PPPs in Waste Management Dr. Roland Ramusch, Sector specialist Solid - - PowerPoint PPT Presentation

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PPPs in Waste Management Dr. Roland Ramusch, Sector specialist Solid - - PowerPoint PPT Presentation

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-


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PPPs in Waste Management

  • Dr. Roland Ramusch, Sector specialist – Solid Waste
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SLIDE 2

Workshop outline

2/14/2019 2 Roland Ramusch

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

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Workshop outline

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  • 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

  • r wast

aste manag management ement PPPs Ps

  • Ex

Examples ples - Gr Group

  • up work
  • rk
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Setting the scene

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  • 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
  • rldwide 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!

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Setting the scene

2/14/2019 5 Roland Ramusch Source: World bank

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Setting the scene

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  • 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

  • ugh infrastructure development

and improve basic services,

  • PPPs can be a good business opportunity for the private

sector;

  • BUT

UT: implementing a successful

successful PPP PPP is CHA

CHALLENGING LLENGING

and requires a long long-ter erm co commit mmitme ment nt from both the private and the public sector!

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Setting the scene

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  • 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

  • r exper

xpertis tise and contractually-defined performa

  • rmance

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

  • rmance

ance which is specified primarily in output terms.

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SLIDE 8

Setting the scene

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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

  • lders;
  • Build admi

dministrativ nistrative ca capa pacities cities for effectively negotiating and managing long-term collaborations with private sector;

  • Adequate legal

al frame mewor

  • rks

ks / regulations;

  • Ensure transparent

ansparent procure urement ment policies;

  • Assess

Assess all all risks risks and allo allocat cate the them ap appr propriat

  • priately

ely between partners;

  • Mitigat

igate all environmen

  • nmenta

tal risks sks.

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Setting the scene

2/14/2019 9 Roland Ramusch

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Setting the scene

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  • 1. Usually government sets the stage and drafts a first plan.
  • 2. Launching of a com
  • mpe

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.

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Setting the scene

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Setting the scene

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Setting the scene

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  • 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

  • verruns and
  • how best to operat

erate and inn nnovat ate.

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Risk allocation

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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.

Permi mits ts Lega gal l frame mewor

  • rks

Change ges s in jurisdiction diction and d regulations lations Design ign Cost st effic icien ient t invest estme ment nt Opera rati tion

  • n and

technol chnology

  • gy

PUBLIC LIC ACTOR PRIVATE ACTOR Force ce majeu eure re Suf ufficient icient us user r dema emand nd

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Waste management is complex – WHY?

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  • 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

  • r is

is highly ighly visibl isible and po polit itical ically ly… sen ensit itiv ive.

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Waste management is complex – WHY?

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Waste management is complex – WHY?

2/14/2019 17 Roland Ramusch

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Waste management is complex – WHY?

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Animal Animal feeding eeding Inf Infor

  • rmal

mal pic picking king

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Waste management is complex – WHY?

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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

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Waste management is complex – WHY?

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  • 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”
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Capital expenditures for sanitary landfill (EUR per tonne capacity)

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Capital expenditures for municipal solid waste incinerators (EUR per tonne capacity)

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SLIDE 23

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Capital expenditures for municipal solid waste incinerators (EUR per tonne capacity)

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Selected issues in waste mgmt. PPPs

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  • PPPs commonly used for la

larger rger inf infrastructu rastructure re investm estments ents such as

  • the de

development lopment and and operation

  • peration 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!

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Selected issues - Drivers

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  • Intr

Introd

  • duc

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

  • ns

in waste infrastructure/ services more ra rapid pidly ly, com comprehen prehensi sively ely and /

  • r 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

  • r-

money;

  • Increasing the visi

visibilit bility and nd predi predictabilit ctability of the whole-life costs;

  • Mobilising
  • bilising privat

private capital to reduce pressures / demands on limited public budgetary resources;

  • Better maint

ntenanc enance of the physical assets.

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Selected issues – Common PSP types

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Selected issues – Common PSP types

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  • Each PSP type implies var

arying ying le levels els of

  • f 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

  • f 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?

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Selected issues – Common PSP types

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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

  • f
  • f th

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

  • wnership / ultimate control of the assets.
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Selected issues – Common PSP types

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CONSTRAINTS:

  • Lo

Low-cos cost reco recover ery le level els due to politically- influenced or det eter ermined mined tari riff policies;

  • La

Lack ck of

  • f re

reliab liable le data about wastes generated / composition and / or technical performance of the existing services and facilities;

  • Affordabil

dability ity of the measures proposed for improving the existing waste management services and facilities => => STE TEPWIS WISE APPR PROACH CH!

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Selected issues – Common PSP types

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Case: Exten ende ded pr produ ducer cer res espo ponsib sibil ilit ity (EPR) schemes Environmental policy approach in which a producer’s responsibility for a product is extended to the post- consumer stage of a product’s life cycle. Characterised by:

  • the shif

ifting ing of

  • f respo

responsibil ibility ity (physically and/or economically; fully or partially) upstream toward the producer and away from municipalities; and

  • the pr

provisio ision of

  • f inc

incen entiv ives es to producers to take into account environmental considerations when designing their products.

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Selected issues – Common PSP types

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Case: Ext Extended ended pr produc

  • ducer

er re responsibi sponsibility lity (EPR) schemes

  • Imply that producers take over the financial

and/or

  • rganisational

responsibility for collecting collecting or

  • r taking

taking back back use used goods goods, as well as sorti ting ng and nd tre reatment tment for thei eir re recy cyclin cling.

  • Producers of products can fulfil the obligations
  • f the extended producer responsibility scheme

individually or collectively.

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Selected issues – Common PSP types

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Source: www.expra.eu

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Selected issues – Payment mechanisms (PM)

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  • PM defines ho

how th the priv privat ate par party is remunera remunerated ed (the heart of the contract);

  • Is one of the main

main ways ys of

  • f allocat

allocating ing ri risk sk effectively and ensuring that performance

  • rmance requirem

quirements ents are met.

  • PM shall be sim

simpl ple and and li link nked ed directly to to measur easurable able proje

  • ject

ct outputs puts / deliv iverables rables;

  • Create a financi

ncial al incent ntiv ive to perform well;

  • Be affor
  • rdable

dable for

  • r th

the contr contrac acting ting au auth thority

  • rity, and

provide appr appropriat

  • priate remedie

emedies in the event that the private party does not meet its obligations;

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Selected issues – Payment mechanisms (PM)

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Key principle: pa payme yments ts should be made only if the as asse set / ser ervic ice is is avai ailabl able at the co contr ntractual actually ly-agree agreed qualit ity / pe performa

  • rmance

nce levels;

  • Not be based on the private contractor’s actual

costs;

  • Not require the private contractor to bear excessiv

essive ris isk;

  • Where

appropriate, include in indexat ation ion to compensate for cost increases due to inflation.

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Selected issues – Payment mechanisms (PM)

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  • Payme

ments nts receiv received ed by by pri privat ate cont

  • ntract

ractor

  • r directly from

user: Us User charg arges (e.g. waste disposal fees);

  • Payme

ments nts fr from the contracting contracting aut authori

  • rity to the private

contractor

  • Usage based payments (according to how much the

infrastructure or service is used);

  • Availability based payments – for making infra-

structure / services available for use at the contractually-agreed standard;

  • Per

erforma

  • rmanc

nce ba based sed pa payme ments nts – vary according to the quality of service provided;

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Selected issues – Payment mechanisms (PM)

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  • Bonu

Bonuses ses and deduc deduction tions / penalties penalties – if specified

  • utputs and / or standards are met, or conversely not

met;

  • Provisions for adjustment – to take account of

un unpredict predictable ble chan changes ges in service needs and / or

  • perating conditions.
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Selected issues – Defining and allocating risks and responsibilities

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RESPONS PONSIB IBILIT ILITY GROU OUPS PS 1.

  • 1. As

Asse set de devel elopment pment, planning new in investme estments nts, demand foreca

  • recast,

st, capac pacity ity pl plannin ing, preparing de desig ign, constructi struction

  • n etc.

2.

  • 2. Man

anag agemen ement: managing the delivery company, appointing staff, HR, establishing / improving businesses processes. 3.

  • 3. Oper

perat ation ion & ma maint inten enance ance and fee ee bill illin ing and coll llec ecti tion

  • n
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Selected issues – Defining and allocating risks and responsibilities

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KE KEY RESPONS PONSIB IBILIT ILITIES IES – waste collecti lection

  • n:
  • Service delivery: types of waste / recyclables

collected / transported, acquisition of permits

  • Procurement / supply of assets: supply of

containers/equipment, construction of container platforms etc., depot, maintenance, facilities etc.

  • Insurance, cleaning, maintenance and replacing of

assets

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Selected issues – Defining and allocating risks and responsibilities

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KE KEY RES RESPONS PONSIBIL BILIT ITIES IES – wast ste tre treatme tment nt and and di dispo posal al:

  • Service delivery: types of waste received, treated,

recovered, disposed of;

  • Facilities development, operation, closure and

aftercare: site provision/acquisition, permits/ licenses, facility design, construction, closure/restoration and aftercare, supply

  • f

plant/equipment/consumables, training, monitoring and control etc.

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Selected issues – Defining and allocating risks and responsibilities

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MAIN RISKS KS:

  • Pl

Plan anni ning ng ris isks: permits are delayed / refused;

  • Desi

esign gn risk isk: design solution fails to meet the contracting authority’s requirements;

  • Co

Construct nstruction ion risk isk: delays due to adverse site, weather conditions;

  • Oper

perat ating ing risk isk: operation costs higher than estimated or standards required are not met;

  • Deman

emand ri risk sk: service usage varies from forecast, revenues are lower then expected;

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Selected issues – Defining and allocating risks and responsibilities

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MAIN RISKS KS:

  • Pa

Payme yment nt risks isks: some user fees are unpaid or delayed;

  • Fi

Financ ncia ial risk isk: delays in securing project financing variation, interest or exchange rates;

  • Pol
  • lit

itica ical, l, leg egisl islat ativ ive risk isk: unforeseen changes in policies, legislation etc.;

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Selected issues – Defining and allocating risks and responsibilities

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Source: Integrated Skills Limited

Cost-effective transfer of risk

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EXAMPLES

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City A Rural municipalities

Case 1 Case 2 Case 3

City B

v

Recycling

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EXAMPLES

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For each Case ask yourself:

  • 1. Which part of the systems could be PUBLIC and

which part PRIVATE and WHY?

  • 2. What are PAYMENT MECHANISMS / MONEY

FLOWS?

  • 3. RISKS and OPPORTUNITIES for PUBLIC and

PRIVATE sector?

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Contact

2/14/2019 45 Roland Ramusch

Roland Ramusch Sector specialist – Solid waste Sustainable Infrastructure Policy and Project Preparation Tel: + 44 020 7338 7862 Email: ramuschr@ebrd.com EBRD, One Exchange Square London, EC2A 2JN United Kingdom www.ebrd.com Find us on social media

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