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Overview and Challenges

IMPROVING MANAGEMENT OF

MUNICIPAL SOLID WASTE

IN INDIA

OVERVIEW AND CHALLENGES

David HanrahanSanjay Srivastava

A. Sita Ramakrishna

ENVIRONMENT UNIT

SOUTH ASIA REGION

37070

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Improving Management of MSW in India

Published by Environment and Social Development Unit, South Asia Region.The World Bank (India Country Office), 70 Lodi Estate, New Delhi 110003

Internet : www.worldbank.org/in

Published in May 2006

Copying and/or transmitting portions or all of this work without permissionmay be a violation of applicable law. The World Bank encourages disseminationof its work and will normally grant permission to reproduce portions of thework promptly.

The findings, interpretations and conclusions expressed herein are those ofthe author(s), and do not necessarily reflect the views of the International Bankfor Reconstruction and Development/The World Bank and its affiliatedorganizations, or those of the Executive Directors of the World Bank or thegovernments they represent.

The World Bank does not guarantee the accuracy of the data included in thiswork. The boundaries, colors, denominations, and other information shown onany map in this work do not imply any judgement on the part of The WorldBank concerning the legal status of any territory or the endorsement oracceptance of such boundaries.

Note: This study draws on background papers, working documents andconsultant reports prepared as part of analytical work on MSW. Those materialsrepresent the inputs of many clients, and the work of staff, partners andconsultants. Key documents will be edited and made available as part of thedissemination of this report.

This report can only provide an overview of a complex and rapidly evolvingfield. The findings and conclusions presented here are subject to ongoing changeand refinement. The report is intended to provide a basis for discussion of issuesand challenges, and is not intended to be definitive.

Cartoons and photos used in this document are illustrative, indicating thenature of challenges. They do not reflect or express any opinion on the actualsituation in any municipality, town or city.

Cover design : Gulshan Malik

Cartoons : Prasanth A.V.

Photos : The World Bank, New Delhi Office

Editorial &Production : Tapan K. Ghosh

Printed at IPP Ltd., Noida, U.P., India

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PREFACE

Solid waste management is increasingly becoming a critical issue for municipalauthorities in India. Central and the state governments are supportive of local effortsto improve MSW management but this is essentially a municipal function and it is atthis level that challenges have to be addressed. The MSW Rules notified in 2000 putmost municipal authorities under pressure to perform. In this context an overviewstudy like the present one may prove useful for policymakers and others concernedwith environment and development issues of urban India.

This report summarizes the findings of year-long analytical work conducted bythe Bank, mainly in the states of Andhra Pradesh and Karnataka and later extendedto three hill towns, and developed with stakeholders including the central ministriesMoUD and MoEF and agencies such as the Central Pollution Control Board. Followinga background study that identified the essential institutional and technical issueswith regard to management of MSW, the Bank supported the preparation of actionplans for three cities each in the two states, as well as the hill towns. These plansprovided valuable insights and allowed broad lessons to be drawn out. The majorfinding is that municipal authorities have to be encouraged to move at their ownpace while they develop and implement sustainable plans for upgrading MSWfacilities and systems. This report summarizes specific areas which should bepriorities.

The report also identifies areas where the Bank or the donor community in generalcould play a useful role. Meanwhile, it is hoped that this report, focused at the policylevel, can be a primary reference in strategic planning for municipal waste managementin the coming years.

Authors

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ACKNOWLEDGMENTS

This overview is a synthesis of the inputs and advice of a wide range of interestedparties and the team would like to acknowledge the many different stakeholders andindividuals who contributed to the substance of the report.

Overall guidance on State level challenges and future strategies was provided innumerous discussions with senior officials, especially from Karnataka and AndhraPradesh. In Karnatka, we would like to thank in particular Mr Jawaid Akhtar,(Managing Director, KUIDFC); Dr K.P.Krishnan (ex-Managing Director, KUIDFC), andMr Ramkumar (Deputy Advisor- SWM, KUIDFC). In Andhra Pradesh, our thanksgo to Mrs Veena Ish (Secretary MA&UD); Mr Tishya Chatterjee (Secretary,Environment); Dr Vijay Kumar (Commissioner, Municipal Administration); andMr Rajeev Babu (Advisor-SWM, MCH). As the study progressed, useful feedback wasalso provided by officials in Tamil Nadu, especially Mr Shashi Shekhar (ManagingDirector, TNUIFSL) and Mr Ambuj Sharma (Commissioner, Municipal Administration).

Much of the important detail in this overview was obtained from the municipalCommissioners and senior officers of the municipalities who cooperated in the detailedaction plans and therefore special thanks go to the cities of Bellary, Shimoga, Tiptur,Hyderabad, Visakhapatnam, Vijayawada, Shillong, Nainital and Shimla and also theState Government officials who supported and facilitated this work in Karnataka, AndhraPradesh, Meghayala, Himachal Pradesh and Uttaranchal.

At the National level, this report has benefited from the valuable inputs andcooperation of officials at the Ministry of Environment and Forests (MoEF) andMinistry of Urban Development and Poverty Alleviation (MoUD), and the CentralPollution Control Board (CPCB). In particular, the team would like to thankDr Avinash Akolkar (Additional Director, CPCB); Dr Indrani Chandrasekharan,(Advisor, MoEF); and Mr B. B. Uppal (Advisor, MoUD) for sharing their experiencesand offering constructive suggestions through the study.

Many other specialists in the public and private sectors, in institutions and in non-government organizations also provided valuable inputs. We thank them all whileapologizing that is not possible to list them in detail. Funding for specific studies camefrom trust funds provided by the Governments of the Netherlands, Norway, and theUnited Kingdom and their support is gratefully acknowledged. The team alsoacknowledges the support and encouragement of Mr Jeffrey S. Racki, acting SectorDirector of the South Asia Environment and Social unit (SASES), the help rendered byMs Genevieve Maria Datta of New Delhi Office, and the excellent support and cooperationreceived from colleagues in the South Asia Urban unit (SASEI), the Water and SanitationProgram (WSP) and the World Bank Institute (WBI).

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CONTENTSPreface 3Acknowledgments 4Overview and Summary 7

1. INTRODUCTION 13� Approach and Methodology� Feedback

2. SOLID WASTE SYSTEMS AND MANAGEMENT IN INDIA 15� Relevance of MSWM� Scale of the Challenge� Financial Aspects� Progress of MSW Management

3. KEY ISSUES 26� Importance of Action Plans� Financial Sustainability� Institutional Support� Improving Collection and Segregation by Working with Communities and the Informal Sector� Using the Private Sector more Effectively� Technological Questions

4. MOVING FORWARD 58� Current Context� Key Areas

Tables & FiguresTable 1 Projected Municipal Waste Generation for the Urban Population in India 21Table 2 Indicative Costs of Existing MSWM for 10 sample Towns in Karnataka 22Table 3 Relative Capital Cost of Various MSWM Technologies in India 23Table 4 Summary of Key Parameters from Action Plans 28Table 5 Summary of Annual Operational Expenditure on Various Activities in MSW Management (Karnataka) 31Table 6 SWM Data from One Pilot City 32Table 7 Indicative Carbon Revenues potential Using Various MSW Management Technologies 38Table 8 Key Characteristics of Contracts in MSW sector 50Table 9 Risk in Contract Documents for Collection/Transportation and Treatment and Disposal 51Table 10 Key Risks Not Covered in Contracts 52

Fig. 1 Variation of Solid Waste Generation per capita and Income level 19Fig. 2 Variation of MSW Generation by Size of City 19Fig. 3 Operating Costs for MSW 22Fig. 4 Progress on Compliance (mid 2004) 24Fig. 5 Institutional Context for MSW Management 41Fig. 6 Organization Chart for MSWM System, Bangalore 42Fig. 7 Typical Solid Waste Recycling Network 47

Annexes1. MSW Rules–Summary 632. Option Based Financial Planning–Results from a Pilot City 66

End notes 70

References 71

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ABBREVIATIONS AND ACRONYMS

AAA Analytic and Advisory Activity

AIC Average Incremental Cost

ASCI Administrative Staff College of India

BOT Build-Operate-Transfer

BOO Build-Own-Operate

BOOT Build-Own-Operation Transfer

CF Carbon Finance

CFB Carbon Finance Business

CPCB Central Pollution Control Board

DBO Design-Build-Operate

EA Environmental Assessment

ER Emissions Reduction

GEF Global Environment Facility

IFC International Finance Corporation

KUIDFC Karnataka Urban Infrastructure Development and Finance Corporation

MCH Municipal Corporation of Hyderabad

MoEF Ministry of Environment and Forests

MoUD Ministry of Urban Development

MSW Municipal Solid Waste

NGO Non-governmental Organization

NIMBY Not-In-My-Backyard

O & M Operation & Maintenance

PSP Private Sector Participation

RDF Refuse Derived Fuel

SPCB State Pollution Control Board

SWM Solid Waste Management

TNUIFSL Tamil Nadu Urban Infrastructure Financial Services Ltd.

ULB Urban Local Body

USAEP U.S. Asia Environment Partnership

USAID U.S. Agency for International Development

WBI World Bank Institute

WSP Water and Sanitation Program

WTE Waste to Energy

Exchange Rate US$1=Rs. 45 approx

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INTRODUCTION

ment and Forests (MoEF) and UrbanDevelopment (MoUD). The mainoutputs to date have been a series ofworking documents developed incollaboration with state- and munici-pal-level clients that address priorityissues raised during discussionsamong the clients, the Bank, and othercolleagues. These documents haveevolved in response to client demand,and form the basis of this summary.Knowledge sharing has been anessential component of the work andthe World Bank Institute is nowinvolved in documenting and dissemi-nating lessons emerging from practi-cal experience as well as helping todevelop a network of local trainingorganizations.

RELEVANCE AND IMPORTANCE

OF MSWUrban sanitation and environment

issues clearly contribute to basichealth conditions in urban areas.Municipal Solid Waste Management(MSWM) however is typically as-signed lower priority than watersupply and sanitation. Very largenumbers of people are engaged in thesector: waste pickers, informal wastecollectors, and municipal workersamong others, although the scale ofthis engagement is often not appreci-ated. The management of municipal

OVERVIEW AND SUMMARY

This study summarizes thefindings of a non-lending analyticalactivity carried out by the World Bankin 2004 and 2005. The work was drivenby concern over the quality of theurban environment, and undertaken ina context of uncertainty on the suit-ability and effectiveness of Bankinvestment in this area, particularly inregard to components that generatelittle or no direct revenue, like wastedisposal and sewage treatment. Theimmediate objectives involved ad-dressing specific problems establishedin consultation with clients, andidentifying obstacles and challenges tothe improved management of munici-pal solid waste (MSW) in Indian cities.The broader long-term objective of thiswork is to support municipal authori-ties in improving the quality of theurban environment within theirjurisdictions, with the aim of achievingrelated public health and economicbenefits.

Most of the initial work wascarried out in the states of Karnatakaand Andhra Pradesh, where there wasstrong client interest and engagement,and where the Bank is developing anumber of projects to support munici-pal reform. Activities also involved theCentral Pollution Control Board(CPCB) and the Ministries of Environ-

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solid waste is often the single largestactivity that a municipality under-takes, and the effectiveness withwhich it carries out this role is per-ceived as a reliable measure of itseffectiveness in providing services toits citizens. MSWM is a fundamentalindicator of institutional capacity.

There is no reliable national-leveldata on the technical or financialaspects of waste management in India,and figures are therefore approxima-tions. The scale of the problem how-ever is fairly clear. The country’sannual generation of municipal solidwaste is in the range of 35 to 45million tons. This volume is likely todouble by 2015, and double again by2025, by which time India would begenerating over 150 million tons ofwaste a year. The scale is perhapsmore comprehensible at the level ofthe individual city: Mumbai todaygenerates about 7,000 tons per day(tpd) and Delhi generates about 6,000tpd.

COSTS AND INVESTMENT NEEDS

Given the limited financial man-agement and accounting systems usedby most cities, the expenditures byactivity are not usually recorded.Available figures suggest that solidwaste management accounts for 15 tonearly 50 percent of the typicalmunicipality's total spending. Theurban population of India is projectedto be around 400 million by 2015,which would bring the running costsof providing basic MSW services to allurban dwellers to between Rs 24 and200 billion (between US$ 500 millionand 5 billion) annually. The estimate

assumes expanded coverage but noupgrading of MSWM systems. Thecost of providing landfill facilities tomeet the requirements of the MSWRules over the next ten years is esti-mated at some Rs 100 billion – aboutUS$2 billion. Not all of this invest-ment will be publicly-financed, andprivate financiers express stronginterest in the sector. The level ofinvestment eventually forthcomingfrom the private sector is likely to besubstantial, but cannot be projected atthis time. Planned allocations underthe 12th Finance Commission are up toRs 2,4000 million (about US$ 500million) in grants for MSW over thenext five years which would be amajor contribution toward the levelsof investment required.

APPROACH ADOPTED:MUNICIPAL ACTION PLANS

The Bank work included a back-ground report prepared on MSW;specific analysis was carried out onfinancial planning for MSW at themunicipal level and of the experiencewith private sector participation.However, probably the most effectiveaspect of the work was support of apilot program of Action Plans forsmall and medium- sized municipali-ties, initially with three cities each inKarnataka and in Andhra Pradesh(and later extended to three hillytowns, at the request of the Govern-ment). These Plans draw on availableestimates of MSW parameters, to-gether with city specific data providedby the municipalities through localconsultants, to produce a range ofpossible strategic options for each

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municipality. One key contribution ofthe Bank to the detailed planningprocess was on the financial aspects,using a spreadsheet financial model(developed for this purpose) to helpclarify the constraints and options inthe pilot cities. While the quality andrelevance of the action plans varied,collectively they provided importantcost data which had been previouslylacking, as well as practical insightsinto local level constraints.

KEY FINDINGS

The work initially concentrated ontechnical questions relating to process-ing technologies and landfills, butinstitutional and financial aspects soonemerged as the more important issues.

� Considerable investment funds areavailable in India for urbaninfrastructure, and the technolo-gies are well known and under-stood. The basic problem is inadapting these existing technolo-gies to specific local conditions.

� MSW management is essentially alocal function, but few localgovernments have the institu-tional, managerial, or financialcapacity for a significant improve-ment in MSW management in thenear term. There is an urgent needfor much improved medium termplanning at the municipal andstate level so that realistic invest-ment projections can be developedand implemented.

� While the principal responsibilitiesfor MSW management lie at thelocal level, state governments playa necessary role in providing

policy guidance, technical sup-port, and funding. Realistically,state governments will have toplay a major role for a consider-able period of time. Some policyand regulatory matters remainwith the central government.Capital funding support by thecentral government will beimportant and available resourcesneed to be used as effectively aspossible.

� The private sector can play agreater and more important rolein improving the management ofMSW but the current frameworkfor Private Sector Participation(PSP) in MSW is weak and under-developed. Considerable contract-ing of labor and transportation isoccurring in MSW but there islimited and generally unstruc-tured PSP in treatment anddisposal. Some standard docu-ments have been developed butmore attention needs to be givento strengthen both ULB capacity toenter into contracts and theprivate sector’s ability to deliveragainst a contract.

Local politicians and seniorofficials are increasingly committed toimproved MSW management, whichis being served by a growing body ofavailable practical information andexpertise. Institutional and financialissues must now take center stage inbringing these improvements to pass.

EMERGING LESSONS

Experience in designing andimplementing MSW Action Plansyielded some practical lessons which

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are being driven home by financialanalyses under way in the differentmunicipalities. A number of basicpoints emerged strongly: the challengeof large numbers of staff working onsolid waste; the value of selective andwell managed contracting of certainservices; the need for clear and reliablerevenue streams (eventually includingsome form of user charges); andacceptance that processing anddisposal will inevitably be a net cost,even though some income may begenerated to offset the costs. Experi-ence suggests quite clearly thatmunicipalities can implement and,over time, operate effective andsustainable MSW management byinstituting efficiencies within currentexpenditures. Modest user fee systemsand new components can be intro-duced at a measured pace, and poten-tial opportunities to privatize certainoperations can be purposefullyexplored.

The practical lessons imparted bythe MSW Action Plans also point tochallenges that improved manage-ment must address and resolve.Among them are:

� The Need to Strengthen Munici-

pal Institutions. Given the in-creasing scale and complexity ofupgraded MSW systems, it isessential to have clear, senior andunified management responsibil-ity for MSW within any UrbanLocal Body (ULB). Some states aremoving ahead to develop coherentapproaches within their ownjurisdictions, and this will requireimproving technical and manage-

rial skills including project devel-opment, project financing, andmonitoring and supervision.Structured learning and trainingopportunities are clearly needed,and processes to build institu-tional capacity must be put intoplace quickly.

� Ensuring financial sustainability

in MSW Management. Realisticcost estimates and financialprojections are essential forinformed decision making, and toensure that MSW Action Plans arebased on what the municipalitycan actually afford. Municipalitiesshould seek to gain revenuewherever possible from compo-nents of the waste stream, but theymust accept that it will usually benecessary to pay the private sectorif complete treatment and disposalof the full waste stream is to becontracted out (the “tipping fee”).Carbon finance is a possibilityalthough technical and proceduralissues must be resolved. Carbonfinance payments are based onverifiable and measurable results,and therefore require a sound andwell operated system.

� Working with communities and

the informal sector. Scaling upcommunity systems is an impor-tant goal but depends very muchon local conditions and on effortsof local authorities. Waste man-agement is highly labor intensive,and promises basic employmentopportunities for large numbers ofpeople. In striving to makemunicipal systems more efficient,

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a balance must be struck with thesector’s traditional role as a sourceof employment.

� Involving the private sector more

effectively. Private sector partici-pation has many potential advan-tages, though municipalities mustbe able to manage the contractingprocess adequately and dealquickly with any problems thatmay emerge. In the short term atleast, private investment byforeign firms is likely to be limitedand Indian companies will leadmarket entry. For states, thismeans developing appropriatepolicy and regulatory frameworksto attract and promote privatesector participation in MSWmanagement.

� Addressing critical technological

questions. At present, it is realisticto expect that composting canlower the net cost of waste dis-posal, but is unlikely to generatenet revenue until markets orsubsidies change or new innova-tions are introduced. Operationalexperience with waste-to-energymethods are so far limited, butindicates that financial and opera-tional risks should be passed toprivate operators, bidding on thelowest price to the municipality.Where local conditions are favor-able, significant practical advan-tages are likely to be found ingranting municipalities flexibilityto adopt simpler, less costlysystems for small landfills.

MOVING FORWARD

MSW management is clearly alarge and important task for munici-pal authorities. Different municipali-ties will move at different paces onthese issues, but momentum has beenestablished nationally and the overallprocess will continue to moveforward. MSW management requiresboth increasingly sophisticatedsystems management and on-going—perhaps relatively small—capitalinvestment. Expanding and improvingcoverage at the national level willtherefore require both upgradedinstitutional and financial structuresand substantial investment in infra-structure. One of the most useful stepsthat can be taken by municipalities isto develop and implement clear plansfor upgrading MSW facilities andsystems, at a pace which is locallyacceptable and sustainable in the longterm.

The Action Plan approach is nowbeing taken up more widely followinga Supreme Court decision directingIndia’s 59 largest cities to draft suchPlans. Many, mostly larger munici-palities are preparing Action Plans,and the state of Tamil Nadu hasintroduced a program supporting itsmain cities in developing plans that isalready well advanced.

There is a growing understandingof practical and pragmatic approachesto MSW management and furtheranalytical work should now focus on aselect number of outstanding issuesthat require deeper understanding. At

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least three such areas may be seen aspriorities: financial planning aspects,the development of contractingstrategies to encourage private sectorparticipation, and community andsocial dimensions of MSW manage-ment.

ROLE FOR THE WORLD BANK

AND OTHER DONORS

Considerable support for MSWmanagement is already in placeamong the donor community. Furthertimely support that responds todemand by clients could include thefollowing:

� Support to the ongoing devolutionprocess and the strengthening oflocal government capacitythrough development of trainingprograms, information exchangemechanisms and informal net-works of professionals.

� Programmatic approaches tourban investment, in whichtechnical assistance is designed tosupport investment in key projectsand to encourage an appropriate

role for the private sector.

� Cooperative efforts to bring innova-tions to bear on the institutional andtechnical challenges, through pilotprojects which introduce anddemonstrate new techniques andtechnologies. Possible areas couldinclude model systems, regionalfacilities, or technologically com-plex facilities/sites which mayrequire specific operational ap-proaches and skills.

Both the national and state govern-ments are supportive of local efforts toaccelerate the upgrading of MSWmanagement, although this is funda-mentally a municipal function and it isat the municipal level that the chal-lenges have to be addressed directly.Considerable improvements in the levelof service have been evident in anumber of sites, with municipal au-thorities beginning to find solutionsspecifically tailored to local conditions.Given the scale of the challenge at thenational level however, the road aheadmay well be a long one.

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1This report summarizes the keyissues addressed and activities under-taken by the World Bank in an analyti-cal work on municipal solid waste(MSW) management in India in 2004and 2005. The activities aimed tocontribute to the improvement ofurban environmental conditions byhelping clients to identify and addressbarriers to improved solid wastemanagement. These clients and localpartners—mainly state level—workedin close collaboration with the Bank.The work relied heavily on Indianspecialists who were supported bytargeted inputs from internationalexperts. Work was carried out in ahighly cooperative and iterativemanner, with shared ownership of itsresults – the working papers summa-rized in this report. The work’s largerimpacts can be discerned in changedapproaches and procedures to wastemanagement, and increased localcapacity to carry these through.

APPROACH AND METHODOLOGY

The approach adopted entailedworking closely with clients to defineissues where the Bank can provideadded value. It also involved extensivecollaboration between colleagueswithin the Bank, the Water andSanitation Program (WSP), and thelarger development community,including the Asian Development

Bank (ADB), the UK Department forInternational Development (DFID),and the US Agency for InternationalDevelopment (through USAEP andurban development program).

The work was undertaken with anunderstanding that MSW is an impor-tant issue both in its own right, and asa practical measure of a municipality’slarger capacity. The scope and com-plexities of the MSW agenda are suchthat practical solutions are not one-offinterventions, but require ongoingconcerted effort by cities and stategovernments, working closely withcommunity organizations and NGOs,with the support of the internationaldevelopment community.

The work focused on three stateswhere World Bank urban projects arein preparation: Andhra Pradesh,Karnataka, and Tamil Nadu. Most ofthe analytical work was carried outin Andhra Pradesh andKarnataka, where therewas particularly strongclient interest and engage-ment. This work initiallycovered six cities andincluded preparation ofMSW Action Plans,which were tailored forlarge towns andsmaller cities.

INTRODUCTION

"I have got on top of the problem, Sir.From this height the view is fantastic!"

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A key objective for municipalitieswas to develop realistic infrastructureplans for sanitation. These wouldprovide a basis for justifying priorityinvestments and attracting private sectorinvestment. Initially, the issues raised bycounterparts tended to be technical, andlimited attention was given to financeand implementation. In attempting tobring more meaning to these discus-sions, the concept of preparing the cityspecific Action Plans emerged. Thedevelopment of these pilot Action Plans(initially for six municipalities and laterexpanded to cover three more cities inhilly areas in other states), providedcritical data, insights into constraintsand opportunities, and informed discus-sion of the options available to therespective municipalities. In addition,detailed work undertaken in Hyderabadincluded the closure of old wastedumps. Together with related analyticalwork, these discussions led to theidentification and development of

realistic approaches on a broader scale,which in turn were discussed at state

and national levels.

The work employed a bottom-up approach designed to build on

existing reform processes whilefostering an environment in

which successful new MSWprojects are likely to find

sources of investmentand support. Expectedsynergies betweenreform efforts andMSW did emerge in theprocess of balancing

fiscal responsibility withthe pressures to support

upgraded urban services, includingsanitation and solid waste.

The Union Government in Delhi wasengaged principally through the CentralPollution Control Board (CPCB), and theMinistries of Environment and Forests(MoEF) and Urban Development(MoUD) were also directly involved.Interaction with these governmentagencies focused on policy level issues.

The analytical work in select munici-palities identified appropriate mecha-nisms for increasing private sectorparticipation as a strategic priority –particularly in treatment and disposal.Private provision of waste collection andtransportation services is quite common,but practical, empirical information onmore complex systems was not available.Taken together, the analyses provided astarting point to bring regulators andpotential investors together and someinitial discussions were held to identifyand address barriers to increased invest-ment.

FEEDBACK

A Technical Round Table on thestudy outcomes with key national andstate agencies and other interestedparties was held in October 2005 toensure that the findings reflected theperspectives of different stakeholders.These consultations reinforced the needfor better systems management, institu-tional and financial reforms, effectivecontracting procedures for private sectorinvestment, capacity building, and betterunderstanding of the community andsocial dimensions of MSW management.

"He is a new recruit. Hedoesn’t know the color code

and can’t read!"

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2ing garbage that are features of manyurban areas can have serious localenvironmental impacts. Identifiedimpacts can be serious (such asanecdotal stories of animals dyingafter drinking polluted surface water)but are typically localized at present.The broader environmental concernscome from the large and growingscale of the MSW problem and itspotential long-term consequences. Atthe same time, MSW clearly does have

health consequences, especially whenit is related to the broader sanitationissue through concerns such asreducing open defecation and man-agement of drainage systems toprevent urban flooding, as well as therole of dumpedgarbage inencouragingdisease vectorslike insects andrats4 .

Another veryimportantdimension is thevery largenumbers ofpeople involvedin this sector,whether as

RELEVANCE OF MSWIncreasing urbanization in India is

a part of the global trend with 27.8percent of India’s population (285million) of the total 1027 million livingin urban areas (as per the 2001 census).The number of towns and cities haveincreased to 4378 of which 393 areClass-I1 towns, 401 are Class-II2

towns, 1,151 are Class-III3 towns andremaining are classified as smalltowns with populations rangingbetween 20,000 to less than 5000. Thenumber of metropolitan cities havingmillion plus population has increasedto 35 as per 2001 census, and this hasalso seen growing public concern withexponential increase in sanitation andenvironmental issues.

Urban sanitation and environmentissues are clearly contributors to basichealth conditions in urban areas butMSWM has a lower priority thanwater supply and sanitation. Althoughincidents such as the plague episode inSurat suggest that there are importanthealth aspects to MSW, it is basicallyan environmental issue rather than ahealth one and certainly the recentpressures in India for improved MSWhave had an environmental focus. Thevarious “smoky mountains” of burn-

SOLID WASTE SYSTEMS ANDMANAGEMENT IN INDIA

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taken important initiatives, and thestate governments are giving this issuemore attention and providing in-creased resources. Private sector isinterested and increasingly involved.However, progress is patchy and thereis no overall coherent program,although state level initiatives areemerging and the Union Governmentis starting to play a greater coordinat-ing role.

There is no reliable national dataon waste management, covering eitherthe technical or the financial aspectsand therefore any overview figuresrepresent, at this point, approxima-tions. Given that MSW is inherently amunicipal function a top-downapproach to data collection would becostly and not very reliable. However,there is a need for good managementand comparative data at the municipaland state level and this issue needs tobe given more attention. In terms ofwaste quantities and characteristics, amajor study was carried out in 1995 byNEERI. CPCB has commissioned anupdate of these estimates, and theresults are expected around mid 2006.

A Background Report preparedunder this activity summarizes thereadily available information andprovides an indication of the scale ofthe problem.5 This Report compiledinformation from various sources andestimated that in year 2000, the majorurban centres in India generated about100,000 tons per day (tpd) of munici-pal solid waste.

On an annual level, therefore,approximately 35 million tons of MSW

"No sir, That’s not a well-knownmountain range. That’s the... repository of the city's refuse"

“scavengers” or “ragpickers”, (infor-mal waste collectors,) or municipalworkers. The numbers of people andtheir roles are important in any effortto improve the management of MSWalthough this dimension is oftenunder-appreciated. Some progress hasbeen achieved under this activity to

clarify this complex areabut much more remains tobe done.

However, perhaps themain reason for paying

increased attention to man-agement of MSW is the reality

that MSW is normally the singlebiggest activity that a municipality

undertakes – sometimes 20-50% oftotal expenditure and sometimes morethan all the other functions combined– and the municipality’s ability tomanage MSW well, is a clear measureof its overall effectiveness in providingservices to its citizens.

SCALE OF THE CHALLENGE

The widespread public concernabout the poorlevel of MSWmanagement inmost urbancentres tends toobscure the factthat there aresome good ex-amples and somerelatively wellmanaged systems.There are numer-ous examples ofcities becomingcleaner. A numberof cities have

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Overview of Main Components of MSW

MSW management covers the full cycle from collection of waste from households and commercialestablishments through to acceptable final disposal. In the process, efforts are made to reduce thefinal volumes, through recycling and materials recovery, as well as processing/treatment. Theaccompanying diagram outlines the typical system of waste management in India. An analysis alongthese lines should be carried out for any municipality, as a first step to understanding and dealing withthe necessary upgrading of the system.

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Box 1 : Progress in Waste Management in Hyderabad

The Hyderabad urban agglomeration contains an area of about 1,864 square kilometers, with 9 municipalities, and 106gram (village) panchayats. The city generates 2,200 Metric Tons (MT) of solid waste. The residential sector contributes about65 percent of the total solid waste, it follows that commercial sector contribute the remaining 35 percent.

Door-to-Door Collection from Residents - There are 3,850 notified garbage collection centers, which are attendedevery day. The residents dispose of the garbage directly into bins at the nearest notified centers. In some areas, residentsdeliver garbage to rickshaw (tricycle) pullers under the Voluntary Garbage Disposal Scheme (VGDS). Four hundred sixty-three Resident Welfare Associations covering 60,000 houses are using the VGDS at present. This program has also beenextended to 350 slums, where neighborhood committees are using the scheme to effectively manage their solid waste.

Street Sweeping - Seventy-five percent of the city’s area is now being cleaned by the private contractors both day andnight. These include 14 self-help women’s groups managed by Development of Women and Children in Urban Areas (DWCUA).Under privatization, the Municipal Corporation of Hyderabad introduced a scientifically designed and structured unit area andunit rate system for cleaning and transport works.

Enforcement System for Control of Littering and Debris - The Municipal Corporation of Hyderabad has introduced aseparate enforcement system to levy fines and charges on residents or commercial establishments for littering and dumping.Eleven mobile enforcement squads are deployed in the city to constantly track any littering or dumping on the streets and finethe offenders. For example, during a recent six-month period, more than 5,000 offenders were caught and fined a sum of Rs4 million. This has considerably reduced public littering. This enforcement system is being strengthened with regularmonitoring.

Doorstep Collection from Bulk Garbage Generators - Under the principle of “users pay, beneficiaries pay, and pollut-ers pay,” the Municipal Corporation of Hyderabad has introduced a scheme for collecting user charges from bulk garbagegenerators in the city. One thousand seven hundred establishments—such as hotels, restaurants, function halls, hospitals,markets, commercial complexes, and so on—that generate bulk garbage are identified and classified into 12 categories forlevying user charges. During 2003–04, 20 transport work packages were proposed to be launched for providing doorstepcollection to these establishments and collecting user charges of Rs 20 million.

Source: WBI Training Module on SWM 2005.

Fig.1) tend to generate smaller percapita loads and therefore proportion-ally less waste. The average wastequantities vary between 300 to500gms/capita/day depending on thetype of Urban Local Body (ULB) bypopulation.

On the basis of plausible estimatesfor the increase in the urban popula-tion and for increased per capita wastegeneration, the total annual volumescould more than double by 2015 anddouble again before 2025. At thatpoint, urban India can be expected tobe generating over 150 million tons peryear of waste. These estimates are

is generated. Other sources suggestthat the figure may be considerablyhigher – up to 45 million tons annually– but the magnitude of the challenge isclear. An analysis of data availablewith the CPCB shows waste genera-tion has been found to be a function ofconsumption and production activity,and thus strongly affected by house-hold income and local production ofgoods and services. Therefore, thescale of the task at the level of indi-vidual cities is more relevant. Forexample, Mumbai generates about7,000 tpd (close to 2.5 million tons peryear); and Delhi generates about 6,000tpd. Smaller cities (as referred in

19


approximate and undoubtedly in-creasing efforts will be made to reducethe volumes of waste generated and toincrease the rates of recycling andrecovery, so as to reduce the size of thedisposal problem. Nevertheless, theproblem has the potential to over-whelm municipalities, both literallyand figuratively. These projections arefully consistent with internationalexperience – a recent World Bankstudy for China showed even moredramatic projections for waste in-creases there.6

FINANCIAL ASPECTS

Lack of investment is the reasonmost often given for lack of progresson MSW upgrading but there areconsiderable funds available in Indiafor urban infrastructure investmentand the constraints are more complexthan a simple lack of funds.

Box 2 : Improved MSW Management in Nagpur

Nagpur, in Maharashtra state, is a major center of education, culture, and commerce. It has a population of more than 2.1million and covers an area of about 220 square kilometers, distinguished by ethnic, cultural, and religious variety. It is dividedinto 10 zones and 45 divisions. It is estimated that 700–800 metric tone of garbage are produced every day in Nagpur.

The Nagpur Municipal Corporation (NMC) authorities earlier found it difficult to provide cost-efficient service to citizens;therefore, MSW management was outsourced in 30 Municipal wards to private sector organizations, such as the Center forCommunication Development (CDC). The CDC was made responsible for primary garbage collection service of the LakadGanj zone (eight wards), which subsequently increased to nine of ten zones, as part of the Swachta Doot Project. Theorganization started with awareness building among the citizens and providing complete range of MSW management, includ-ing street sweeping, door-to-door garbage collection, container lifting, dumping, recycling, and vermicomposting.

Daily door-to-door garbage collection is the core of the Nagpur – Swachta Doot model. Trained laborers collect the wastefrom households and shops everyday 365 days a year. The service is provided between 6:00 A.M. and 1:00 P.M.. Swachtadoots (loaders of garbage into containers) use bells and whistles to alert customers of their arrival in the neighborhood, andalso pick up the dustbins directly at the doorstep to assist elderly or infirm citizens. Specially designed vehicles are used totransport the garbage directly to transfer stations. The containers from transfer stations are brought to landfill sites outside thecity by the NMC workforce. There is close cooperation between the CDC and the municipal bodies so that waste is not storedlonger than necessary in residential areas, which has resulted in significant improvement in cleanliness of streets.

Source: WBI Training Module on SWM 2005.

Fig. 1 : Variation of Solid Waste Generation per capitaand Income level

Fig. 2 : Variation of MSW Generation by Size of City

20


MSW management is often thelargest single area of annual expendi-ture for a municipality in India. Giventhe relatively low standards of finan-cial management and accounting inmost cities, expenditures by activityare not usually recorded and socomprehensive data is not availablebut it is widely accepted that 20-50percent of the typical municipality’s(revenue) expenditure goes on MSW.

Typically the MSW managementexpenditure for smaller towns rangesbetween 30-50 percent while for largecities it ranges between 15-25 percent.For example, figures for Hyderabadshow that Rs 750 million (approxi-mately $19m) was spent on solidwaste in 2004, which is about 15percent of the Corporation’s operationbudget, and in Bangalore, expendi-tures of Rs 6400 million (approxi-mately $160m) in 1999 had almostdoubled by 2001, to cover majorupgrading of the municipality’ssystems.

Using data compiled for theBackground Report, current operatingcosts for MSW (not including propertreatment and disposal) are typicallyquoted in the range of Rs 60-500capita/annum7 (see Fig.3), with thehigher numbers in metros which havemore advanced and more complexsystems8 . The current costs also varyfor each municipalities depending onthe level of MSW management ser-vices, such as area covered for streetcleaning, door to door collection,percentage of waste collected andtransported etc. In simple terms, withan urban population of the order of400 million by 2015, the annualrunning costs of basic MSW systemsfor all urban dwellers would be of theorder of Rs 24-200 billion. This isassuming an increase in coverage ofthe services but no upgrading of thesystems.

As part of background study itwas also observed that several munici-palities regularly use the option tocontract out a part of MSW Manage-

"This is the most prosperous neighborhood in the area.We even generate the maximum waste."

21


ment services to cope with increasingdemand to cover new urban areasand improve the quality of services,which typically include use of privatecontractors for street cleaning, collec-tion and transportation of waste. Thetypical expenditure on sub-contract-ing ranges between 10-25 percent ofrecurring municipal budget, andoften does not get reflected as cost ofMSW management. A brief overviewof data from some municipalities inKarnataka indicates that the cost ofMSW management per ton of wastehandled, as incurred by privatecontractor is significantly less (in therange of 20-40 percent) compared tothe cost of waste handled by munici-palities. One of the reasons forrelatively lower costs incurred by thecontractor is quoted as differentialwages, particularly when privatecontractors tend to pay lower thanminimum wages to their sanitaryworkers. Table 2 provides an indica-tive cost of MSW management for themunicipality and private contractor. Itis observed that smaller municipali-ties tend to use services of privatecontractors much less compared tolarger municipalities. However, it is

important to note that level of MSWmanagement service coverage in somemunicipalities is quite low. Thereforelower costs per ton of MSW may notfully represent quality of MSW man-agement in a city.

Various estimates of overallinvestmentneeds have beenmade bydifferentparties, particu-larly the finan-cial community,but thesefigures aretypically not forquotation andin any case arebased ondifferentassumptions. In the absence of anyreal data on the actual costs of landfillconstruction (which in any case willvary with local circumstances), in-formed estimates indicate additionalcosts of about Rs 300-500 per ton areneeded to meet the requirements ofthe MSW Rules. Over the next tenyears, with annual waste quantities

Table 1 : Projected Municipal Waste Generation for the Urban Population in India

Year Projected Urban Waste generation rate Total MSW generation

Population (in thousands)* (gms/capita/day) (million tons)

2000 281255 327 33.72005 315276 391 45.02010 355205 471 61.02015 401898 571 83.82020 455823 696 115.82025 517178 848 160.1

2030 586052 1032 220.7

* Population projection data from United Nation Population Division Source: Background Report.

22


* Does not include treatment and disposal.

Fig. 3 : Operating Costs for MSW*

Table 2 : Indicative Costs of Existing MSWM for 10 sample Towns in Karnataka

Population Waste Percentage (%) share of Percentage(%) share of Cost per ton Cost per ton Overall cost

2001 handled waste handled per day by Annual MSWM costs for for municipality for contractor

Unit Tons per Municipality Contractors Municipality Contractors Rs Rs Rs

day /per ton /per ton /per ton

Small Town

Town 1 53,043 12 75 25 86 14 2,000 649 1,550

Town 2 48,000 10 100 0 100 0 656 NA 656

Town 3 47,060 9 100 0 100 0 1,477 NA 1,477

Town 4 49,408 4 0 100 0 100 NA 573 573

City Municipal Council

Town 1 274,105 60 43 57 83 17 3,449 525 1,792

Town 2 248,592 52 37 63 66 34 1,639 495 913

City Corporation

Town 1 317,000 60 75 25 90 10 2,069 690 1,724

Town 2 399,600 110 50 50 79 21 2,518 658 1,588

Town 3 398,000 110 40 60 55 45 1,730 946 1,260

Town 4 427,929 126 33 67 67 33 2,700 659 1,339

Source : Data collected by consultants for Action Plan study (2005)

23


doubling to 70m/t/a or more, therequired total new landfill capacitywould be 500m tonnes. Using a unitcost of Rs 200/t the investmentrequirements would be Rs 100bn.(about $2.5bn) over the decade. Thisfigure represents the probable order ofmagnitude but there are many impor-tant variables, such as the rate ofimplementation and the level ofinvestments in processing facilities,which would reduce the landfillinvestment required. The cost oftreatment will vary for various treat-ment options and application may belimited by requirement of land9 ,operational costs and managementcomplexities of various availabletreatment techniques. The backgroundstudy suggested the approximate costcomparison for various technologiesin India (Table 3).

PROGRESS OF MSWMANAGEMENT

Over the years, the problems ofMSW have been highlighted by civicand environmental activists, resultingin direction by the Supreme Court toMoEF to draft Rules on MSW, whichwere gazetted in 2000. Annex 1presents a summary of MSW Rulesincluding institutional roles. InOctober 2004, the Supreme Courtissued further specific direction to thelarger cities to demonstrate progresson meeting the requirements of theRules.

There are some examples whereresults have been achieved but overallprogress has been weak. There is nosystematic collection of data whichwould allow implementation to be

tracked but a recent review of a largenumber of cities provided a goodsnapshot of the current situation. Thereview collected responses on progresson each of the main components ofMSW covered in the Rules and theresults are presented in Fig.4.

The immediate deficiencies areevident in terms of waste collection,treatment, and disposal. However, thetechnologies are well known and wellunderstood and the problem is not oneof overall technological challenges butof the difficulties in adapting and

"I said a simple graph. Youdidn’t have to be so realistic!"

Table 3 : Relative Capital Cost of variousMSWM Technologies in India

Technology Assumed MSW Land required Cost

Quantity (Metric ton) (acre) (Rs in million)

Biomethanation 150 6-7 60-90

Pelletisation 125 3-4 40-50

Incineration 100 2-3 60-70

Composting 150 7-8 15-20

24


implementing known technologies tospecific local conditions. The typicalexpression of the current problems islack of funding to implement technicalsolutions (and it is clear that thesolutions required by the MSW Rulesare expensive). However, much can beachieved even within the currentconstraints but guidance and technicalsupport are needed.

The fundamental underlyingproblems are in fact financial andinstitutional. There are some indi-vidual good examples and (notsurprisingly) the larger municipalitiestend to have better systems in placebut overall, financial, human andinstitutional resources are limited.

A realistic timescale will berequired to see substantial progress,although there is increasing realcommitment by local politicians andsenior officials and a growing body ofinformation and expertise to supportpractical efforts to improve MSW. Atnational level, MoUD has realized theneed to address MSW issues onpriority and the 12th finance commis-sion has allocated grants to the tune ofRs 25000 million covering 423 Class Itowns.

"Five rupees? For carrying so much garbage downfour floors! And I give you Rs. 10 for the bottles !!"

Fig. 4 : Progress on Compliance (mid 2004)

25


26


KEY ISSUES

data and analysis was required butsuch data is not available. In order tohave some specific case studies, it wasagreed with the participating stategovernments that pilot “Action Plans”would be developed in a small num-ber of municipalities.

IMPORTANCE OF ACTION PLANS

MSW management is a keymunicipal task and local electedofficials increasingly feel pressure todeliver “clean cities” but there areother issues, such as water supply andsanitation, which are often at least asurgent and important as MSW, andoften more so. In order to moveforward toward compliance with theMSW Rules while balancing municipalpriorities, a useful tool would be thedevelopment and implementation atthe local level of clear plans forupgrading MSW facilities and sys-tems, at a pace which is locally accept-able and sustainable in the long term.It was agreed that preparation of anumber of pilot or indicative examplesplans would be a very worthwhilecontribution of the Bank’s analyticalwork.

A first set of pilot Action Planswas developed for three cities each inKarnataka and Andhra Pradesh10 ,covering a range of size and circum-

Interactions with key clients andwith Bank colleagues on MSW initiallyrevolved around a number of technicalquestions, relating to processingtechnologies and to landfills. Afterseries of discussions with ULBs, datasupport from pilot MSW managementaction plans and stakeholder consulta-tions, the most urgent issues to beaddressed emerged as the institutionaland financial aspects. A number ofdifficult technical questions have to beresolved and effective solutions canonly be achieved through sustainableinstitutional and financial mecha-nisms. In moving to address theseissues in more detail, municipal level

"We missed the garbage truck again! Perhaps this is what theymean when they talk of waste-to-energy!"

3

27


stances. The Action Plan was intendedto set out the current situation, theupgrading required, and to outline arealistic and financially sustainableprogram for moving ahead. (Theoutputs were at the level of broadoptions, not specific investment plans.)To help anchor these plans a simplebut comprehensive spreadsheetfinancial model for MSW was devel-oped and refined, in consultation withclients and donors in India. Thepurpose of the model is to help citiesunderstand their current expenditureson MSW; allow them to estimate thecosts of different options; and – aboveall – to generate informed discussionof possibilities and priorities. (It isconsistent with more sophisticatedmodels and approaches being devel-oped, such as those under the USAIDFIRE Program, but is not intended tosubstitute ongoing efforts to upgradeoverall municipal financial manage-ment systems.) It should be noted thata similar Action Plan approach hasbeen widely adopted, including arecent requirement by the SupremeCourt that the 59 largest cities in thecountry prepare some form of plan.

This first round of pilot ActionPlans provide useful results (althoughsometimes of mixed quality) and theiroutcomes generated discussion withthe municipalities themselves and thestate governments. Subsequently, inorder to understand the complexity ofissues in hilly regions, three hillytowns were supported in the secondround of pilot Action Plans in closecollaboration with CPCB11 . The Bankis now supporting efforts by CBCP toexpand the approach, accepting that

the concept is still developing and thatdifferent versions are emerging. Theseefforts include working with WBI todevelop training and capacity build-ing systems to support MSW develop-ment.

Data Developed under ActionPlans

The Action Plans draw on avail-able average figures on waste genera-tion, characteristics, existing schemesand assets, together with city specificdata provided by the municipalitiesthrough local consultants and somespecific survey and data collection.There is a wealth of experience withinthe health department staff and therevenue department staff of themunicipality about the various facetsof waste management, includingfinancial and institutional aspects butthis is rarely coordinated and docu-mented. A major contribution of thiswork has been to help municipalities

28


to extract data on MSW from themunicipal accounts, in a format whichallows key parameters to be calcu-lated. (Very few municipalities nation-ally keep their accounts in a way thatthis data can easily be extracted).Table 4 summarizes some of these keyfigures, such as the cost per ton ofMSW collected and the ratio of work-ers to waste. The data is presented asranges, without identifying theindividual cities, given the uncertain-ties in some of the numbers and thevery different circumstances of thecities, making simple comparisonsmisleading. The development of

benchmark indicators for MSW, alonglines such as these, is an essential steptowards increased efficiency in thesector.

FINANCIAL SUSTAINABILITY

Almost every municipality inIndia is under financial pressure. Asmall number have good financialmanagement systems in place and areoperating within acceptable budgetconstraints. However, the majority donot have adequate accounting andbudgeting systems and do not operateon a multi-year capital and financialplanning basis. This makes the process

Table 4 : Summary of Key Parameters from Action Plans

Parameters for Benchmarking Large Cities Mid size Towns Small Towns Typical

(Above 1.5 (between 0.5-1.5 (less than 0.5 Range for

million) million million Hilly Towns

� MSW management expenditure in Rs per 165-175 150-180 120-150 350-400*capita per annum

� MSW management expenditure as % of total 15-25 15-25 20-40 25-45municipal revenue expenditure

� MSW management cost per ton (Rs ) 900-1200 800-1200 800-1600** 2500-3000#

� Relative costs per ton by size/population 0.22-0.27 1.00-1.11 2.78-5.00 4.44-7.78##(taking mid-size town as 1.00)

� Salaries as % of overall MSW management costs 45-55 60-70 65-75 80-90

� Ratio of worker per ton of waste managed 3.5-4.5 2.5-6.0 2.5-5.0 8.0-16.0

� Cost of primary collection as % oftotal MSW management expenditure 25-30 40-70 30-40 20-40

� Cost of transportation as % oftotal MSW management expenditure 20-25 10-20 10-15 15-25

� Cost of MSW management contract as % oftotal MSW management expenditure 35-40 25-30 5-10 Less than 5

Note : These nine Action Plans have provided insights in managing MSW and have been the basis for identifying many of the key issuesdiscussed below.

* For hilly towns the municipal expenditure is generally high due to specific revenue importance such as tourism and seasonalvariation in population etc

** Higher percentage of MSW management expenditure is observed in smaller cities where sub contracting of MSWM services aswell as level of services is generally lower.

# Higher costs in hilly towns is attributed to difficult terrain and extreme climatic conditions

# # MSW Management costs in hilly town varies significantly depending on geography and tourist importance

29


of understanding costs, commitmentsand revenues difficult for specificactivities like MSW management. Inorder to address this shortcoming, thespreadsheet model was used incollaborative manner with municipalstaff in order to improve the under-standing of financial aspects of MSWmanagement

A key aspect of devolution is anemphasis on increased self-sufficiencyfor cities, within a framework of someongoing financial support from higherlevels of government. A basic objectiveof the Bank’s municipal reform effortsis to support this move towardsgreater self-sufficiency, includingimproving accounting and financialmanagement systems and assisting inincreasing revenue collection. Theprovision of MSW managementservices – a core function of any city –is a good test bed for upgradedsystems and the selection of threestates where municipal reform opera-tions are under way was a deliberateeffort to make this link.

PRIVATE BENEFITS AND PUBLIC

GOOD

MSW management systemsprovide two broader types of benefits.The first is the removal of waste fromthe premises (domestic, commercialetc) and from the locality (block, street,colony). This type of benefit is thatmost immediately relevant to thetypical citizen. The second type ofbenefit comes from the treatment andfinal disposal of the wastes in a waywhich is environmentally sound. Theextent of the private benefits can beestimated, in economic terms, by the

amount that people are prepared topay (in cash and in other terms) forwaste removal. In practice, in mostmunicipalities, many householdsalready pay a waste collector toremove rubbish from the house andalso often pay some element of anMSW charge to the municipality(often in the property tax). Estimationof the value of the public benefits ismuch more difficult but this is abenchmark against which publicinvestment in waste managementshould be assessed. In practice, thesepublic benefits are typically valued ata very low level in most communities,as evidenced by the lack of generalconcern over the impacts of wastedumping.

The financial challenge for citymanagers is to expand the scope oftheir MSW operations to address thetreatment and disposal issues, which

30


can be expected to increase costssignificantly while typically notgenerating any additional revenue.However, to move in this directionrequires a good understanding of thereal current costs and a realisticevaluation of the options for newtreatment and disposal systems. Inthese circumstances, improvedfinancial management is critical.

COSTS OF MSW MANAGEMENT

There is no detailed accounting ofcurrent expenditures on MSW in mostmunicipalities and there is very littleexperience in constructing and operat-ing treatment and disposal systems.There are some unit costs for collec-tion and transport and some authori-ties (such as KUIDFC) are developingdetailed figures. Reasonable estimatescan be made for storage and transportequipment but estimates for treatmentand landfilling are generally notreliable. The typical distribution ofexpenditure on waste management fora city is that about 75 percent or more

of the total MSW expenditure goes oncollection, 20 percent on transporta-tion and only 5 percent or less ondisposal. Table 5 and table 6 provide:(i) an approximate indication ofexpenditure patterns across munici-palities (ii) break up of costs from atypical pilot town based on datacollected as part of Action Planningstudy.

Another important factor is thesignificance of economies of scale intreatment and landfilling. Smallsystems, say below 100t/d, whichwould represent a population of 300-400,000, are likely to have significantlyhigher unit costs, especially fortechnically sophisticated and complexsystems. This is one of the key reasonsthat alternative technical requirementsare now being considered for smallsystems and that regional solutionsmay emerge, driven by cost issues.

Estimated Good Practice MSWcosts:

There is no base of data on actualcosts but order of magnitude costs fora typical MSW system have beenestimated by knowledgeable special-ists in India to be roughly as follows,looking at the average cost per tonmanaged. However, treatment anddisposal costs in particular are verysite specific and there are many factorswhich change these order of magni-tude numbers for any given case.

Results from the pilot ActionPlans (summarized in Box 3) suggestthat these numbers may be low, giventhat actual current costs appear to begenerally significantly higher. How-ever, few municipalities are managing

"You can give the job to me.We have all the necessary expertise

and experience"

31


"You want a challenge?Let's see you turn those dumps into malls."

their wastes for efficiency or costminimization and it should be pos-sible to bring costs more into line with

� Collection of wastes: 300-400 Rs/ton

� Transport of waste: 300-400 Rs/ton

� Treatment/disposal(average costs,excluding land): 400-600 Rs/ton

� Total cost per ton ofwaste collected and disposed: 1000-1200 Rs/ton

(approx. $25)the good practice estimates. Forexample, it is reported that Bangaloreis contracting on BOT basis for wastetreatment and disposal (in a scientifi-cally designed landfill), at a pricebelow Rs 200 per ton.

FINANCIAL PLANNING

In the absence of adequate ac-counting and budgeting systems inULBs, a simple spreadsheet basedfinancial model (referred in an earliersection) has been developed. The

Table 5 : Summary of Annual Operational Expenditure on Various Activities (excludingcontract costs) in MSW Management as Percentage (%) of Annual MSW Management

Expenditure in Selected Municipalities in Karnataka

Population Waste Supervision Primary Transport Sweeping Process Contract as

handled Collection disposal & % of

MSWM budget

Small TownTown 1 53,043 12 9 39 14 38 0 14Town 2 48,000 10 7 38 17 38 0 0Town 3 47,060 9 7 41 10 42 0 0Town 4 49,408 4 0 0 0 0 0 100

City MunicipalCouncilTown 1 274,105 60 4 42 12 42 0 17Town 2 248,592 52 10 34 22 34 0 34

City CorporationTown 1 317,000 60 6 40 14 40 0 10Town 2 399,600 110 10 41 8 41 0 21Town 3 398,000 110 10 40 11 39 0 45Town 4 427,929 126 4 38 7 37 14 33

32


Table 6 : SWM Data from One Pilot City, as taken from Accounts and also Presentedin Financial and Functional Terms

2003-04 in Rs percentage

A. Solid waste management Heads of Account (as taken from municipal accounts)

Health Inspectors 275,256

Sanitary Mastrys 260,374

Establishment

Permanent 3,628,000

Temporary ( same work same pay) 844,600

Other Items

Conservancy materials and purchase of dust bins 10,428

Contracts for Gandhinagar and other area cleaning 948,000

Drivers and loaders payments 144,000

Vehicle fuel 328,308

Tractor rents 101,619

Vehicle maintenance and insurance 246,536

New hearse van 611,708

TOTAL 7,398,829

B. Financial Classification of costs (using data from Section A above)

Supervision 535,630

Sweepers 4,472,600

Driver+loaders 144,000

Salaries total 5,152,230

Fuel + vehicle hire 429,927

Vehicle Purchase 611,708

Vehicle repair 246,536

Sanitary Materials, dustbin , Uniforms etc. 10,428

Sanitary Contracts ( external service) 948,000

TOTAL SWM EXPENDITURE 7,398,829

C. Functional classification of operational costs (extracting capital expenditures)

Municipal system costs

Supervision costs 535,630 9

Primary collection 2,241,514 38

Transport 820,463 14

Processing 0 0

Disposal 0 0

Sweeping 2,241,514 38

Total of Municipal system 5,839,121 100

Cost of Contract system 948,000 14

TOTAL COST OF SWM OPERATIONS

* excluding cost of hearse (611,708) 6,787,121

Waste handled by Municipal system ( tpa) 2,920

Waste handled by contract system (tpa) 1,460

Cost per ton of waste handled by municipal system 2,000

Costs per ton of waste handled contract system 649

33


model12 is used to estimate ongoingexpenditure and to support investiga-tion of MSW investment options.

The financial planning using themodel demonstrates that the ULBs canconsiderably improve the MSWmanagement service levels withlimited incremental costs, maximizingthe system efficiencies. While Annex 2presents the typical results of optionbased financial analysis in one of thepilot cities as a case study, the lessonsfrom this exercise are presented in thebox that follows. Also, the key obser-vations include the following:

ULBs Affordability

The financial situation of mostULBs (outside of the metros) is rela-tively weak and many are unable tofulfil the responsibilities that are beingpassed to them under decentralizationefforts. At present, a very large pro-

portion of municipal expenditures goon wage and salary costs, with MSWoften being one of the largest items. Inpractice, few ULBs currently havescope for increased expenditure onequipment or on capital works. Thus,improving the capabilities and finan-cial strength of ULBs is a key objectiveto be addressed on priority13 . How-ever, work done in Karnataka, forexample14 , has allowed estimates to bemade of the realistic scope that existsin a sample of municipalities forincreased capital expansion.

Allocating Costs and Charges

In outline planning, little differen-tiation is made between householdand commercial wastes, since thecharacteristics are broadly similar.Similarly, street sweepings are gener-ally included with the overall wasteloads, for basic system sizing etc.

Box 3 : MSW Management Costs – Observations from Pilot Action Plans

� Typically smaller municipalities spent between 20-40 percent of operational budget on MSW management. Higherexpenditure is observed in hilly areas due to the terrain conditions. However, MSW management budgets in biggercities did not exceed 20 percent of the municipal operational budgets.

� The major share of MSW management budget is spent on collection, to the tune of 75 percent with significant part (upto 75 percent) spent on salaries.

� The average cost MSW management per ton of waste in plains varied between Rs 800 to Rs 1600. The cost of MSWmanagement in hilly areas is up to double this amount.

� There seem to be some relationship although not fully established, between the unit costs of MSW management vis-à-vis size o the municipality, The largest pilot city is able to provide complete service at relatively lower than the averagecost which probably reflects scale of economy and competency of management.

� All the pilot towns have limited contracting for services ranging from sweeping, primary collection to transportation. Theunit cost of private sector operation is found to be about 30 to 40 percent lower than those of municipalities ownoperations. Thus indicating scope for efficiency improvements to considerable extent.

� Though limited, community based collection systems are proving to be effective in demonstrating: (i) devolution ofprimary collection responsibilities (ii) the concept of paying for the service (approximately Rs 20 per household permonth

34


However, when looking into thedetails of systems design and whenallocating costs to different wastesources and system elements, it isimportant to develop more detail sothat an allocation can be made to thedifferent sources of the costs involved.This is essential as the basis fordesigning cost recovery schemes,which should reflect – to the bestpractical extent – the charges to berecovered from the different partiesinvolved. Decisions on cost recoveryfor MSW management services arepart of mandate of the elected officialsin any municipality but it is importantfor the managers and planners toprovide the officials with reliableinformation and a range of practicaloptions.

Costing Treatment and Disposal

Municipalities often see privatesector participation as a vehicle forraising the capital. However, there isnot enough experience yet to assesshow cost effective and reliable is thisapproach. The costs of contracting out“treatment” are even more difficult to

estimate confidently, especially sincethere is such limited experience. Theuncertainties are illustrated by infor-mal reports of recent tenders in Delhi(for collection and transport) and inBangalore (for treatment andlandfilling) where the differencebetween low and high bids is of theorder of 2-3 times. For planningpurposes, municipalities shouldinvestigate options for both self-owned and operated systems andcontracted systems, noting the highuncertainties at present on realisticcontract charges.

Benchmark Costs for Landfills

Proper landfills are costly to siteand to construct, and since there arealso significant operating and mainte-nance costs, the empty volume in alandfill actually has a real opportunitycost for the municipality. This oppor-tunity cost of landfill (which is the lastresort for any scheme) should be thebenchmark for evaluating wastetreatment and disposal options for anymunicipality. This can be estimated asthe marginal (AIC) cost (over say 5-10years)15 . The importance of this figureis for areas where landfill space islimited – often because a site is close tobeing full and other sites are difficultand/or expensive. As the cost of spacegets higher, there is an increasingvalue to treatment methods whichreduce the volume required for eachton of waste collected.

REVENUE STREAMS

The government regulations haveexpanded the required scope of MSWoperations to address the treatmentand disposal issues. However, the

"These youngsters are always smokingcigarette butts! Whenever I talk to them

they tell me about the 3 Rs."

35


capital support to ULBs has remainedthe same or diminished on account ofdevolution, so there is an increasingneed for self-sufficiency. The obviousrevenue stream from increased prop-erty tax and user fee concepts couldnot materialize in majority of themunicipalities due to public concernsand political reasons. Though theULBs hope to generate revenuestreams from the waste, the criticalsolution is to move towards improvedfinancial management with a clearunderstanding of current costs and arealistic evaluation of the options fornew treatment and disposal systems.

Paying for the Service

A good approximation of thevalue that people place on MSW

management is the amount that theyare prepared to pay for this. On thebasis of simple assumptions, a house-hold would produce 600 kgs wasteper annum, which would translateinto an annual cost per household ofabout 600 Rs/t (say 50 Rs/month).Therefore, from these rough estimatesit would appear that the costs ofimproved MSW are broadly afford-able to non-slum areas. In case ofcommunity based-collection systems,the incremental costs would be of theorder of Rs 30. Some municipalities inKarnataka and Andhra Pradesh haverecruited community based organiza-tions and resident welfare associations(RWAs) authorizing them to under-take door-to-door collection, whichwork through collection of user fee (in

Box 4 : Lessons on Cost Management from Action Plans

� A good understanding of current and future costs and expenditure patterns is essential to MSW management systemplanning. The relevant information on current costs is generally recorded in municipal budget but not in a format which isreadily usable by municipal planners The MSW management costs data needs to compiled and presented in a structuredformat to facilitate better planning.. The costs of an improved MSW management system is likely to be marginally higherthan the current costs, provided ULBs undertake measures to improve system efficiency, particularly by rationalizingexpenditure on staff costs..

� Costs in most ULBs are dominated by staff salary costs, which ranges between 45-50 percent in large cities, increasingup to 75 percent for smaller cities. Increasing the coverage of waste collection while maintaining the present expenditurelevels on staff is a realistic objective.

� Data from action planning indicates that costs of MSW management services using private contractors could be signifi-cantly lower than those of municipalities. The need and extent of private sector participation, however, needs to be seenin light of the quality of service delivery as well as the risks of service failure

� Involvement of community based organizations including SHGs need to be explored for improving door-to-door collection,which is found to be cost effective but difficult to scale up.

� Clear analyses of potential revenues from MSW need to be understood before taking up large capital investment onMSW management.

� With limited capacity for capital investment, many ULBs see involvement of private sector as a means to reduce costsand improve efficiency. However, many ULBs are finding it challenging to commit a tipping fee in order to keep the privateinvestor interested.

� Several ULBs feel that meeting the requirements of MSW rules particularly in relation to requirements of designs ofMSWM infrastructure could be expensive and often unaffordable. Therefore, the designs of such infrastructures, such aslandfill needs to be related to site specific requirements and done in phase manner to fully comply with MSW rules.

36


the range of Rs 30-40 per month)directly from residents. This hasallowed municipalities to reassignsanitary staff to focus on improvingefficiency of segregated waste collec-tion directly from the primary bins.For example, over the past year,Shimla Municipal Corporation hasimplemented MSWM user fee fordoor-to-door collection through NGOs(monthly fee ranging from Rs 35 forhouseholds to Rs 805 for big hotels).The key issue is therefore less one ofaffordability than one of politicalpriorities.

Royalty on Waste

Early entrepreneurial efforts bythe private sector to generate revenuefrom waste included the payment of afee to the municipality for the right tocollect waste from certain parts of amunicipality. This fact, together with abelief that the private sector couldmake money from waste, resulted in

an attitude in some municipal manag-ers and elected officials that theprivate sector should pay to takewaste. This attitude is reinforced bylegal requirements (in at least onestate) that no government functionshould be contracted to the privatesector unless the government receivesa payment in return.

While some components of thetotal waste stream could have a netvalue if available in a segregated state(e.g. organic waste from markets),proper treatment and disposal of theoverall MSW stream will have a netcost, in any realistic scenario. If amunicipality undertakes the treatmentand disposal itself, it will have toprovide for these costs, which may beoffset in part by any revenue that canbe gained from specific components ofthe waste stream, such as marketwaste. If treatment and disposal arecontracted out, then there still will be anet cost which will have to be paid tothe private sector. At best, a munici-pality may agree to provide waste atzero cost (although in practice, itappears that there are often hiddencosts to the municipality in such adeal). More recent contracts are beingstructured to generate competitionamong private sector providers, withthe key parameter being the lowest netfee (usually per ton) to be paid by themunicipality to the private contractorfor complete treatment and disposal ofthe wastes, in accordance with allappropriate requirements.

Waste to Income?

Municipal officials understand-ably are looking for any potential

"Several landfills can come upin the next two decades...provided of

course we have land!"

37


income that can be generated fromwaste, to offset the cost of disposal.Basic recyclable wastes (glass, plastic,metal) are typically removed at thepoint of collection. This reduces thetotal volumes and provides income tothe groups involved but also reducesthe nominal value of the overall waste.

MSW in India has a high organiccontent and therefore composting is apopular option. Some private compa-nies offer to take waste from munici-palities and turn it into compost, on acommercial basis. The history ofgovernment supported compostingplants is generally unsuccessful inIndia and a focused commercialapproach might be more successful.However, there is limited experienceand care needs to be taken in settingup such approaches.

Waste-to-energy (WTE) is anapproach which is being promotedincreasingly in India. There are a smallnumber of WTE plants in India whichoperate on a “commercial” basis but inpractice rely on significant govern-ment subsidy, both capital and opera-tional, particularly in the form ofpreferential power tariff imposedupon already financially weak powersystems. Such schemes do havepotential to be part of a workableMSW system but their technicalperformance needs to be confirmedand sensitivity to government supportmust be taken into account.

Carbon Finance

When garbage is left to rot in pilesor dumps it typically releases consid-erable amounts of “landfill gas” whichcontains high proportions of poten-

tially explosive methane. Control oflandfill gas is good practice for anumber of reasons including safety,and raises the possibility of use of thegas for energy production (althoughthis is typically quite costly to set up).Methane is a powerful greenhouse gasand there are financial incentives forits control, in the context of addressingclimate change. GEF funding has beenused to support MSW projects in othercountries16 and there is potential for“carbon finance” through the CarbonFinance Business (CFB) at the Bank orone of the other mechanisms that arenow emerging. The fundamentalrequirement in each case is that the“project” has some innovative aspectswhich reduce the greenhouse gasemissions below “business as usual”.The basic difference is that GEFprovides an initial capital subsidywhile CFB provides regular paymentsfor reductions actually achievedduring operations.

There is growing interest inseeking Carbon Finance for control-ling methane, especially given the lackof other revenue sources typicallyassociated with landfilling. Theprinciple is straightforward: capturingand destroying methane, or changingsystems to prevent its generation, canbe the basis for claiming “EmissionsReductions (ERs)” and these ERs –once verified — can be sold for cashon an increasingly open carbonmarket. As opposed to GEF grants,which are applied at the constructionstage, ERs are based on confirmedresults from an operating scheme andbecome a revenue stream for asuccessful project, for a period of

38


typically 7-14 years. Applying theprinciple of mass balance and assum-ing the different parameters as recom-mended by IPCC for India, it isestimated that roughly about 1.4million tons of CH4 which is equiva-lent to about 30.0 million tones of CO2

is generated from the MSW disposal inIndia per year. However, there is verylimited practical experience.

A number of clear possibilities forattracting CF exist. For existingdumps, closing a dump in a waywhich prevents further release ofmethane could be eligible for Emis-sions Reductions. Constructing newlandfills in a way which prevents thegeneration (or at least the release) ofmethane is another possibility, al-though the protocols for CarbonFinance require an innovative ap-proach which achieves additionalreductions beyond “business as

usual.”17 One particularly interestingopportunity is the use of composting,where careful processing of waste inaerobic conditions helps eliminate thegeneration of methane. There are noclear indications or examples of CFrevenues generated by Indian agencies(municipalities or private operators)from the MSWM business. However,Table 7 provides a rough estimate ofcomparative and potential CF rev-enues for various treatment technolo-gies.

Such finance could be very impor-tant in covering the costs of activitieswhich are otherwise non-revenuegenerating. Although simple inprinciple, the approach is new and thedetails are not well established, sothere are a number of technical issueswhich have to be resolved and there isa lack of experience with the proce-dural requirements.18

Source : Carbon finance business estimates.

Table 7 : Indicative Carbon Revenues potential Using VariousMSW Management Technologies

MSW treatment & disposal CO2 Emissions Potential Emission Carbon finance foroptions (t CO2E/tMSW) Reductions treatment of MSW

(tCO2E/tMSW) Rs/tMSW

Assuming Landfill without LFG recoveryas baselineLandfill with LFG recovery & flare 0.20-0.25 0.95-1.20 175-200Landfill with LFG recovery and 0.21 (may be less if More than 0.95 More than 175 Rs/tonenergy generation energy component is

considered)

Composting 0 (may be less if More than 1.16 More than 200 Rs//tonreplacement ofchemical fertilizer isconsidered)

Biomethanation 0 (may be less if More than 1.16 More than 225 Rs/tonenergy and fertilizercomponents areconsidered) More than 225 Rs/ton

39


The Bank team is working withthe Carbon Finance Business (CFB)group in the Bank and with clients,including the Governments ofKarnataka and AP and the cities ofDelhi and Hyderabad, to designCarbon Finance projects with clients,including the Governments develop-ment for landfill remediation, for largescale new projects, and for program-matic projects, typically at the Statelevel.

INSTITUTIONAL SUPPORT

Role of State Governments

Although municipalities have thebasic responsibility for MSW manage-ment, state governments will retain asignificant role for the foreseeablefuture. Apart from assisting in fundingand finance, State governments willhave to provide technical advice andassistance until municipalities havesufficient internal resources andexpertise to manage the MSW functionsuccessfully. The governments withwhom the Bank is working on munici-pal reform projects have establishedclear functions and responsibilities inrelation to infrastructure investmentsbut the responsibility for ongoingtechnical support on MSW issues hasbeen less clear.19 State governmentsare now formally defining the respon-sibility for this support— typically inthe Municipal Administration Depart-ment—although the relevant units arerelatively under-developed. There hasbeen dialogue with state governments,particularly in Karnataka, on themechanisms needed to provide thenecessary support to the cities whichwant to invest in upgraded MSWfacilities and systems.

In order to provide coherentguidance to municipalities in rathercomplex and changing circumstances,a number of state governments haveprepared or are in the process ofpreparing state policies or frameworkson MSW, including all of the statescovered in this activity. In Karnataka,the state policy on Integrated MSWM20

sets out objectives, key principles andtechnical guidance. It also makesreference to a range of contractualapproaches that are supported by thestate government (with model con-tract documents in preparation). Inaddition, KUIDFC have prepareddetailed technical guidance on mod-ern collection and transportationsystems (which could form the basisfor a broader draft guidance manual.)

In Andhra Pradesh, an inter-departmental Task Force establishedby the Urban Secretary providesguidance, through a formal Govern-ment Order. The overall objectives areto provide support to individual citiesmoving ahead on implementationissues. The policy focuses on WasteManagement framework, possibletechnologies for different type ofmunicipalities, government support toprivate sector initiatives throughvarious contractual incentives andconstitution of a Technical Committeeand State Level Official Committee forcoherent technical and administrativedecisions. In Tamil Nadu, the Com-missioner of Municipal Administra-tion has been working with all theClass I cities in the state to prepareindividual Action Plans and a stateframework has been prepared. Thesituation in other states appears to be

40


mixed, with some well advanced insupport to municipalities while othershave done little, because of lack ofskills, resources or enthusiasm. Thisissue is currently under discussionwith CPCB. The objective is to developa practical coordination approachacross states, ideally with the UrbanMinistry, which could be supportedby the Bank.

While individual states are mov-ing ahead to develop coherent ap-proaches within their own jurisdic-tions, there is a growing need for aneffort at the national level to ensurethat the lessons learnt from the moreadvanced states are shared with theslow starters. Though there is limitedexperience in private sector participa-tion, individual states have realizedthe efficiencies and economic gainsand appropriately facilitated the PSPthrough state policies. These need tobe revised on a regular basis to meetchanging trends.

MUNICIPAL INSTITUTIONAL

STRUCTURES

The traditional structure underwhich MSW is addressed in a UrbanLocal Body (ULB) is for the streetsweepers and all other staff involvedin MSW directly to be under thecontrol of the Public Health Officer (orequivalent), while the machineryneeded (trucks, tractors, lorries etc) isunder the control of the Chief Engi-neer. This system has worked as longas the MSW system only covered“lifting” of waste from primarycollection points and then transportingit to a dumping ground. In mostmunicipalities, there is high level ofinefficiency reported in the manage-ment of primary collection, as well ashigh down time and inadequate roadworthiness of vehicles carrying solidwaste.

Various models are possible for amore coherent structure which would

Box 5 : Government of Karnataka State : Policy on IntegratedMSW Management

� The policy aimed at catalyzing modernization of MSW Management services uniformly in the state includes :

� Specific plans to improve seven components including segregation, storage at source, primary collection, secondarystorage, secondary transport, treatment and landfill;

� Plan for mechanical handling of waste minimizing human contact with waste;

� Specific normative standards including standard tool kits for BOT or O&M practices; manuals on specifications ofequipments and vehicles and on treatment and landfill issued for all type and size of local bodies; and approach forinformation, education and communication

� Specification for various type of equipments and vehicles recommended for Primary Collection (such as auto tipper,Tricycle and Push cart) and for secondary Storage (such as variable capacity metal containers)

� Recommendations on secondary transport using hydraulically operated systems for Class I cities (such as twincontainer and dumper Placer); and for non Class I cities (such as Single container and tractor Placer)

� Recommendations on treatment & disposal facilities for various types of towns - Class I cities to have both treatmentand sanitary landfill sites in accordance with MSW Rules 2000 while other Non Class I towns to have only engineeredlandfill sites.

41


enable an integrated MSW system.The common and simplest one is toassign or strengthen overall responsi-bility at the level of Additional Com-missioner. For larger municipalities orthose where major system expansionis planned, it is probably preferable tohave a specific designated manager,with operational responsibility, whocould be a Solid Waste Manager, or aChief Engineer, Solid Waste.

Larger municipalities are movingahead on this issue. Bangalore has hada high level committee managing itsexpanded MSW efforts; MumbaiCorporation appointed an externalorganization to help manage itsprogram for MSW; Delhi has com-pleted a major study of its options and

strategy. In Hyderabad, the Bank hasbeen assisting the Corporation indealing with dump closure and futureoptions, and a management team isbeing assembled.

Typically in smaller municipali-ties, the public health department isresponsible for collection, streetsweeping, transport and disposal ofsolid wastes generated in the localbody’s wards (see in Fig.6 for a typicalorganization chart outline for existingMSW management system in Banga-lore). The head of Health Departmentreporting to Municipal Commissioneris generally head of the MSW manage-ment system but there is often poorcoordination between the engineeringdepartment (which is responsible for

Fig. 5 : Institutional Context for MSW Management

42


transportation and disposal) andhealth department.

INFORMATION BASE FOR

PLANNING

Many municipalities have recordson how much waste is generated,collected and disposed. However, it isdifficult to determine consistentfigures across data from differentsources which can be based on popu-lation figures: number of bins; numberof sanitary staff; number of collectiontrucks; and volume reaching andaccumulating on dumping site.Further, the lack of a fund basedaccounting system ( or Double AccrualBased Accounting practice) limitsunderstanding of costs involved andresources required in carrying out

MSW management activities. Thus themunicipal systems need to manage astructured and credible informationbase to facilitate physical as well asfinancial planning.

PROFESSIONAL ASSOCIATIONS

AND OTHER INSTITUTIONAL

RESOURCES

One emerging trend is the grow-ing acceptance that municipal solidwaste is a legitimate and importantarea of municipal government andthat recognition needs to be given tothis as a legitimate professional field.Karnataka government has realizedthis need and inducted technicallyskilled professionals (environmentalengineers) to take on the MSWmanagement responsibilities from

Fig. 6 : Organization Chart for MSW Management System, Bangalore

43


Health Officers.

The Bank with the involvement ofWSP and WBI, is currently supportingan Urban Managers program at ASCIwhich partially covers the MSWagenda. Further, with the involvementof WBI, the Bank is currently develop-ing a focused program on MSWmanagement capacity building forULBs. In parallel, discussions are alsounderway with the CPCB and withdifferent state governments on adapt-ing this approach so that appropriatetraining and capacity building ver-sions can be delivered in differentstates.

REGIONAL SOLUTIONS

A particularly complex andsensitive institutional issue is thequestion of regional approaches forMSW treatment and disposal facilities.There are strong economies of scale inmost MSW treatment and disposalsystems. This fact, allied to the timeand complexity typically associatedwith planning and developmentapprovals for MSW facilities, arguesfor the development of regionalfacilities as an effective approach forgroups of smaller municipalities. Thisapproach also opens a clear opportu-nity for private sector involvement inthe finance and operation of such aregional facility.

Transportation costs have to beoffset against economies of scale andso solutions become site specific.However, given traditional municipalrivalries, it is unlikely that regionalfacilities will be developed withoutoutside impetus.

A number of state governments(and the Union Government) see theidentification and support of appro-priate regional approaches as animportant task. In Andhra Pradesh,possible “catchment areas” for suchfacilities have been outlined, using thelarger municipalities as the anchor forsuch approaches.

IMPROVING COLLECTION AND

SEGREGATION: ROLE OF

COMMUNITIES AND THE

INFORMAL SECTOR

MSW management systems arevery labor intensive, particularly indeveloping countries. Most munici-palities have significant numbers ofunskilled staff working as sweepers orin waste collection but collectioncoverage and the quality of theoperations is often low (especially inpoor areas). As a result, in many areasthe collection is done through infor-mal or semi-formal mechanismsoutside the municipal system. At thesame time, good control at the initialstages of household collection and at-

44


source segregation are critical to boththe efficiency of the system and toopportunities for later recycling orprocessing.

There is limited data for compara-tive figures and trends but the cover-age of municipally managed house-hold collection is probably less than 50percent (reported figures tend tosuggest higher but these are notreliable). Middle-income and high-income neighbourhoods tend to takematters into their own hands, hiringtheir own neighbourhood pushcartwaste collector and covering thenecessary costs. In many municipali-ties and corporations, neighborhoods

have formed committees or associa-tion giving contracts to NGOs or

private sector or to individualsfor house-to-house collec-

tion of waste usingcontainerized tri-cycles/handcarts, forwhich residents paydirectly. A number ofpilot programsimplemented by theNGOs and commu-nity based organiza-

tions are showing positive results andare pushing municipalities to improvetheir part of the system. These pilotprograms are often very successful intheir own context and provide poten-tial models for replication. Althoughthere are a number of examples wherelocal community groups have beenestablished (with considerableeffort21 ), there are no good models ofhow to scale up significantly toachieve a major increase in the numberof community groups involved. Arecent study (2005) by Shristi, anNGO, on up-scaling public participa-tion in waste management noted anumber of NGO led initiatives as wellas some led by city municipalities. Thesame study notes: “even if we take thetwo largest interventions, namelyMuskan Jyoti Samiti at Lucknow andCentre for Development Communica-tion at Jaipur, they deal with only 3.6percent and 2.5 percent of the citywaste, respectively. But they aremaking a significant contribution tothe form of providing employment towaste collectors and providing door-to-door collection service”. The caseexample from Visakhapatnam, one ofthe pilot cities appears to be a sustain-

Box 6 : Institutional Capacity Building - Key to Successful MSW Management

� Given the increasing scale and complexity of upgraded MSW systems, there is a clear need to have clear, seniorand unified management responsibility for MSW in any ULB.

� The institutional mechanisms within ULBs (especially smaller municipalities) need to be strengthened to achieveeffective co-ordination between administrative, engineering and finance functionaries.

� A structured information system (covering physical and financial) on MSW management is essential at ULB level tofacilitate strategic planning

� There is a clear need to build a legitimate MSW management profession attracting professionals who can under-stand the engineering and environmental issues and run the MSW management operations effectively.

� A structured learning and training mechanism is essential to enhance the ULB capacity to manage a number ofissues and subjects related to MSW management.

"I warned you not to make promises.Next time try a different approach!"

45


able model where primary collection isdriven through municipality andcitizens’ partnership.

Community initiatives dependstrongly on the interest and activismof key players and thereforesustainability and replicability are areal challenge. The coverage of currentcommunity based collection systems isnot known accurately but is believedto be, at best, of the order of 15 percentof any urban area. Scaling up isdifficult because it depends on thelocal context, but committed andenergetic municipalities are achievingsome progress.22 One key conditionseems to be an explicit recognition bymunicipalities of the role of thesecommunity systems and a willingnessto adapt municipal systems to meshwith community efforts.

In terms of recycling, a key factoris the high level of informal recyclingthat occurs at the household or pri-mary collection stage, which results inthe removal from the waste stream ofmuch of the recyclable material suchas paper, cardboard, plastics andmetals. Some of this work is done bythe door-to-door collectors but the rag-pickers or scavengers who huntthrough roadside heaps or largerdumps in search of items of value. Thevalue of waste increases as it movesup the chain. For example, plastic andPET bottles, which are bought at Rs 2per kg at the small waste dealers levelare sold at a price which is 125-150percent higher, while some tin andmetal items (such as cans, etc) seeabout 80 percent increase in value as itreaches large waste dealers’ level.

The scale of this informaleconomy is not well understood but itis certainly large, for example, withone estimate that there are 75,000waste pickers in Delhi.23 These wastepickers collect different recyclablesitems such as plastic bags, metal cans,wires, paper and plastic items etc, andsell it to local waste dealers, who inturn sell it to recycling units. Acommonly accepted figure is thatwaste pickers take away 10-15 percentof the waste (by weight). The pickersare poorly paid and work in very badconditions24 , although the middlemenwho control the system are typicallyquite well-off. The chart (Fig.7)outlines a typical network of munici-pal solid waste recyclers’ in India

Typical efforts to deal with theconditions of the waste pickers tend toaddress the problems of individuals orgroups by providing protectiveequipment or better working facilities.However, from discussions with localofficials and with NGOs active onthese issues, it is clear that the plightof individuals or groups of pickersneeds to be considered in the contextof informal recyclingas a substantialeconomic system.

A recent study byan NGO25 looked indetail at the operationof the waste pickers inthe central New Delhiarea, based on asurvey of severalhundred wastepickers. The studydocuments a hierarchy

46


of waste pickers, waste collectors(thiawallas), small kabaris (middlemen)and big kabaris. The big kabaris sellrecovered material onto the secondarymaterials industry and therefore arethe link between the informal andformal sectors. The secondary materi-als industry is itself a significant partof India’s industrial structure. Thestudy suggests that the numbersemployed in the informal sector arefrom 40,000 people upward, which islower than other figures quoted butnot totally inconsistent. The study alsosuggests that the quantities of wastegenerated are underestimated by theauthorities and that the proportioncollected by the informal sector isgreater than the normally assumedfigure of about 15 percent.

A key point made in this reportand by others working on these issuesis the critical importance of allocatingspace locally for waste management

purposes. Attempts to develop localrecycling efforts, such as composting/vermiculture often fail because of lackof space and the informal recyclingsector (like any other logistics system)needs depots (“godowns”) at strategicpoints in order to make the collectionsystem efficient. However, space is ata premium and expensive in anymetropolitan area and urban dwellersare resistant to having waste facilitiesas in the neighborhood.

Taking the informal sector, thestreet sweepers and the collection staffof municipalities, there are tens andhundreds of thousands of peopleemployed in waste collection in Indiancities. A review of the informal sectorand its links with community collec-tions systems, considered as aneconomic system, has been discussedwith NGOs and others working in thisarea.

Box 7 : ULB – Community Partnership for Primary Collection– Case Example from a Pilot City

Primary Collection of Solid Waste in municipal wards is done through combination of conventional method ofstreet level bins and house level collection. While municipal workers collect the street level waste in 75-80 percentof the area, about 20-25 percent of the areas are covered through household level collection. The latter is managedunder a specific program called “Janachaitanyam”(public awareness). Under this self-help scheme, Municipalityprovides a rikshaw with four containers and a monthly cost of about Rs 600 to the Neighborhood Residents Associa-tion (NRA) of less than 200 families who in turn organize a workers (generally rag pickers) and pay about Rs 20 perfamily for collection of waste from households. Currently about 200 units are operating in the city. This program isfurther extended to other participatory community sanitation services like street sweeping, drain cleaning and solidwaste collection under the program: “Subhram (cleanliness)”. Both of these programmes are currently operatingsuccessfully. These programs have resulted in:

� Community ownership of primary collection through ULB-Citizens partnership.

� Substantial improvement is sanitary conditions.

� Organizing the rag pickers through NRAs.

� A successful model which is currently being replicated in other ULBs in Andhra Pradesh.

47


USING THE PRIVATE SECTOR

MORE EFFECTIVELY

Role of the Private Sector

Engaging the private sector forproviding services is common insectors such as MSW. In India, there isalready widespread use of contractors(both labor and equipment) butusually on a simple contract basis andnot for broader delivery of specificMSW services. A background study(2005) on various MSW managementcontracting practices in India (com-missioned as part of this analyticalwork) notes that increasing number ofULBs in India see private sectorparticipation as a panacea and haveexperimented at different levels in the

MSW management chain. Particularly,cities such as Delhi, Chennai andBangalore have undertaken PSP incollection and transportation activitiesof MSW. While most ULBs have usedservice contracts for MSW collectionand transportation, Delhi and ChennaiCorporations have also entered intoConcession Contracts. These contractsencompass a larger proportion of areain the cities. Street sweeping contractsinvolving private sector participationhave generally been executed asservice contracts. Hyderabad andMumbai have experimented with fixedrate contracts with rate fixation beingdone by the Corporation and thecontractors selected on the basis of alottery system. Experience of PSP in

Source : Background Report

Fig. 7 : Typical Solid Waste Recycling Network

48


treatment and disposal in India isvery limited so far. Municipalitiessuch as Bangalore, Delhi andThiruvananthapuram have initiatedactivities for the development ofengineered sanitary landfills withprivate sector collaboration.

Potential benefits of increasedprivate sector participation (PSP) inMSW have been summarized asfollows: 26

� Private sector stake in the projectguarantees their commitment toeconomic efficiency while servingthe public interest.

� Improving efficiency and loweringcosts by introducing commercialprinciples (focused performanceobjectives; financial and manage-rial autonomy; hard budgetconstraint; clear accountability).

� Equitable risk allocation withreduced level of risk for Govern-ment and taxpayers for a rate ofreturn to the private investor.

� Access to latest technology andenhanced efficiency.

� Better customer focus and deliv-ery.

� Access to broader fundingsources.

There are several different pos-sible levels of involvement of theprivate sector and contractual ap-proaches to PSP27. In India, there isgrowing experience with contractingthe private sector for some MSWactivities. A number of cities haveentered into service contracts withprivate operators for collection of

MSW from different waste generators(primarily households, commercialestablishments, hotels and restaurantsetc.) but the area of operation has beenlimited to a few localities. The use ofcontractors for labor-intensive work isregulated by employment legislationand so flexibility is limited undercurrent approaches. On the otherhand, it is very difficult to changeworking conditions for municipalemployees and so flexibility is alsolimited in this area. On the transportside, there are different approachestaken to contracting haulage firms andthere are different claims as to the costreductions and efficiencies.28

There is a reasonable assumptionthat the private sector can providemost of the MSW services at lowercosts than currently borne by manyULBs using their own equipment andstaff. However, this assumption is notalways true and some municipalitiesare reportedly carrying out functionsat a lower costs than comparable PSPin other cities. At the same time, thereare clear inefficiencies and wastage insome ULBs and there are definiteopportunities for reducing the overallcost of service within the existingstructures, if the will to do so exists.Experience worldwide shows thatstrong management in a competitiveenvironment can bring down costs,even where the system is owned andoperated by the public sector. Inpractice, a mix of public and privateprovision is often a good solution.

Apart from contracting for collec-tion and transport, contracting outtreatment facilities is likely to become

49


more widely adopted. There is stronginterest in India in PSP options fortreatment and disposal facilities and anumber of examples are underway orunder discussion29 . The approachmost commonly suggested in Indiaputs the complete responsibility on theprivate sector to build, own andoperate the required facilities (theapproach known in its variations asBOO, BOT, BOOT etc). This hasapparent advantages in terms ofsimplicity, from the point of view ofthe municipality, but it remains to beseen if it can be made effective andefficient. There is considerable privatesector interest in such contracts butlimited real experience, although somecities are considering entering intoconcession agreements / managementcontracts with the private operatorsfor operation and maintenance oftreatment and disposal facilities on aBuild-Operate-Transfer (BOT) basis.

Initial efforts by private operatorsunder the small number of currentcontracts have typically not beensatisfactory. Some of the primaryissues of concern include30 :

� Inability of the ULBs to providethe guaranteed quantum of wasteto the private operator.

� Delay in decision making oftenresulting in huge opportunitycosts and loss of private sectorparticipation.

� Poor operation and maintenanceof the facilities by the operators.

� Anticipation of “royalty” forsupplying MSW by many ULBs.

� Inappropriate division of rolesand responsibilities.

� Inadequate risk mitigation mea-sures.

� Lack of credible information.

� Unsustainable operations of thefacilities owing to high capital andO&M expenses.

� Poor monitoring and supervisionby the ULBs leading to inefficien-cies.

� Lack of political will to ensuresustainable MSW managementoperations.

World Bank experience in othercountries suggests that there has beenreluctance on the part of the privatesector to accept all the financial risksassociated with a treatment/disposalfacility and that a more acceptableapproach is the Design-Build-Operate(DBO) route where the municipalitycarries or at least shares the financialrisks.31 Whatever system is preferred,the key principles in contracting theprivate sector for this type of service

"The sweepers are gettingagitated, Sir. Do we have

anything in the manual aboutdealing with the situation?"

50


provision are competition, transpar-ency, and accountability.

Managing the Contracting Process

A key factor in the poor perfor-mance to date has been that fewmunicipalities appreciate the impor-tance of developing their own internalmanagement and financial capacity todesign and supervise properly thesenew contracts. There is clearly excel-lent legal advice and basic contractualexperience available through compa-nies and individuals in India but thereis very little significant implementa-tion experience on the types of con-tracts now being used. Municipalitiesmust do their own careful risk assess-ment of contractual approaches anddevelop plans for dealing with thepractical and contractual problemswhich will inevitably arise.

Under this activity, a review hasbeen commissioned of the contracts letto date on MSW, with the aim ofextracting good practice lessons. Thereviews32 note key characteristics ofthe MSW sector, including preferred

contract types, as depicted in Table 8.

The review assessed availablecontractual documents for collection/transportation and treatment anddisposal, focusing on allocation of risk,using the framework given in table 9.

Several existing contracts cur-rently under implementation invarious Indian States were reviewedunder the study. Without naming anyparticular contract for the reasons ofconfidentiality, Table 10 outlines ageneral analysis of key risks leftuncovered under the agreements.

The review noted that real experi-ence with PSP has been mixed, due tolack of adequate project development– with projects often being operatorled rather than ULB driven – andweakness in the underlying informa-tion and expectations. Some of the keycharacteristics observed from currentcontracts are summarized in Box 8.

The review concluded that thereare already various contractualstructures for PSP in India, which have

Table 8 : Key Characteristics of Contracts in MSW sector

Activity Characteristics Preferred contract types

· Large number of employees including informal Service contractsCollection and Transportation · Logistics intensive Management contracts and

· Citizen interface Concession· Investment ranges widely depending on scope· Labour oriented Service contracts

Street sweeping · Minimal investment· No requisite skill set/ technical skills· Logistics intensive· Technology intensive Concession contracts

Transport · More capital intensive· Ongoing O&M· Capital intensive Concession contracts

Disposal · Technically skilled manpower required· Ongoing O&M

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differing risk and responsibilityallocations. The main types are servicecontracts, management contracts andconcessions contracts. A thoughtfulassessment of the appropriate type ofcontract needs to be made in each case,depending on the scope and objectivesof the work to be done. The essentialrequirement for encouraging anequitable partnership in any case iscareful preparation, including framingof the objectives and the projectstructuring options, so that a clear,comprehensive and balanced contract-ing process can be implemented. There

is considerable international expertisein operating MSW systems and atleast one current example in India33

but the scale of the typical scheme andthe uncertainties about contractualapproaches mean that, in the shortterm at least, international involve-ment is limited and PSP is likely to beled by Indian companies. A reportlooked at the strategies and prioritiesof the major international players inMSW service provision and concludedthat this market is unlikely to attractmuch international interest until itmatures and risks for international

Table 9 : Risk in Contract Documents for Collection / Transportationand Treatment and Disposal

Nature of Risk Brief DescriptionDesign risk The risk of designs being adequate/ deficient.Sponsor Ability of sponsor to invest and provide desired servicesQuantity Variation This may be broken down into the following sub-heads:

· Underestimation of quantities· Change of scope· Unforeseen ground/ environment conditions

Revenue · Adequacy of consideration for stakeholders

Environment/ social · Conformance to provisions of applicable lawTime Overruns · Delay in Land Acquisition

· Delay in approvals· Contractor’s delays

Force Majeure · Non-political Events*· Political Events**· Other Events***

Quality risk Risk that quality of construction would be lower than expected, leading to:· Higher costs of maintenance.· Non-availability of service

Failure of the Contractor Risk that the Contractor would fail, and a replacement would lead to cost and time overruns.Termination Risk arising from termination of the Agreement and could result in time and cost overruns.Variations Risk that would arise due to any variation in the scope of work on the ContractorDefects Liability Risk arising from any defects or damage appearing in any part of the WorksDispute Resolution Risk arising from any dispute, difference or controversy between the parties* Natural force majeure events, terrorism, strikes, boycotts, etc.** Change in law, expropriation, other governmental action having material adverse effect.*** War, ionising radiation, volcanic eruption, rebellion, riots, etc.

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investors are reduced.34

Local Equipment Market

A less frequently discussed butvery important aspect of private sectorinvolvement in MSW is the opportuni-ties present for the local equipmentmarket. There are already a number ofprototype small- scale collection

vehicles that have been developed inconsultation between state govern-ments and equipment manufacturers.Given the scale of the MSW sector,there will be many business opportu-nities and one of the issues raised indiscussions with CPCB and IFC is howthis market can be encouraged. There

Table 10 : Key Risks Not Covered in Contracts

No. Risk Key Observation

1. Completion Risk � Many agreements do not set out any timelines or penalties to addressthe risk.

� The security deposit is used in many cases as a mitigant for this riskthus failure of agreement could lead to forfeiture of the securitydeposit.

� In some cases performance penalties are set but no penalties are setrelated to delays in approval by ULBs or to ensure timely or speedyexecution of the treatment and disposal projects.

2. Operating Risk � The risk of management of the project facilities and the quality isgenerally allocated to the Contractor. There are however, nopenalties or monitoring systems set in place.

� In some cases independent agencies are involved in review ormonitoring.

� In many agreements the specifications for equipment etc are not set outand left to the discretion of the Bidder.

� In some, technology is provided by another party while the responsibilityof operation is passed on to the bidder.

� In some cases the ULBs do not retain their right to review the adequacyof design of plant and machinery but generally they retain say inperformance monitoring.

3. Revenue Risk � In some cases no demand estimation and geographical distribution ofwork is often inadequate but concessionaire is suitably protected fromthisrisk as payments are made by letters of credit within a given timeframe.

� Many ULBs have used tipping based model but in several cases nopayment guarantees or risk mitigants are set out for revenue risk.

� Some municipalities have resorted to taking royalty payment from privateoperators without an assessment of revenue risks in case of reduced saleof either compost or power.

4. Force Majeure* Risk � Most contracts do not adequately set out the risk allocation for ForceMajeure events.

5. Environmental & � Many contracts do not explicitly address environment and social risks asSocial Risk these are left to the discretion of private operators.

6. Political Risk � Most contracts do not identify or address political risks.

* unforeseeable circumstances

53


will be some need for importation ofspecialized equipment but given localingenuity and engineering expertisemuch of the market demand can befilled by local equipment.

TECHNOLOGICAL QUESTIONS

A number of important techno-logical questions have been raised inthe course of this work. The focus isnot on technology but there are someissues on which comments are war-ranted.

Composting

Composting is a long establishedapproach. Technically, it has beendemonstrated that compost can bemanufactured from MSW at a rela-tively large scale (hundreds of tons perday) but numerous efforts to commer-cialize composting have failed – notjust in India, but across the world –because of a lack of suitable markets atacceptable prices.

Although the material is generally

known as compost, it is more properlydescribed as a soil conditioner since itdoes not have high nutrient levels.Therefore, for commercial sale it isoften reinforced with some form offertilizer (such as chicken meal). Thiscompost/soil conditioner does have amarket but it is not seen as a highvalue product. At the same time,chemical fertilizers are stronglysupported and subsidized and conse-quently the opportunities for breakinginto the commercial market is limited.An allied concern of the agriculturalauthorities is that heavy use of chemi-cal fertilizer can be associated withdeclining soil productivity as the soilstructure changes, a trend whichcould be combated by more use ofcompost as a conditioner. Conse-quently, MoUD in co-ordination withMinistry of Agriculture, is planning topromote a compost market by requir-ing fertilizer companies to sell a mixedproduct to their customers, in a 7:3ratio (fertilizer to compost). There are

Box 8 : Characteristics of Current MSW Management Contracting

Collection and Transportation

� There exists a disparity between contract payments and actual performance of the Parties

� No clear monitoring mechanism to assess the performance

� Issues with regard to environmental and social risks have not been addressed

Treatment and Disposal

� Commercial terms are not equitable

� Revenues risks are high due to unviable model of royalty payments by the private investor

� Timelines and penalties for default are not comprehensively addressed

� Termination risks are not equitably shared

� No clear monitoring mechanism set out in the contracts and payments are not linked to serviceperformance

� Issues regarding to environmental and social risks have not been addressed adequately

54


also proposed directives to improvethe viability of compost plants, whichinclude: (i) 50 percent subsidy oncapital for proposed compost plantson Public- Private Partnership; (ii) freeleasehold land provision by ULBs (iii)no royalty on waste; (iv) exemption oflocal taxes; (v) transport subsidyamount of Rs 150 per ton of compost.The final package of measures tosupport compost are not decided andthere are a number of practical issuesthat will have to be addressed, butthere is a clear recognition of thepotential value of compost use andactions are being taken by the govern-ment.

At present, there is interest in theIndian private sector in contractingwith municipalities to take MSW andmake compost, on the basis of a“tipping fee” to be paid by the munici-pality, with the company selling thecompost “commercially”. Some states,such as Tamil Nadu, are looking atdifferent approaches to support theexpected emergence of a sustainable

compost market, but there is very littleexperience yet in such schemes.

In summary, composting doesmeet requirements of the MSW Rulesfor “inertization”; it can qualify forcarbon finance, and it will generatesome revenue as a compost marketdevelops.

Waste to Energy

Mass burn incineration does notappear to be a realistic option in Indiafor technical, operational and financialreasons. The alternative of Waste toEnergy (WTE) plants using RefuseDerived Fuel (RDF) has been demon-strated to be technically possible. Atthe time of writing this report, there isone operating WTE plant inHyderabad which produces approxi-mately 6MW (a standard generatorsize) and nominally consumes about700t/d of mixed municipal waste. Asecond plant (an evolution of thisdesign) has started operating inVijayawara. There are also proposalsfor larger plants for Hyderabad andfor Delhi. All of these operate on“fluff” – a form of RDF based on wastethat has been sorted, dried andpulverized.

The current plants are not operat-ing in a manner where the actualvolumes of waste used (and thevolumes rejected) can be measured. Ineach case, they are situated in adumpsite surrounded by waste. Aconcern is that if and when a WTEplant shuts down, the municipalitywill be left with a large dump which isgoing to cost money to clean up.Evaluation of the economics of such"I should pay more because I generate more waste? What about

my contribution to employment, waste-to-energy projects, etc.?"

55


plants must consider all the life cyclecosts.

An alternative form of WTE is that ofbio-methanation plants, which relies ongas produced from slurry of organicwaste. There are at least two such plantsoperating in India. A large one inLucknow which has a number of opera-tional problems to date and a smaller onein Vijayawada. At the appropriate scaleand with a good waste stream, thisapproach clearly has potential but theeconomics are again not completelyclear.

The details of any contract needs tobe carefully considered, especially inrelation to the volumes of waste acceptedand the disposal of waste not used or leftafter RDF preparation. In this context, itmakes sense for the RDF plant to be on amajor municipal landfill site but it mustalso be monitored separately or other-wise the municipality may end uppaying for all the waste handling,without realizing it. It is essential todesign and apply a proper competitivebidding process with a well designedcontract. Unsolicited bids are rarely agood deal for a city.

Landfill Issues

The MSW Rules set out requirementsfor landfills which are consistent withbest international technology for land-fills. However, the high technical stan-dards also mean relatively high costsystems and there is no flexibility in thecurrent Rules to consider alternativeapproaches for different circumstances.

The Bank accepts that developmentof landfills often has to be carried out instages and is generally supportive of

staged or “differentiated” approaches,based on environmental protection as thepriority and with careful assessment ofindividual sites35 . Selection of a good siteis fundamental; if this can be achievedthen the specifics of the landfill designare less critical in achieving the desiredenvironmental performance. Systemshave been identified in other countrieswhich allow “differentiated” require-ments and which could serve as models36

for India. The possibility has beendiscussed of developing a small numberof well instrumented and monitoredlandfills to test different technical ap-proaches. This idea should be imple-mented.

As part of work carried out inAndhra Pradesh, a simple matrix wasdeveloped to identify key components ofgood landfill design and constructionand to show how these could be intro-duced progressively, starting from asimple basic system and developing intoa full modern sanitary landfill.

"There goes the second draft ofmy novel! My wife calls it waste-

segregation-at-source."

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Operational Skills

Although the basic skills to operatean MSW landfill are relatively simple,there is very little experience in India (inpublic or private sector) on how tooperate an overall landfill system effec-tively and efficiently. In the same contextthat the design and construction of anumber of model landfills is generallyaccepted as a very sensible approach, theuse of such sites for formal training ofoperators – particularly supervisors andmanagers – is strongly recommended.

Dump Closure/Upgrading

The public and political pressure foraction on MSW treatment and disposal istypically driven by the nuisance causedby large dumps, particularly whereurbanization is now approaching siteswhich once were relatively remote. Theselarge dumps, some of which are still inoperation, cover tens of acres, containmillions of tons of waste which has beendumped over several decades, and areoften burning, at least in sections. Inclose cooperation with USAEP (US AsiaEnvironment Partnership), the Bankprovided advice to the Municipal Corpo-

ration of Hyderabad (MCH) on aspectsof closure of one major dump atAutonagar on the outskirts of the city.

The decision has been taken to closethis dump, as a matter of urgency.However, analysis of alternatives sys-tems has not yet been completed and theresources to deal with Autonagar arelimited. The overall objective is to helpMCH to develop a financially andenvironmentally sustainable IntegratedMSW Management system. In relationspecifically to the existing dump, theobjectives are to clean up the dumpsite asefficiently as possible, and in doing so tomaximize the potential value of the assetto MCH. These possibilities and thepotential for seeking carbon revenue arebeing addressed, in order to identifypotential financial revenues.

A “Road Map” was developed andprovided as a working document toMCH, setting out the steps necessary indeveloping an Action Plan for upgradingthe treatment and disposal of MSW,including:

� Identify and implement actions toclose the existing dump.

� Evaluate potential landfill site(s),needed as a core element of the long-term system, starting with sites thathave already been identified for thispurpose.

� Identify and assess those treatmentoptions that have the highest poten-tial to contribute to the overall longterm solution.

� On the basis of the previous steps,identify and develop a small numberof the most attractive treatment and

"The compost is not selling andthe children love playing here.

Might as well make it a park andcharge a small user's fee."

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disposal alternatives, taking intoaccount transportation factors.

� Compare and evaluate this set ofoptions, taking into account bothtechnical and financial parametersand on broader acceptability andimplementation factors.

Landfill Siting and Approvals

Siting is a difficult issue in majormetros (such as Delhi and Hyderabad)where efforts have been underway forseveral years with limited progress.However, for smaller municipalities,experience (such as that in Karnataka)has shown that acceptable sites can beidentified and obtained. In such cases,it is usually possible to identify a fewpotential sites within a reasonabledistance of the core urban area and,with a careful and consultative selec-tion process37 , acceptable sites can befound.

Selection of a good site is critical toreducing the potential environmentalimpact of a landfill and also to increas-ing the prospect of public acceptance.However, Indian law does not requirean Environmental Impact Assessmentfor a landfill clearance from the localSPCB is required but the proceduresand criteria are not well established).Early drafts of the MSW Rules didrequire some level of EIA and al-though this requirement is not in thecurrent Rules, the issue is again underdiscussion.

The major problems the urbanlocal bodies facing in the country inregard to landfills is the non-availabil-ity of large area of land at a suitablelocation which meets the parameters

laid down under the MSW Rules 2000.The need of land is estimated at 15 acresper 100,000 populations for the purposeof landfilling for 25 years. This require-ment is huge and can be minimizedonly if city governments go deep and gowell above the ground like the westernworld using high skills in landfilloperation. The not-in-my-backyard(NIMBY) syndrome and vested interestplay a vital role in municipal authoritiesnot getting adequate land for disposalof waste. The state governments are alsovery slow in allotment of land to thelocal bodies for this purpose at a nomi-nal cost.

Landfill investments supported bythe Bank through municipal projectswould normally require a “limited “(e.g. Category B) Environmental Assess-ment38 . An outline of the requirementsfor such an EA has been drafted. Aslong as there has been a careful andinclusive site selection process, itappears that such requirements arenot onerous and can be accepted byclients.39

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The current work is coming tocompletion, having successfullysupported a number of approachesand initiatives which are part of abroader effort by governments andtheir partners at all levels in India toupgrade management of MSW.However, the long term work ofupgrading systems to provide im-proved and sustainable MSW servicesto the hundreds of millions of urbandwellers is really only beginning.

CURRENT CONTEXT

It is clear that MSW managementis, and will continue to be, a large andimportant task for municipal govern-ments, at all levels. Different munici-palities will move at varying pace onthese issues but momentum has beendeveloped nationally and the overallprocess will not be turned back. MSWmanagement requires both increas-ingly sophisticated system manage-ment and on-going – although rela-tively small – capital investment. As atechnical function it falls between amajor infrastructure scheme (watersupply, for example) and a manufac-turing system. National level expan-sion and improvement of coveragewill therefore require both institu-tional (including financial) upgradingand also considerable infrastructureinvestment.

The growing pattern in India,which is consistent with internationalpractice, is for an increasing level ofprivate sector participation in differentaspects of MSW service provision.Outside of relatively straightforwardtransport or labor contracting, there isstill limited experience with contract-ing MSW functions to the privatesector but this situation is beginningto change and considerable learning(sometimes painful) can be expectedover the next few years.

Both the national government andstate governments are very supportiveof efforts to accelerate the upgradingof MSW. However, this is fundamen-tally a municipal function and it is atthis level that the challenges have tobe addressed directly. There has beenconsiderable improvement in thelevels of service and there are manyexamples of local governmentsbeginning to find the solutions thatare appropriate to their own condi-tions. However, given the scale of thechallenge, the road ahead is a longone.

KEY AREAS

In this context of the increasingawareness and growing efforts beingput into managing MSW, a number ofkey areas have been identified which

MOVING FORWARD

4

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should be addressed as priorities inmoving forward.

Strengthening ULB capacity

Upgrading MSW will only occurwith continuing strengthening of thefinancial and management capacity ofmost ULBs. This process will take timebut should start with an emphasis onongoing assistance in the overallprocess of financial system upgrading(a key objective of the Bank’s munici-pal reform efforts) to include a reliableaccounting system for MSW. It is alsoimportant to strengthen MSW man-agement by the clear allocation ofresponsibility (and appropriateauthority) to a senior officer in theULB for all MSW functions.

MSW Management Core Group

Completing these changes willtake some time but significantprogress can (and should) be madequickly. At the same time, efforts needto be put into mechanisms for provid-ing support to the ULBs as they gothrough the process of upgrading theirsystems. This is clearly a state functionand it is probably essential to establishsmall state level MSW managementprogram groups which will havemandate to develop a program ofupgrading, through working withindividual ULBs and other key parties.The program would set out criteria forsupport, performance monitoringrequirements and incentives for ULBsto participate in upgrading their MSWservices. The group should be pro-vided with technical and humanresources to work with individualULBs and increasing the availability of

targeted training programs for munici-pal officers.

ULB Staff Capacity

While some ULBs have the staffpositions and skills to take on thechallenge of upgrading MSW, thereare weaknesses in others. Given theimportance of MSW in the operationsand finances of ULBs, efforts must beput in place to upgrade staff capabili-ties. While the resources could bemobilized for this purpose, a quickprocess to institutionalize this effortsshould be put in place. The commit-ment of ULBs to upgrade the capacityof staff would be a key criterion for theinitiating his effort. The Bank with theinvolvement of WBI is initiating acapacity building program consideringthe felt need.

Developing Practical Experience

Much of MSW managementrequires hands-on experience, which iscurrently lacking. At the State level, asmall number of ULBs, which putthemselves forward for the purpose,may be selected as pilot or demonstra-tion cases where additional resourcesand support would be provided inorder to rapidly build experience andexpertise, which can then be sharedwith other ULBs.

Improving ULBs’ FinancialSituation and Management ofResources

Serious and sustained progress inaddressing MSW can only come withimprovements in the financial re-sources and financial management inthe typical ULB, given the large share

60


of MSW expenditures in any ULB’sfinances. Such improvements will taketime and will be achieved through anumber of different efforts. Theseinclude:

� Adopting better accounting andfinancial management systems,which will allow the municipalityto manage better its financialresources and also to increase itscollection of revenues.

� Increase efficiency in the operationof its current MSW activities, anduse resultant saving of financialand human resources to expandthe system to meet the newrequirements.

� Providing more integrated man-agement of all aspects of the MSWsystem, allowing available man-power, equipment and otherresources to be put to best use inthe expanded system.

User Fee for the Service

A good approximation of thevalue that people place on MSWmanagement is the amount that theyare prepared to pay for this. On thebasis of simple assumptions, the MSWmanagement cost per household isabout Rs 50/month. This cost isaffordable by majority of the popula-tion (except slum-areas) and part ofthese costs is already paid by manyhouseholds in case of communitycollection systems. Also there aresuccessful examples in collecting theuser fee40 . In view of this, effortsshould be towards a systemic shift to“Paying for the Service” approach.

Realistic Plans for Upgrading

Upgrading will take time and willrequire that new resources are found.It is important that realistic implemen-tation plans be developed andadopted by each ULB, with supportfrom State governments (or othersources), as necessary. The structureand content of any plan document ismuch less important than the need forinvolvement of all relevant parties inthe adoption of agreed steps forwardin improving the system.

Organizing Communities forSegregation and Collection ofWaste

It is clear that there are severalgood models for community levelsegregation and collection of MSW.Most municipal governments recog-nize this and are supportive of in-creasing the coverage of such groups.However, since community basedorganizations or NGOs are inherently“bottom-up” groups, it has proveddifficult to replicate or scale upsignificantly the existing good ex-amples. A number of authorities41 areembarking on Information, Educationand Communication (IEC) programsto encourage the formation of morelocal groups. Increasing the coverageof such community groups is impor-tant since it would be very difficult formunicipalities to expand their owncollection efforts at this level, givenconstraints on size of workforce andthe costs involved.

Incorporating Informal Sector

MSW is a labor-intensive opera-tion, involving significant numbers of

61


poor people in informal activities anda large unskilled workforce. The roleof these people must be taken intoaccount in upgrading MSW, aiming toimprove the overall efficiency of thesystem while providing reasonableopportunities for the people affected.In the long term, the objective shouldbe to incorporate the informal sectorinto a more structured and organizedcollection and recycling system. Forthe ULB workforce, the aim should beto upgrade the skills and effectivenessof the workforce to help deal with thegrowing workload that will come withimproved management and increasedcoverage.

Working with the Private Sector

It is clear that there will be a highlevel of private sector involvement inproviding MSW services in India. Thiswill build on existing involvement inthe areas of collection and transportbut will require significant newinitiatives in treatment and disposal.There is so little experience in this fieldthat there will inevitably be a period oftrial and error. It would be of signifi-cant value in establishing structures toreview both the technical and opera-tional aspects of the emerging ap-proaches. In any case, very carefulattention needs to be paid to thecontractual mechanisms used. Thisshould emphasize understanding thetechnical and commercial risks in-volved in any proposal and thenclearly and openly define the alloca-tion of these risks between the partiesinvolved.

Performance Monitoring/Benchmarking

There are no established orbroadly accepted parameters formonitoring the performance of MSWsystems, although there are variousnorms for the design of collection andstreet sweeping systems. Effortsshould be made to begin to collectperformance data on parameters suchas unit costs, efficiency of differentsystems, typical costs and prices etc, inorder to provide a baseline for newsystems.

Regional Approaches

International experience showsthat economies of scale, scarcity offacilities and other factors oftensuggest that regional solutions mayhave advantages over a proliferationof small schemes, around metropolitanareas, for example. However, in India,as elsewhere the first approach isusually for each municipality to seekits own solution, typically for reasonsof control and political independence.With some exceptions42 , little attentionhas been given to possible regionalsolutions. These should be included, atleast as medium term approaches, inany planning process.

Role of State and CentralGovernments

Although MSW is fundamentally amunicipal responsibility, state govern-ments will have an important role toplay over the next several years, bothin helping to deal with the financialneeds and also in providing assistancewith organizational and technical

62


issues at the level of ULBs. At present,governments are just beginning toaccept and prepare for these responsi-bilities.

The central government has set thebasic framework and is currently inthe process of reviewing the limitedexperience of the initial years of tryingto implement the MSW Rules. It willbe very helpful if the Government canprovide guidance and support to anew and perhaps more realisticimplementation program

Impact of Dumps and PriorityRemediation

Little attention has been given tothe issue of cleaning up existingdumps (with the exception of a coupleof cases in major metros). Althoughthe first priority should be to identifyimprovements or alternatives toexisting dumpsites, this issue shouldnot be forgotten and planning effortsshould include at least a first orderreview of the state of existing dumpsused by any ULB. This review shouldidentify those worst cases which arecausing immediate or long termdamage to nearby communities or tothe environment (water systems).

Carbon Finance Opportunities

Methodology for methane reduc-tion through MSW compostingmechanism has been approved forCarbon Finance (CF). The biggermunicipalities are looking to avail of

this opportunity to increase to theMSW revenue stream (typically withspecialist consultant assistance) butthe transaction costs are quite high atthe moment and the benefits wouldnot justify these transaction costs forsmaller ULBs. The Bank with theinvolvement of the Carbon FinanceBusiness (CFB) unit is currentlyworking with Karnataka, Tamil Naduand Andhra Pradesh on a “BundlingApproach” for CF. Intended to bundlethe potential carbon credits fromdifferent municipal investments inMSW composting into one projectscheme per State, it reduces the costs.The opportunities look attractive butthere is very little practical experienceso far.

Building the Networks required

The critical issues are organiza-tional and financial. The basic stepsare known and understood butadapting them to the specific circum-stances of each state and city is a longand difficult task. This cannot be donecentrally and there is an essential needto support the emergence of networksand systems which will allow indi-vidual ULBs to share experiences andto learn from each other. The objectivewould be to promote the exchange ofideas and emerging findings, drawingfrom the experience of the municipalauthorities themselves and others whoare testing approaches on the ground.

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ANNEX – 1SUMMARY OF MUNICIPAL SOLID WASTES (MANAGEMENT AND HANDLING) RULES,25TH SEPTEMBER, 2000

The MSW (M&H) Rules are notified by the Minis-try of Environment and Forests (MOEF) under thepowers conferred by section 3, 6 and 25 of the Envi-ronment (Protection) Act, 1986 (29 of 1986). Thesummary of rules is presented below focusing on theexpected “Implementation Schedule”, “Management

of Municipal Solid Wastes” and “Roles and Respon-

sibilities of Different Agencies” involved in imple-menting the rules. The detailed notification aspublished by the MoEF can be referred at http://www.envfor.nic.in/legis/hsm/mswmhr.html.

Schedule I: Summary of Implementation Schedule

Serial No. Compliance Criteria Schedule1. Setting up of waste processing and disposal facilities By 31.12.2003 or earlier

2. Monitoring the performance of waste processing and disposal facilities Once in six months

3. Improvement of existing landfill sites as per provisions of these rules By 31.12.2001 or earlier

4. Identification of landfill sites for future use and making site (s) ready for operation By 31.12.2002 or earlier

Schedule II: Summary of Management of Municipal Solid Wastes

S.No. Parameters Compliance criteria

1. Collection of municipal 1. Littering of municipal solid waste shall be prohibited in cities, towns andsolid wastes in urban areas notified by the State Governments. To prohibit littering and

facilitate compliance, the summary of steps to be followed include:-i. Organising house-to-house collection of municipal solid wastes;ii. Devising collection of waste from all categories of waste generators;iii. Make use of biodegradable waste;iv. Bio-medical and industrial wastes shall not be mixed with MSW;v. Proper management of waste collected including transportation;vi. Shall collect horticultural and construction or demolition wastes

separately and dairy waste regulated as per state regulations;vii. No burning of any type of wasteviii. Stray animals shall not be allowed to move around waste storage facilities

or at any other place in the city or town and shall be managed in accordancewith the State laws.

2. The municipal authority shall notify waste collection schedule and method

to be adopted for public benefit.

3. It shall be the responsibility of generator of wastes to avoid litteringand sure delivery of wastes in accordance with the collection and segregationsystem to be notified by the municipal authority as per para 1(2) of this Schedule.

2. Segregation of municipal ULBs shall organize awareness programs for segregation of wastessolid wastes and shall promote recycling or reuse of segregated materials. The ULB shall

undertake phased program to ensure community participation in wastesegregation. For this purpose, regular meetings shall be arranged by theULB with citizens and NGOs.

Contd.

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S.No. Parameters Compliance Criteria

3. Storage of municipal ULBs shall establish and maintain storage facilities in such a manner assolid wastes they do not create unhygienic and insanitary conditions around it. Summary of

criteria to be followed for establishing Storage Facility includes:i. Quantities of waste generation in a given area and the population

densities. A storage facility shall be so placed that it is accessible to users;ii. Storage facilities shall not be exposed to open atmosphere and shall be

aesthetic and user-friendly;iii. Storage facilities or ‘bins’ shall have ‘easy to operate’ design for handling,

transfer and transportation of waste. Bins shall be painted green, whiteand black respectively for biodegradable, recyclable and other wastes;

iv. Manual handling of waste shall be prohibited. If unavoidable due toconstraints, manual handling shall be carried out under proper precautionwith due care for safety of workers.

4. Transportation of municipal Vehicles used for transportation of wastes shall be covered. Waste shouldsolid wastes not be visible to public, nor exposed to open environment preventing their

scattering. The following criteria shall be met:-i. The storage facilities set up by municipal authorities shall be daily attended for

clearing of wastes. The bins or containers wherever placed shall be cleanedbefore they start overflowing;

ii. Vehicles shall be designed to facilitate multiple handling of wastes, priorto disposal.

5. Processing of municipal Municipal authorities shall adopt suitable technology or combination ofsolid wastes such technologies to make use of wastes so as to minimize burden on

landfill. Following criteria shall be adopted:i The biodegradable wastes shall be processed by composting, vermin-

composting, anaerobic digestion or any other appropriate biologicalprocessing for stabilization of wastes. It shall be ensured that compost orany other end product shall comply with standards as specified inSchedule-IV (refer http://www.envfor.nic.in/legis/hsm/mswmhr.html for details);

ii. Mixed waste containing recoverable resources shall follow the route ofrecycling. Incineration with or without energy recovery includingpelletization can also be used for processing wastes in specific cases.Municipal authority or the operator of a facility wishing to use other state-of-the-art technologies shall approach the CPCB to get the standards laiddown before applying for grant of authorization.

6. Disposal of municipal Land filling shall be restricted to non-biodegradable, inert waste and othersolid wastes waste that are not suitable either for recycling or for biological processing.

Land filling shall also be carried out for residues of waste processingfacilities as well as pre-processing rejects from waste processing facilities.Land filling of mixed waste shall be avoided unless the same is foundunsuitable for waste processing. Under unavoidable circumstances or tillinstallation of alternate facilities, land-filling shall be done followingproper norms. Landfill sites shall meet the specifications as given inSchedule –III (refer http://www.envfor.nic.in/legis/hsm/mswmhr.html for details).

Schedule ll contd.

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SCHEDULE III: SPECIFICATIONS FOR

LANDFILL SITES

Schedule III as per the notifications covers thespecifications for Landfill sites covering: Siteselection criteria, facilities to be provided at the site,specifications for land filling, provisions for pollu-tion prevention, water and air quality monitoringrequirements, plantations to be maintained at thelandfill site, closure of landfill sites and post-closurecare and special provisions for hilly areas.

SCHEDULE IV: STANDARDS FOR COMPOSTING,TREATED LEACHATES AND INCINERATION AND

OPERATING AND POST CLOSURE STANDARDS

Forms: The Notification provides standard formatsfor different applications including: Application forobtaining Authorization from pollution control boards,Annual report submission by Municipalities, formats forissue of authorization by state pollution control boards,format for annual review to be submitted by SPCBs toCPCB and Accident reporting formats.

Summary of Institutional Responsibilities for Implementation of MSW (M&H) Rules - 2000

66


APPROACH

For the pilot cities, the capitalrequirements (by year) have beenestimated for MSWM under the broadheadings of: primary collection andsweeping; secondary collection andtransport; and processing and dis-posal. It is evident that most ULBswould require a combination ofexternal grant and loans to developand implement an upgraded inte-grated solid waste system. However,municipalities should be able tooperate and maintain the system ifthey could keep a separate solid wasteaccount and can identify and intro-duce an assured stream of revenue tomaintain and replace the assets. MostULBs would require an appropriatecombination of municipal staff andprivate sector in primary collection inorder to cope with requirements toservice new areas and the approachwould have to be based on some userfee model to make this operation self-sustainable.

The range of practical optionsexamined on the ground are demon-strated from the example of one mid-size city. After considerable work withthe effective and knowledgeable staffand rounds of discussions with seniorofficers and elected officials, a range ofpractical options were identified, as

summarised below and in the accom-panying table.

A CASE STUDY OF A MID-SIZED

TOWN

Several options including cost andrevenue projections were studiedunder the action planning process forthe Pilot City, and the summary ofresults can be presented in the follow-ing manner.

Option 1 (Partial privatization):

This option is expected to be a mostlikely scenario for the city in view ofGovernment’s policies, as it envisagedthat 70 percent of the primary collec-tion would be undertaken by theprivate sector/NGOs and the user feeswould make this operation self-sustainable. The balance of primarycollection in the 30 percent of themunicipal area which is mainlycomprised of slums would be under-taken by the ULB. The municipalityhas adequate staff, so sweeping andsanitation services could remain thedomain of ULB. The bins for second-ary storage and vehicles for transpor-tation of MSW, would be procured bythe ULB and operated by the privatesector contractors who would be paidon a contractual basis, based onnumber of trips made. The MSWprocessing is proposed to be carriedout by a private party on BOT basis.

ANNEX - 2 CASE STUDYOPTION - BASED FINANCIAL PLANNING : RESULTS FOR A TYPICAL PILOT CITY

67


Then landfill disposal would also beundertaken on BOT basis and a gatefee would be payable by the ULB @Rs500 per ton. The sweeping and sanita-tion is expected to remain a responsi-bility of the ULB as in the Pilot Cityadequate municipal staff is available.


The option 2 is similar to option 1except for the provision that theprimary collection in this case wouldbe done entirely by the ULB and thesanitary landfill development andoperational costs would be incurredby the ULB, but would be madeperative by a private party. Thisscenario is also quite likely to beimplemented in the Pilot City as notmany private parties/NGOs arecoming forward for primary collectionand also that due to high initial capitalinvestment required for the land-fill, aBOT project may not yet be feasible. Inthis case, the Capex for land-fill hasbeen taken as Rs 30 million. Howeverno gate fees are envisaged which

would lead to a saving of Rs 5.8million in the operational costs.

The cost of primary collection inthis option (Rs 14.8 million) would be3 times higher that the option 1 (Rs 4.6million).


This option is a combination ofoptions 1 & 2 and under this optionthe investment for the landfill sitewould be made by the ULB and itwould be operated by a private party.The projected scenario for otherfunctions under this option is thesame as in the option 1. The gate feespayable in this case would be lower @Rs 200 per tonne, and thus the opera-tional costs for the disposal would belower.

Option 4 (100 percent responsibil-

ity of ULBs for MSWM): Option 4 isamong the least likely scenarios whereall functions and components of MSWmanagement are undertaken by theULB. This option is also the mostexpensive proposition in view of the

Summary of Future Scenarios Considered (Pilot City )

68


inefficient functioning of the ULBStaff.

Option 5 (100 percent

privatization of MSWM) : This is anidealistic option in which all activitieswould be carried out in the privatesector, except for sweeping & sanita-tion services, which owing to ad-equacy of municipal staff is likely toremain as the functional responsibilityof the ULB.

EVALUATION AND

RECOMMENDATIONS

Estimates were made of theinvestment and operating costs for themain items for each of these options.At this point, many of the figures areapproximate but there is sufficientdata to see the key patterns and issuesemerging. The comparative evaluationcarried out has been summarized inthe table given below.

Accepting that these figuresare best read as comparative ratherthan absolute, a number of broadconclusions can again be drawn. It isknown that current unit costs in this

city are already above the average andthe additional costs of upgrading evenonly the collection and transportsystem to provide complete coveragewould mean a significant increase inthe unit costs of MSW. To then pro-vide an upgraded processing anddisposal could in some cases virtuallyfurther double the unit cost to levelsthat are simply not considered afford-able at present.

The analysis behind the figuresprovides some background andinsight.

� It has been observed that for streetsweeping, the private operatorsare 3-4 times more cost efficientthan the ULBs and the same ratiohas been reflected in the costfigures, wherever applicable.However, an immediate shift to allprivate contracting is not practi-cally nor politically feasible.

� The overall costs would be thelowest in Option 5, where theentire investment and operationfor processing and disposal as wellas transportation is undertaken by

Note: The Capex for the year 2005-06 has been taken as one-sixth of the total value for calcula-tion of Unit MSW management costs. This has been done based on an assumption that theaverage economic life of the equipment is 6 years.

Comparative Evaluation of the Options for Pilot City

69


the private operators, due to theassumed better cost efficiency ofthe private sector. However, thereare clearly operational and finan-cial risks in this approach, even itis feasible.

� Under the most probable scenario,which is Option 1, the operatingcosts for MSW for the year 2005-06would be Rs 42.59 million, whichis about 26-27 percent of themunicipal budget. Under Scenario4, where all investments andoperations are to be done by theULB, the cost of operation and

investment together would rise toapproximately 50 percent of themunicipal budget.

� The ULB should probably consideradopting Option 1, a plausiblemixed option, which can be practi-cally implemented and is in linewith government policy. However,the various technical options nowneed to be re-assessed to findpotential costs savings and the citymust work on an implementationschedule for upgrading which willbe consistent with its ability to raiserevenue.

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END NOTES

23. Quoted in article in “Down to Earth: 200 Special” CSE Delhi,2001

24. Graphically described in various articles. See CSE (ref) andrecent article in Independent Newspaper of London.

25. Chintan Environmental Research and Action Group “Spacefor Waste” New Delhi 2004.

26. “Review of Contractual arrangements in India – backgroundstudy by IDEC under this AAA

27. See, for example, “Guide Pack on PSP in MSW management”by Cointreau and Coad, SKAT/WB 2000

28. Informal discussions suggest very different views onefficiency. There is no comparative data available.

29. The FIRE program supported by USAID has been doingconsiderable work on this issue.

30. Findings from a review of contractual performance by IDEC,as part of this AAAs.

31. The Bank has drafted standard DBO contract documentswhich are now being applied in cases in the Middle East andthe Philippines, although experience with this approach isalso relatively limited.

32. “Review of Contractual Arrangements in MSWM in India”IDEC, finalized Nov.2005.

33. ONYX of France, through associates, have been contractedto carry out collection and transport for Chennai Corpora-tion.

34. Prunier, unpublished report35. Ref Technical Paper36. For example, South Africa and the State of Tasmania in

Australia have detailed systems. Some of the ideas fromthese systems have been used in discussions with the Stateof Karnataka.

37. A process for site selection among alternatives has beendrafted by consultants for CPCB and has been used in someexamples in Karnataka. This may be overly complex but thebasic principles and approach are clearly helpful.

38. Large schemes, especially within metro areas, might beCategory A but these would be a minority of the possibleinvestments and would probably be addressed as separateprojects rather than as part of broader municipal investmentprograms.

39. Once specific investments have been proposed by clients forpossible financing under municipal projects, site specificToRs will be prepared and from experience with theseprocesses, the generic approach will be updated and refined.

40. Over the past one year Shimla Municipal Corporation hasimplemented MSWM user fee for door-to-door collection(monthly fee ranging from Rs 35/- for households to Rs805/- for big hotels). The user fee is over and above theproperty tax.

41. For example KUIDFC in Karnataka. Delhi MunicipalCorporation is also undertaking IEC.

42. Andhra Pradesh, as one example, has begun to identifypossible regional systems.

1. Population size 100,000 and above2. Population size 50,000 to 99,9993. Population size 20,000 to 49,9994. However, review of the available literature and discus-

sion with colleagues inside and outside the Bank failedto identify any body of work which is able to demon-strate these links quantitatively and is also relevant tothe Indian context.

5. SENES 2004 - Referred to as Background Report6. Sector Study by EAP7. NSWAI/ENVIS Report 20038. Detailed figures starting to come from the action plans

suggest that these may be underestimates, probablybecause many of the costs are not easily identified incurrent municipal accounts.

9. It is also estimated that approximately 1 acre of land isrequired for Sanitary Land filling of 40,000 tonnes ofMSW

10. Bellary, Shimoga and Tiptur in Karnataka; Hyderabad,Visakhapatnam and Vijayawad in Andhra Pradesh

11. Shimla and Nanital in North India and Shillong inNorth-East India

12. Based on the experience from the pilots, it is planned tosimplify and make the model available, with somesupport, to other municipalities or States who request it.

13. Municipal reform work through Bank’s Infrastructureunit envisages to enhance financial strength of ULBs

14. Studies for KUIDFC by CRISIL have assessed theavailable debt raising capacity for a number of munici-palities. A relatively small number have any realcapacity.

15. A range of typical figures is expected to emerge fromthe site specific exercises that are now beginning.

16. In Bank funded projects in Mexico and China, forexample.

17. A very useful reference is the Bank/ESMAP publication“Handbook for the Preparation of Landfill Gas toEnergy Projects in Latin America and the Caribbean”World Bank 2004.

18. To date there has been only one fully developed CarbonFinance project in MSW in India. This is a bio-methana-tion plant at Lucknow which has had a number ofproblems preventing it from achieving full success.

19. In each case some form of Infrastructure Corporation,within the State’s Urban Department.

20. This document is available in draft and has beenapproved by the State Government. The final versionhas not yet been distributed

21. Such as work supported by JICA in Delhi.22. Report on Scaling up Public Participation by Toxics

Links, an NGO working on waste collection andreduction; and other sources.

71


REFERENCES

Administrative Staff College Workshop proceedings: Roadmapping for an Improved Solid Waste Disposal System inof India Hyderabad.

_________ Preparation of MSW Action Plan in Selected Municipalities of Vishkhapatnam,Hyderabad and Vijaywada in the State of Andra Pradesh, Sept, 2004.

Chintan Environmental Space for Waste, Planning for the Informal Recycling Sector.Research and Action Group

CPCB Indicative Guidelines for formulation of Action Plan for Management of Municipal SolidWaste (MSW), 2004.

Gabriela Prunier Prospects for International Private Sector Participation in Municipal Solid WasteManagement in India, January 2004.

GoI Municipal Solid Wastes (Management and Handling) Rules, 2000.

IDECK Review on contractual arrangements in Solid Waste Management, India Status.

John F. Smithson and Mott Initial Draft report of Findings and Observations over the period 15 to 23 April 2005.Macdonald

Michael Schaeffer India: Multi-Year Capital Investment Planning (CIP). Muncipal Financial CapacityAnalysis and Project Feasibility for Solid Waste Management, May 2004.

_________ Framework for Effective Local Government Budgeting and Financial Management,March 2005.

MoUD Manual on Municipal Solid Waste Management.

N. Sampath Kumar Preparation of MSW Action Plans in the hilly towns of Shimla, Shillong and Nainitaland Pradeep Dadlani Ltd. Status - Submitted Analytical & Financial study on Solid waste management for Nanital,

September 2005.

NEERI Guidelines for Site Selection for Sanitary Landfilling.

Pradeep Dadlani Testing and Application of Financial Model for Muncipal Solid Waste Management.

Robert Reid Summary: Waste Management in India (covers Sustainable Development of WasteManagement Systems; Landfill Development and Operation;Private Sector Involvement) October 2004.

Roger J. Bastone Municipal Solid Waste Management in Karnataka, Draft Status Report, RevisedMarch 2004.

Sampath Kumar Preparation of MSW Action Plan in selected Municipalities of Puttur, Mangalore andGulbarga in the state of Karnataka.

SENES Draft Report: Issues and Opportunities for Municipal Solid Waste Management in India,Consultants India Pvt. Ltd. & March 2004.IRG, System South Asia Pvt. Ltd.

_________ Overview at Goa Workshop, May 2004.

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