PPPs in Waste Management Dr. Roland Ramusch, Sector specialist – Solid Waste
Workshop outline Sustainable Infrastructure Project and Policy Preparation - Policy paper https://www.ebrd.com/documents/climate-finance/from- waste-to-resources-mobilising-the-private-sector-to-deliver- sustainable-waste-management.pdf?blobnocache=true 2 Roland Ramusch 2/14/2019
Workshop outline • Sett etting ing th the sc scen ene • Compl plexity xity in in wast ste ma manag nagement ement • Select Selected ed is issues sues for or wast aste manag management ement PPPs Ps • Ex Examples ples - Gr Group oup work ork 3 Roland Ramusch 2/14/2019
Setting the scene • Many people have no no acc access ess to to re reliab liable and and saf safe servi vice ces − 1.2 billion people life without electricity − 2.8 billion people cook food using solid fuels − 60% of world’s population lack access internet − 750 million have no access to safe drinking water − 2 billion lion ha have no no acc ccess ess to to regula ular wast waste co collec lection ion servic vices es Worldwid orldwide we we have more more mobile mobile phone hone sub subscript scriptions ions then then • people le having access ss to to proper per sanit itation! ation! 4 Roland Ramusch 2/14/2019
Setting the scene Source: World bank 5 Roland Ramusch 2/14/2019
Setting the scene Governments face capacit pacity and financial nancial cons nstra traints ints; • • Under the ri right ght cir circumstan cumstances, s, PPPs can facilitate economic growth thr through ough infrastructure development and improve basic services, PPPs can be a good business opportunity for the private • sector; • BUT UT: implementing a successful PPP is CHA CHALLENGING LLENGING successful PPP and requires a long long-ter erm co commit mmitme ment nt from both the private and the public sector! 6 Roland Ramusch 2/14/2019
Setting the scene PPPs need very careful reful plann anning ing and prep eparation aration; • • PPPs are com comple plex legal, legal, contr ntract actual ual and financial inancial arran range geme ments nts; • Goals: introduction of pri privat ate sect sector or exper xpertis tise and contractually-defined performa ormance nce requi uireme rements nts; • Tran ransfer of the majority of the ri risks sks and and re responsib sponsibilities ilities for project delivery from public authority to to a pri privat ate contractor; • A pa paym yment ent mec mechani hanism link linked ed to to per perform ormance ance which is specified primarily in output terms. 7 Roland Ramusch 2/14/2019
Setting the scene GOOD GOVER ERNANC NANCE PRINCIPL INCIPLES ES: Put people le first st and start with assessi sessing ng user needs ds; • • Involve ALL concerned stak akeh eholder olders; • Build admi dministrativ nistrative ca capa pacities cities for effectively negotiating and managing long-term collaborations with private sector; • Adequate legal al frame mewor orks ks / regulations; Ensure transparent ansparent procure urement ment policies; • • Assess all Assess all risks risks and allo allocat cate the them ap appr propriat opriately ely between partners; • Mitigat igate all environmen onmenta tal risks sks. 8 Roland Ramusch 2/14/2019
Setting the scene 9 Roland Ramusch 2/14/2019
Setting the scene 1. Usually government sets the stage and drafts a first plan. 2. Launching of a com ompe petit titiv ive ten ender der to identify the best offer from private partner to FINANCE – DESIGN - BUILD – OPERATE and MAINTAIN the project. 3. Private partner recovers initial investment by ser servic vice fee ees paid paid by by public ic partner tner or by the users directly ectly. 10 Roland Ramusch 2/14/2019
Setting the scene 11 Roland Ramusch 2/14/2019
Setting the scene 12 Roland Ramusch 2/14/2019
Setting the scene • PPP approach lets you plan project over enti entire re li lifecy ecycle cle and.. • … optim imises ises us use of available vailable re resour urces ces. • Private sector knows better how to first attract and invest capital and how to avoid cost overruns and • how best to operat erate and inn nnovat ate. 13 Roland Ramusch 2/14/2019
Risk allocation PPP approach allocates specif specific ic risks risks to the partner that is in a be bett tter er position position to to ma manage age them. Change ges s in Cost st effic icien ient t jurisdiction diction and d Design ign Permi mits ts invest estme ment nt regulations lations Suf ufficient icient us user r dema emand nd PUBLIC LIC PRIVATE ACTOR ACTOR Force ce majeu eure re Opera rati tion on and Lega gal l technol chnology ogy frame mewor orks 14 Roland Ramusch 2/14/2019
Waste management is complex – WHY? Waste sector usually receives the lea east st pol politic itical • atten ention ion … • … and fin inanc ncia ial sup suppor port compared with other infrastructure sectors. • Despite this sec ector or is is highly ighly visibl isible and po polit itical ically ly … sen ensit itiv ive. 15 Roland Ramusch 2/14/2019
Waste management is complex – WHY? 16 Roland Ramusch 2/14/2019
Waste management is complex – WHY? 17 Roland Ramusch 2/14/2019
Waste management is complex – WHY? Animal Animal feeding eeding Inf Infor ormal mal pic picking king 2/14/2019 Roland Ramusch 18
Waste management is complex – WHY? What are the more standar dardi dised ed par parts ts of a waste management system? Source: https://www.bulkhandlingsystems.com Source: https://en.helector.gr 19 Roland Ramusch 2/14/2019
Waste management is complex – WHY? Different waste types and composition • • Urban vs. rural areas (collection costs!) • Costs of technologies / option • Economies of scale Costs /revenues: recyclables, refuse derived fuels, • energy, electricity, disposal costs (hazardous waste!) • Multitude of stakeholders with different values / attitudes / beliefs • Affordability / Tariffs / “Hidden services” 20 Roland Ramusch 2/14/2019
Capital expenditures for sanitary landfill (EUR per tonne capacity) 2/14/2019 Roland Ramusch 21
Capital expenditures for municipal solid waste incinerators (EUR per tonne capacity) 2/14/2019 Roland Ramusch 22
Capital expenditures for municipal solid waste incinerators (EUR per tonne capacity) 2/14/2019 Roland Ramusch 23
Selected issues in waste mgmt. PPPs • PPPs commonly used for la larger rger inf infrastructu rastructure re investm estments ents such as • the de development lopment and and operation operation of a ne new sol solid id was aste tr treatment atment / dispos sposal al / reco cover ery fac acility lity. • PSP / PPPs are NO NOT forms of privatisation which involves the permanent transfer of publicly-owned assets to the private sector! 24 Roland Ramusch 2/14/2019
Selected issues - Drivers • Intr Introd oduc ucing ng com compe peti titi tion, by reforming public procurement legislation and contracting procedures; • De Deli livering ering im impr provemen ements ts and inn nnovat ations ons in waste infrastructure/ services more ra rapid pidly ly, com comprehen prehensi sively ely and / or on a larger rger scale compared to public sector alone; • Achieving signifi significa cant nt cost cost sa saving vings and in incre creased ased value alue-for or- money; • Increasing the visi visibilit bility and nd predi predictabilit ctability of the whole-life costs; • Mobilising obilising privat private capital to reduce pressures / demands on limited public budgetary resources; • Better maint ntenanc enance of the physical assets. 25 Roland Ramusch 2/14/2019
Selected issues – Common PSP types 26 Roland Ramusch 2/14/2019
Selected issues – Common PSP types • Each PSP type implies var arying ying le levels els of of re respon ponsib sibility ility and risk risk to be assumed by the private sector operator, as well as dif differing ering de degree grees of of co contractual ntractual co comple plexity xity and mana anagem gement nt burden en for the contr ntractin cting autho thori rity ty. QUESTIONS: • Are procurement and contracting options legally available to the contracting authority? • Technical, legal, regulatory and institutional issues and constraints? Commercial, financial and financing requirements and • constraints? 27 Roland Ramusch 2/14/2019
Selected issues – Common PSP types QUESTIONS: Interest of the market (local and international); • • Spec pecial ial req equir irements ements based on the ch char aract acter erist istic ics of th of the wast stes es gen gener erat ated ed, proposed system for managing wastes, topo pogra graph phy and demography of the project area, etc.; In the case of stra trategic egically ally-es essent sentia ial asse assets, the • need for the contracting authority to retain ownership / ultimate control of the assets. 28 Roland Ramusch 2/14/2019
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