant of the capacity of 300MT/day for the processing of
biodegradable waste.
c) A brick making plant for processing of construction and demolition waste
at ISWM facility.
6
8. Management Information System-A GIS-GPS based MIS was to be developed
by the concessionaire for management and monitoring of SWM system.
Infrastructure for this would include 80 GPS instrument, 3 web server, 8
computer system and 8 rooms.
Average physical composition of MSWItems/year
Total compostables
Recyclables
Inerts and others
Percentage
51.49
9.86
38.65
2.4 Penalties for non compliance
Four types of penalties would be imposed for non compliance of the terms and
conditions of agreement1. Waste non-collection penaltyP1=WD*R, where
WD= MSW the concessionaire fails to deliver with respect to assured waste
collection quantity for total no. of days in concerned month.
R=0.5 TP (Tipping Fee)
2. Waste non-processing penaltyP2=WP*R, where
WP=MSW the concessionaire fails to process as per clause 5.14.2 of the RFP.
R= 1.5 TP (Tipping Fee)
3. Waste landfill penalty
P3=WL*R, where
WL=MSW in excess of cap limit
R=TP (Tipping Fee)
4. Penalty for non-compliance of service levelsa) If MSW is not collected for more than 24 hours then Rs.10,000 per
ward/day
b) In case there is overflow of secondary storage container then Rs.5000 per
hour/bin
c) In case of non-collection of street sweeping waste for more than 24 hour
then Rs.5000/hour
7
3. Investment and Operation Models
Investment and operational aspects of the project have been analysed by way of
two modelsModel 1- In the Model 1 the user charges are collected by the concessionaire
and are handed over to the AMC. The primary collection system is funded entirely
by the AMC. The civil construction work except the dhalaos and the workshop is
carried out by the concessionaire.
Model 2- In the Model 2 the user charges are collected and retained by the
concessionaire. The primary collection system is funded entirely by the
concessionaire. The concessionaire shares 20% of the cost of civil work, while the
AMC shares 80%.
The details of 2 different models suggested by the TA-cum-PMC are given
below :
Model 1
Borne
by:
Activity to be done by:
pp
pp
pp
pp
rmc
rmc
pp
pp
pp
pp
pp
rmc
rmc
pp
Primary Collection System (4 zones)
135630060 rmc
rmc
Transportation
183530000 rmc
rmc
Items
Civil Works
Transfer Stations
Compost Plant
Brick Making Plant
LandFill
Dhalaos
Workshop
Power Connection
Investment Cost
42084944
61024000
7493200
103243120
30000000
2824500
8350000
Operation & Maitenance
Vehicle Maintenance & Repairing facility
Total cost borne
Rs.
111247711.3 pp
pp
3500000 pp
pp
%
8
Pp
Rmc
Total Cost
Items
Civil Works
Transfer Stations
Compost Plant
Brick Making Plant
LandFill
Dhalaos
Workshop
Power Connection
222195264
351984560
574179824
Model 2
Investment Cost
42084944
61024000
7493200
103243120
30000000
2824500
8350000
39%
61%
Borne by:
Activity to be done by:
pp/rmc
pp/rmc
pp/rmc
pp/rmc
pp/rmc
pp/rmc
pp/rmc
pp
pp
pp
pp
pp
pp
pp
Primary Collection System (4 zones)
135630060 pp
pp
Transportation
183530000 rmc
rmc
Operation & Maitenance
Vehicle Maintenance & Repairing facility
Total cost borne
pp (20% cost of civil works)
Rmc
Total Cost
111247711.3 pp
pp
3500000 pp
pp
Rs.
%
186634012.8
387545811.2
574179824
33%
67%
The above two models have been compared on the following aspects1. Developer’s perspective
2. Economy perspective
3. AMC perspective
4. Incremental perspective
5. ADSCR perspective
6. Revenue risk perspective
7. Operating risk perspective
8. Construction risk perspective and
9. Market risk perspective.
9
4. Enabling Environment:
1. Under Jawahar Lal Nehru National Urban Renewal Mission, Ministry
of Urban Development, GOI ,Sewerage and Solid Waste Management has been one
of admissible project area. The main thrust of the revised strategy of urban renewal
is to ensure improvement in urban governance so that Urban Local Bodies (ULBs)
become financially sound with ability to access market capital for undertaking
improvement and expansion of services. This program provided for institutional
framework like national steering group, Central Sanctioning & Monitoring
Committee in the Ministry of Urban Development, State level steering Committee
for deciding and prioritizing the projects under the Mission. The Financial pattern of
the projects under JnNURM will be -- 80% by Central Govt., 10% by State Govt.
and remaining 10% by ULB. On completion of the Mission period of seven years, it
is expected that all urban residents will be able to obtain access to a basic level of
urban services. Under JNNURM, ULBs have to implement obligatory reforms, one of
which is to encourage PPPs. Accordingly, while appraising the SWM projects; the
MoUD has sent an advisory to all the State Government wherein it had been
advised that the ULBs should explore the possibility of including PPP in SWM
projects.
2. The Municipal Waste (Management and Handling Rules) were
notified by the MoEF in September 2000 making it mandatory for ULBs to improve
their waste management systems envisaged in the rules in a timeframe ending 31st
December 2003. While these rules have set in motion a number of activities
relating to MSWM, service levels in the sector continue to be below par.
3. In the context of the growing PILs, the Supreme Court set up a Committee
under the chairmanship of Mr. Asim Burman with members drawn from municipal
corporations, Ministry of Environment and Forests Government of India (MoEF) and
MoUD. This Committee submitted its report in March 1999 and covered wideranging recommendations on institutional, financial, health and legal aspects. A key
recommendation of this report was to enable Private Sector Participation.
4. The Ministry of Urban Development (MoUD), Government of India has
initiated a number of steps to address policy, capacity building and financing
challenges that are faced by ULBs. It recognizes Public Private Partnerships (PPP) as
an important element to improve service delivery in Municipal Solid Waste
Management (MSWM) and developed a toolkit for guiding PPP initiatives in MSWM.
The Toolkit aims to facilitate a better understanding of applicability of potential PPP
models in the context of the issues and challenges faced in the MSWM sector and to
10
provide a step-by-step approach for identifying, evaluating and implementing PPP
projects in the MSWM sector.
5. Apart from the above, a range of other GoI initiatives to support SWM and
PPP in SWM were introduced including the Bio-medical Waste Handling Rules, 1998,
the development of a Technical Manual on MSWM, the setting up of a Technology
Advisory Group on MSWM, the Inter-Ministerial Task Force on Integrated Plant
Nutrient Management from city compost, the permissions for issue of Tax Free
Bonds by ULBs, Income tax relief to waste management agencies, overarching
guidelines for PSP, introduction of commercial accounting system in ULBs and other
such sector reforms, development of Model Municipal Bye-Laws and making
available financial assistance under various packages/schemes including the 13th
Finance Commission grants.
5. RISK ANALYSIS OF THE PROJECT
Project needs to be examined for different types of risks associated with the
project so that risk management can be done to structure the project for viability.
Different types of risks associated with the project and there allocation is analysed
hereunder:
a)
b)
c)
d)
Market risk:
One of the main risks of the project is demand for the output of the
project. In this case recyclables, bricks, compost are the outputs of the solid
waste processing. The demand for these products in the market will affect
the Concessionaire and, therefore, the Concessionaire bears the market risk.
Government policy:
Changes in government policies such as taxation policy, regulations
and licenses etc. will affect both the parties. So there is sharing of policy risk
between both the parties i.e. Concessioning Authority and Concessionaire.
Construction risk:
It refers to the risk associated with the changes in the prices of inputs
(construction materials) like bricks, cement, iron rods etc. It also includes
time and cost overruns. Since in both the models construction cost is shared
by both the parties hence the risk also stands shared.
Revenue risk:
The revenue includes the revenue to the Concessionaire from the
saleable products and revenue from the user charges. In model 1 since the
user charges are collected by the Concessionaire and retained by the AMC
and the revenue from saleable products is retained by the Concessionaire so
the risk is shared between both the parties. In model 2, the user charges are
collected and retained by the Concessionaire and revenue from saleable
11
e)
f)
g)
products is retained entirely by the Concessionaire hence the risk is
completely borne by the Concessionaire.
Operating risk:
Operating risk essentially refers to the risk associated with the
efficiency of operations involved in the solid waste management processes.
Since the project is conceptualized on DBFOOT basis so the operating risk is
borne by the Concessionaire.
Performance risk:
Since the performance standards/benchmarks have already been
prescribed by the Concessioning Authority and performance guarantee has
been envisaged and ensured so the performance risk is entirely borne by the
Concessionaire.
Force Majeure:
Risks attributable to unforeseen circumstances are shared between the
parties.
6. Assumptions for analyzing models
a. O&M Expenditure to increase by 5% p.a.
b. Expenditure on Vehicle Maintenance & Repairing Facilities to
increase by 2% p.a.
c. Revenue from sale of treated waste to increase by 7% p.a.
d. Revenue from user charge to increase by 5% p.a.
e. Discount Rate = 12%.
f. Tax Rate = 31%.
7. Decision Criterion
a.
b.
c.
d.
e.
NPV from economy point of view.
NPV from developer’s point of view.
NPV from incremental point of view.
A.D.S.C.R.
Risk Allocation.
8. Financial Results & Interpretation
Sr.No.
1
2
3
Parameter
NPV - Developer's
NPV - Economy
NPV - AMC
Model 1
371350291.3
269743908
-202,665,123
Model 2
518,099,147
269743908
-232,794,238
Preferred
Model
2
Same
1
4
NPV - Incremental
323,734,429
470,483,284
2
12
5
ADSCR
> 1 from 2nd
Year
6
Revenue Risk
PP/AMC
> 5 from 2nd
Year
PP
2
2
9. Recommendation
Model 2 appears to be the preferred model from Developer’s, Incremental,
ADSCR, Revenue risk and Operating risk perspective, while the Model 1 scores
equally with Model 2 from Economy, Construction risk and Market risk
perspective and only from the perspective of the AMC does Model 1 appears
preferable. Hence Model 2 is suggested as a preferred model.
Model 2 does not have the capacity to serve its debt in 1st year, so this
model will need either bridge financing or moratorium on repayment for 1st year.
13