Ãëàâíàÿ
ñòðàíèöà
Äîêëàäû
Ñâåäåíèÿ îá
àâòîðàõ
Public Private Partnership for Solid Waste Management Projects: the Quad-Party Formulae
Azhar Ali, Aqwadem Consulting, Ankara, Turkey
Abstract
Solid Waste Management is a real and frightening problem for most of the municipalities in the developing countries. One of the reasons is that the solid waste management issue had been ignored for decades while water and roads have been prioritized for a long time leaving a huge back log of waste for the municipalities to handle. Even in cases where the municipalities are able to provide 100% waste collection services, the situation at final dump sites is not very promising.
The municipal authorities from developing countries may lack financial as well institutional and organizational resources to handle waste management problems in their areas. One of the so called quick fixes has been to use Public Private Partnership (PPP) to improve the situation. Considering waste as a resource and a raw material, most of the municipal authorities believed that private sector would jump in as soon as the offer is made. This would not only solve the problem but would also provide a new financial resource for the authorities. However in most of cases the authorities end up using the private sector as the sub contractor for waste collection and transport only. The waste management problem is solved or partially solved but the municipal authorities get no other benefit, even may end up paying more and also losing their own capacity to handle issue in future.
The real purpose of any PPP initiative in Solid Waste Management (SWM) sector should be to find a system in which all partners benefit. Before launching any PPP initiative for SWM one must understand about the fact that the initiative will have higher chances of success if all concerned partners are involved from planning to implementation phase.
Existing Practices
More and more municipalities are looking for private sectors’ cooperation and intervention in solid waste management sector. This is encouraged in hope to have efficient and cost effective solutions to the waste problems. There might be many successful examples of such approach in world. However in most of the cases increased efficiency does not come with decreased costs.
In developed countries where concept of full cost recovery is corner stone of any waste management policy, the costs of the system are passed considerably to the waste producers. There are waste management taxes which in general are based upon the amount of waste disposed by the producers. The amount is monitored through renting of some waste container of a certain size or in some more advanced cases through weighing of waste submitted. Where private sector is involved the public authorities keep a strict monitoring and supervisory role. Higher economical, awareness and education level of waste producers supports the system.
Developing countries can be divided in to two major categories i.e. those with limited financial resources and others with enough financial resources. Countries where enough financial resources are not available the level of service cannot be increased without hardships. These countries look for private sector mainly to invest in the system and also use its know-how to help them sort out the problems. In this case the public authority control can also not be strict and various compromises are sought between the parties. Private sector also comes up with solutions promising no costs and even revenue for local authorities. Such unrealistic approaches ignite fake hopes of sudden success among local authorities and may also result in loss of resources and wastage of time.
On the other hand countries with enough financial resources also have similar problems. Although they may not seek full scale investment by private sector they also lack strict public control and monitoring. This is mainly due to lack of skills and lower level of awareness among waste producers. Another false perception among authorities of these financially rich countries is that the private sector from a certain developed country would come and with governmental funding they can replicate the wonder solution. This also leads to wastage to resources including time. The authorities need thorough investigation and mechanism before going for any such adventure.
Cost Recovery Issue
Another major attraction for private sectors’ involvement for public authorities is to implement the idea of full cost recovery. It is much harder for any public authority to convince waste producers (common people) to pay for waste management services. People in general consider provision of municipal services as a duty of the public authorities. This implies less willingness to pay for any such service by them. However once the services are provided by private sector, the situation may change. Public authorities hope that in later case it is much easier to convince people to pay for the services. The hypothesis might be true but in fact in almost all cases it is transfer of burden to private sector and then back to public sector through complex contractual agreements.
The full cost recovery concept is highly encouraged and supported by professionals and consultants working on the issue belonging to western countries. The cost recovery concept has been implemented in western countries with success but only after passage of time and completion of certain phases. In all cases these services were highly subsidized by local authorities till the level of services and awareness among waste producers allowed for waste taxes implementation. Demanding its implementation at once in developing countries is not a successful approach. Besides differences in culture and economical status the people are found to pay with more ease once they are convinced about better use of the paid money. Therefore in case where countries have financial resources it is much better to subsidies waste management services for many years until situation is improved and people become more convinced to pay if required. One major point which is missed by most of experts is that the cost recovery or full cost recovery might not be an issue for a rich developing country. There should not be any harm for providing subsidized municipal services by a rich developing country to its citizens.
Current PPP Initiatives
Currently in most of the developing countries or countries which intend to switch to private sector for waste management services the applied model is not PPP model rather it is a contractual agreement for services provisions. Municipal authorities are in phase where efficient waste collection and its transport is most important issue. Very recently some private companies have entered in to agreements with public authorities to provide the integrated solutions. In cases where such solution is promised with private investment, the results need to be seen and analysed with utter care.
In such contractual arrangements for services acquisition in SWM sector or provision of the integrated solution the beneficiaries are not taken as a party in the arrangement and it is a municipality and some private company negotiating and signing the contract.
Public Private Partnership (PPP)
Public Private Participation (PPP) also known as Public Private Partnership has four major aims.
i. To provide better services
ii. To decrease the costs
iii. To avoid complex labour laws for public employees
iv. To increase the capacity of public sector
Although PPP initiatives should ideally have above-mentioned four key properties, most of them serve only the 3rd issue i.e. avoiding complex labour laws for public employees. In cases where level of services was increased significantly, the costs were rarely decreased. Capacity development of public sector is the issue overlooked in most of the cases. Although many contracts ask private sector to hire public sector employees (shifted from waste management department of a municipal authority) this only decreases the efficiency of private sector and increases the costs which are transferred to public authority in one way or another. Capacity development initiatives for public sector should go beyond this simple job offering and should include long-term training and know-how transfers to the public sector.
Major Partners in any PPP Initiative
As stated earlier currently there are two main partners in private participation projects i.e. municipal authority and private company. In some cases a monitoring authority also comes in to the picture if some infrastructural improvement is sought. However neither the monitoring authority nor the beneficiaries are involved in designing stage of any PPP initiative.
Following are the four major partners that must be included in any PPP initiative.
1. Client – Client is defined as the authority which will have the right to award a certain contract or work to a private company under any PPP initiative. The client which might be a municipal authority must have the legal base for doing so. It must own and has the right to transfer this title to a private contractor.
2. Operator – In PPP case it would be a private company which would be conducting the service once awarded by the Client. Operator could be a fully private company or a company established and operated by client or some other governmental organization.
3. Regulatory – Regulatory should be an authority which has right to monitor, evaluate and penalize any PPP initiative during implementation. It would be wrong to think that regulatory should do it on behalf of the client. In fact regulatory should be an independent organization or its representative which act on behalf of beneficiary and legislation in a certain country.
4. Beneficiary – The most important party in any SWM project is waste producer. However in almost all of the cases in the developing countries waste producers are never consulted for any modification or improvement in the system. The knowledge of municipal and private experts is considered more than sufficient in this regard. Most of the projects may also include ‘public awareness’ component but this campaign is only to provide information about implementing certain pre-agreed waste management improvement project, already approved by the authorities. This is the single most important reason for failure or partial failure of many new waste management projects with PPP. A simple example is introduction of door-to-door waste collection or communal bins system. The local people, the producers of waste are just informed to act in a certain way. Their input while planning any new system is negligible which later creates operational and financial problems.
Results of Common PPP Initiatives
Most of the municipal authorities consider that inclusion of a resourceful private company in a PPP initiative is the key to success. It might be true that the selected big company brings in a number of vehicles or compactor trucks (favourite of authorities) and also human resources to manage the solid waste in a certain area. All matters can go in good way for some time or even for a very long time but only as long as both partners don’t feel the financial crunch. In case of any such successful project it can easily be concluded that:
- The purpose of private company involved would be to maximize its profit
- The client or local authority would like to screw the private company more and more to get the better level of services while remaining in the same financial borders
- The private company may upgrade its equipments initially but in long run they might not be replaced again (unless major financial gain is on stake)
- The private company would shift its experienced staff to new projects and would try to use new and more economic personnel once project is stable
- There would be no improvement in the capacity of the client other than the increased financial resources, most probably due to increased waste taxes from improved quality of services
- The beneficiary or waste producers will keep on producing more and more waste (especially if waste removal becomes more efficient) and there would be no fundamental change in their pattern or role
Quad-Party Roles for a Successful PPP Initiative
As introduced earlier it is much better to include the four major partners in the process from very beginning. On the other hand if this approach is not followed the failure risks of any PPP initiative for SWM projects might be very high. An extensive discussion and consultation among all the four partners should be done before any PPP initiative is started. Through these consultations and discussions roles of the four major stakeholders should be finalised. It is always better that the roles of a certain stakeholder (say client) should be drafted by remaining three (say operator, regulatory and beneficiary) and vice versa. In this way there are certainly more chances to come up with the roles which are accepted by all the four partners. Any PPP contract made using these roles would also have a much more success chance. It should not be forgotten that at a later stage any such contract must be signed by representatives of all the four partners.
Following could be few roles for each of the partners which can be further elaborated as per local needs.
1. Roles of Client
- To award the contract
- To make payments to private sector (if applicable)
- To make sure that waste is present at agreed points in agreed form for collection etc
- To hinder other users of waste than the authorized ones
2. Role of Operator
- To implement the agreed plan for waste management
- To take its role as capacity builder for client
- To ensure the beneficiaries’ satisfaction
3. Role of Regulatory
- To monitor any un-ethical cooperation between Client and Operator
- To check inconformity of the contract with legislation
- To process any complaints
4. Role of Beneficiary
- Cooperate with operator and comply with schedule of activities (collection, transport of waste etc)
- Pay the related tax (if applicable)
- Notify any lacking during implementation
Pre-Requisites for Successful PPP Initiatives
It is never sufficient to have a resourceful private sector willing to take any SWM problem in a certain area to solve the problem. A certain level of capacity is pre-requisite for any PPP initiative. The client or local authority must know the facts on ground, including technical and financial data. It must also develop (may be within the PPP initiative) its institutional and organizational capacities. A capable client is in fact a blessing for any private operator, it is much easier to understand each other and also work together for improvement. On the other hand the private operator should also look for improving its capacity with time if it falls insufficient at any stage.
Concerning the capacities of remaining two partners, their roles cannot be ignored. In most of the developing countries the basic legislation for local authorities’ roles in provision of municipal services is missing. Once any such legislative ground is missing, it is very easy to confuse the roles of different authorities. This confusion results in poor performance of any PPP initiative also. Therefore prior to launch of any PPP initiative there is a dire need to enhance the capacity of regulatory authority which would be monitoring any such initiative.
Almost all of the PPP initiatives for SWM include public awareness components. These are generally well designed but lead to dissatisfactory results. The single most important reason is that the beneficiaries or community has never been involved while planning for any PPP initiative of which public awareness is a component. In order to have any successful PPP initiative the capacity level of community needs to be assessed and reached a certain level.
Decentralization and PPP Initiatives
Decentralization of municipal services is the preferred approach by most of the countries under influence of western experts and consultants. The basic idea of solving local problem at local level is highly appreciated. There exists however many pre-requisites to get this concept implemented with success. Most important of those is the decentralization of implementing, monitoring and financial authority. In cases where implementing authority is devolved to the local level but is not accompanied with decentralization of legislation or financial powers the results are not encouraging.
In order to have successful decentralization the first question a national government should ask is if it is required and suitable for the local conditions? Decentralization might work well in some countries but might be a complete disaster in others. No matter whatever the case is PPP initiatives work well at local levels. It is easy to monitor and implement any such initiative at a local level. However in spite of this advantage the national waste management policy, legislation and fiscal procedures should clearly be defined. In absence of any national policy for PPP in waste management sector different local authorities go for different unrealistic solutions thus wasting the resources.
Other two important issues are regarding national legislation and fiscal policy. No matter how decentralized a waste management system might be the national waste legislation should provide the framework for implementation of services or any PPP initiative. The local authorities need a sound legislative support and guidance even though they are not the implementer of any waste service and intend to involve private sector.
Lastly the fiscal policy for waste management services should also be clearly defined. It is rare if the private sector intending to provide waste management services also take care of the related costs. In general the agreements with any private company are revised several times during implementation to accommodate new provisions or cost increases. Therefore for many years after starting PPP initiatives, it is still the local authority which carries the financial burden. The national fiscal policies should provide guidelines to local authorities about different expenses and revenue streams.
Conclusion
PPP initiatives for SWM projects are common practices in the developing world. In fact most of such initiatives end up only as ‘sub contracting’ in which the local authorities or sometimes the community keep on paying for the services to a private contractor. The main idea behind PPP concept was however to increase the capacity of all partners involved. It did not have any room for contractor and instead there were partners to be involved.
While designing for any PPP initiative generally the client and operator comes together and tries to agree on suitable terms for both parties. Such approaches leave two other major stakeholders i.e. regulatory and beneficiary (also waste producer) out of scene. In order to have a PPP initiative with higher chances of success, the quad-party approach must be followed. All the four partners must be involved in planning, decision making and implementation processes.
It must also be noted that any international donor willing to help a local authority for PPP initiative must also consider investing in capacities’ building of above mentioned four partners prior to launch of any PPP initiative. A certain level of capacities is necessary even to start the planning for some PPP initiative in SWM sector.
Azhar Ali, Project manager, Aqwadem Consulting, Nilgun Sokak 12/14, Cankaya, Ankara, Turkey. Tel. +90 (312) 446-29-25, fax +90 (312) 446-29-14 E-mail1, e-mail2
© Íåçàâèñèìîå àãåíòñòâî ýêîëîãè÷åñêîé èíôîðìàöèè