JOE ZORN'S PRESENTATION - World...

"La propreté au cœur de l'environnement" réf. 067560Anglais pour validationSémantis pour Onyx – 16/06/2003www.semantis.com

TRANSPORT WASTE MANAGEMENT WATERENERGY SERVICES

Veolia Environmental Services

In China –Our Presence & Future

Joe A. ZornChief Operating Officer

Veolia Environmental Services Asia

~ April 26, 2007 ~


WASTE

A Social and Economic By-Product



Background


Background



Major Treatment & Disposal Options

Sorting & Recyclingo Formally and informally going on in every country.o Usually takes care of a small fraction of MSW; larger volume

needs treatment and/or disposal.o Above the “street level”, even the more advanced countries

do not achieve a high recycling rate if not for government intervention.

Secured Landfillso Modern landfills manage waste, leachate and gas in an

environmentally safe manner.o Flexible; ability to handle various types of wastes.o Optimal minimum size is 1,000 tpd; as the tpd increases, the

unit operating cost decreases.



Thermal Combustiono Modern systems satisfy stringent environmental parameters

including the latest EU and US standards.o Optimal treatment capacity ranges from 300 to 600 tpd per

production line.o Not a comprehensive solution as there are other wastes to

be treated such as ashes, hazardous materials and non-combustible wastes.

Criteria for Selection of Optionso All are viable options. o Common decisive factors include: social-economic factors;

geographical conditions, waste characteristics; regulatory policies.




Criteria for Selection of Options (cont’d)

Steam to electricity Landfill gas to electricity or town gas

Energy recovery

Primarily up front;Limited expansion

In phasesCapital investment

More expensiveVariableUnit costFlexible after demolition of the plant

Country park, golf coursesRestricted development

After use

Leachate (variable)Ash needs disposal or reuse

Leachate and gasBy-productsSensitive to heat valueFlexibleWaste quality300~600 tpd per line x 1~4Up to 15,000 tpdWaste quantityIndependentDependentSite conditionsSmall footprintLarge footprintSpace requirementsTHERMAL COMBUSTIONLANDFILLFACTORS


Quality of Proposed Waste Management Solutions

Sustainable?o Whether or not the option is a long-term solution considering

economic, environmental and political objectives.Practicable?o Distinguish between practicable and unrealistic proposals.o Prequalification of bidders is important.

Efficient and effective?o Production and operation efficiency; meets applicable

environmental standards.Economically viable?o Consideration for investment, operating costs, after use and

decommissioning.Other benefits?o Energy recovery and reuse, potential for

CDM or VER credits.



Common Factors Affecting Our Decisions

Waste Volumeo Commitment by Government to control the flow of waste and

ensure waste volume.Concession Rightso Best to have concession rights for certain districts / areas to

ensure adequate waste volume.Put or Payo Government needs to guarantee the minimum amount of

waste or minimum operating fees.Waste Qualityo Particularly for thermal combustion projects as heat value of

waste affects combustion efficiency and therefore power production.



Reasonable Contract Durationo Need time to recover investment. o Reasonable duration:

• 5 years+ for collection contracts; • 10 years+ for landfills;• 15 years+ for thermal combustion projects.

Competitiono The amount of waste available and the number of competing

facilities in the same catchment area is balanced.




Attractive ProjectsProject has the right economy of scaleReasonable risk profile (e.g. cost index adjustments)Security of getting paid on a long-term basisOther benefits to offset cost (e.g. CDM or energy sales)Synergies with existing projects and management in the vicinityWell-structured local master plan for waste management


New contracts in 2006/2007

Cities where we are present

Examples in Asia – Operations Overview



VES Presence

Laogang LandfillShanghai


Laogang Landfill

Projects in China – Laogang Landfill

LocationLaogang MSW Landfill Phase 4 is located at the east end of LaogangTown, Nanhui, Shanghai, located approximately 60 km from Shanghai central. It covers an area of 361 hectares. Length is 4200m, width 800m.




OverviewCommenced design and construction: Dec 2003Formal commencement of operations: Dec 2005Ownership: Shanghai GovernmentOperating entity: Shanghai Municipal Solid Waste Treatment Company, a joint venture between foreign partners (VES & CITIC Pacific) and local partner Shanghai Chengtou. VES brings the design, construction & operational expertise to the Project.Concession agreement to the operating entity: - Design, construction and operations for 20 yearsLandfilling capacity: 80 million cbmCurrent in-take: 6,300 tpd with majority delivered by barges; less than 10% is delivered by trucks from Nanhui DistrictLand and space available well after the 20-year contract



OverviewThe landfill treats waste from 11 districts of Shanghai.It is the largest municipal waste sanitary landfill in China.Investment of initial phase: RMB 505 millionStructure of funding: - JV Registered Capital: RMB 170 million (~USD 22 million)- World Bank Loan: US$ 33 million- Private Funding: RMB 107 million (~USD 13.85 million)



1a

1b2 3 4

近期取土区Soil Borrow Zone

远期库区Future Landfill Site

老港Ⅰ、Ⅱ、Ⅲ期填埋库区

Phase I-III Landfill Ｓite

Ⅳ期库区


Site Layout


225%45 years20 years4900LaogangPhase 4

Increase as a %

VES’Extended

Facility Life

Original Design Life

Design intake

tpd

Facility

Adopt ground reinforcing technique to increase the airspace in limited area.3,000 kilometers of drainage wicks installed in Phase 1Save land resource, and increase the utilization rate of the land and the life service of the landfill.

Foundation Treatment





Construction and Operation Sequence


Final waste massTreatment Platform

45 mPD

30 mPD


Staging




Embankment geotube construction

Top: Western embankment constructed from sand geotube

Left: Western sand embankment

Embankment


15 m wide road

7.5m wide perimeter road

East side perimeter bund


Perimeter Berm 450m of 15m-wide concrete road and 350 m of 10 m wide concrete road has been built at north separation berm10.8km of 7.5m-wide bitumen road has been constructed around the entire perimeter of Phase 4.




Groundwater ManagementA vertical cut-off wall (k ≥ 1x10-8m/s) was constructed to 16 m deep around the full perimeter of Phase 4 which minimizes groundwater coming into Phase 4 (Inverts of cells are excavated below sea level).A cut-off wall (k ≥ 1x10-9m/s) was constructed around Phases 1 to 3 to minimize leachate migration out of the old landfill.A woven geotextile and gravel drainage layer has been installed under the double liner to enable groundwater to be extracted creating inward groundwater hydraulic gradient.


Cut-off wall around Phase 4

Slurry wall around 1-3


Vertical Cut-off Wall



WasteWoven geotextile600mmGravelNon-woven1.5mmHDPEGeocomposite1.5mmHDPENon-wovenGravelWoven geotextileSubgrade


Liner System



Liner System




Weighbridges4 weighbridges can be operated two-directional, static and dynamic weighing – efficient, fully automatic with upload of data to the Shanghai Government daily


Waste Supply Plan 2007

010002000300040005000600070008000

Jan Feb Mar April May June July Aug Sep Oct Nov Dec

month

quan

tity

(ton

)

Total Waste Delivered to Laogang Phases 1to 4

8038.58304.26

9150.97

8541.658837.43 8629.87

9002.64 8966.049307.35

8682.58 8826 8655.1

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07

Month

Tonn

es MinimumaverageMaximum


OperationsEntered trial operations on Feb 21, 2005 and commercial operations Dec 2, 2005. 2006 average waste intake 4,900 tpdAnticipate around 7500 –8000 tpd by mid 2007 for next 3 yearsOperating hours generally 7:30 am to 3:30 pm with local Nanhui District waste delivered from 5:00 am




Tipping AreaSteel slag road combined with the mobile steel plate road to provide semi permanent road and temporary roads in landfill cells respectivelyTipping platforms with more than 1,500 tpd capacity each are used to ensure the acceptance of the waste



Leachate TreatmentLTP uses UASB plus SBR biological processes to treat leachate to class 3 standard, plus reduction in ammonia and nitrogen.The effluent is discharged to municipal sewage water treatment plant.Design capacity 1,500 tpd; ultimate capacity 3,000 tpd.




Leachate Treatment

close to 0600 ~ 800NH3-N (mg/L)

1500 ~250050000 ~70000COD(mg/L)

Treated Leachate

Raw Leachate


Landfill gas LFG Facility Generate electricity

Flare and blow to atmosphere

Short-term 18 months after start of landfilling


Landfill Gas CollectionComprehensive LFG collection and management system.System of horizontal and vertical collection wells.LFG treated through LFG to electricity engines and excess gas flare if necessary.Use first 2.5 MW power for on-site power requirements.



洒水车

移动式防飞散网


Environmental MonitoringDust and litter controlDaily coverFlies control


Environmental MonitoringLong term monitoring program with Shanghai Environmental Monitoring CenterIn the process of obtaining ISO14001& OHSAS18001 certification


Monitoring of surface water and river slits

Monitoring of landfill gas Monitoring of underground water



Set out and settlement monitoring

Inclinometer

Settlement meters


Quality Control


Landfill has numerous levels of quality assurance & control including in-house staff,

construction quality assurance and other consultants


Quality Control



Staff CompositionGM with comprehensive experience on international landfill design, construction and management.129 staff including 38 managerial, engineering and office staff. 62% bachelor’s degree and 26% master’s degree.Several relevant master’s degrees, such as environmental engineering and water treatment Operators on-site mostly come from Laogang Landfill Phase 1 – 3; very experienced with new EHS concept as an employee of an international group.


12%

26%62%

master's degree or abovebachelor's degreecollege or below


VES Presence

Other Projects in China



Projects in China – Xingfeng Landfill

Location：Baiyuan District, Guangzhou; 38 km from cityArea: 84 hectares (including expansion areas)Capacity of Phase I: 20.17 million cbmCommenced Construction: Nov 2000Formal Commencement of Operations: Mar 2003Current waste in-take: average 6,800 tpdCurrent electrical power converted from landfill gas: 2MWOwnership: Guangzhou Government. Construction and major equipment capital provided by GovernmentContract to VES: - Design, design coordination and 8 years operation- One year aftercare for phases completed during operationsCDM: Guangzhou Government recently signed an agreement with British global warming solutions company, Icecap. Icecap will pay US$50 million to the Guangzhou Government in exchange for 5 million tonnes of carbon dioxide emissions credit.


Projects in China – Xingfeng Landfill



Projects in China – Foshan Landfill

Location: Gaoming District, Foshan City, Guangdong ProvinceArea: 95 hectaresCapacity: 30 million cbmCommenced Construction: Oct 2003 by Foshan GovernmentFormal Commencement of Operations: Jan 1, 2006Ownership: VES through the 30-year BOT agreementContract with VES: 30-year concession agreement for the investment, design, construction and operations of the landfillCurrent waste in-take: average 1,600 tpdLandfill gas-to-energy: expect to be operational by early 2008Bank financing: Standard Chartered Bank; current interest rate at 6.075%.


Projects in China – Foshan Landfill



Projects in China – Landfill Gas-to-Energy

Hangzhou Tianziling Landfill Gas-to-Energy Planto Cooperative joint venture with local Governmento Desgin, build, and operate for 15 years since 1998o Current output: 2 MWo Power price: RMB 0.4498/kWh (USD 0.0582)Guangzhou Datianshan Landfill Gas-to-Energy Planto Cooperative joint venture with local Governmento Desgin, build, and operate for 20 years since 1999o Current output: 3 MWo Power price: RMB 0.63/kWh (USD 0.0815)



Acquisition of Cleanaway Operations in 2006Nanjing: Shui Ge Landfillo Total waste capacity of 12 million tons (1998 – 2021)o LFG operation started in 2002o Capacity: 3.9 MW by 3 engineso Can be expanded to 5 engineso Contract term: 15 years (until 2016)o Power price: RMB 0.45 /kWh (USD 0.0582)

Xi’an: Jiang Cun Gou Landfillo Total waste capacity of 50 million tons (1995 – 2050)o LFG operation started in 2004o Capacity: 5.2 MW by 4 engineso Can be expanded to 12 engineso Contract term: 26 years (until 2027)o Power price: RMB 0.47/kWh (USD 0.0608)




Acquisition of Cleanaway Operations in 2006 (cont’d)Beijing: Asuwei Landfillo Total waste capacity of 12.5 million tons (1994 – 2015)o LFG operation started in Nov 2006o Capacity: 2.6 MW by 2 engineso Can be expanded to 6 engineso Contract term: 25 years (until 2028)o Power price: RMB 0.491 /kWh (USD 0.0636)


Projects in China – Guangzhou Likeng WTE

Location: Baiyuan District, Guangzhou City, Guangdong ProvinceCapacity: 1,000 tpdCommenced Construction: Dec 2002 by Guangzhou GovernmentFormal Commencement of Operations: Apr, 2006Ownership: Guangzhou GovernmentContract with VES: 10 years Operations and Maintenance contractCapacity output: 21 MWPower price: RMB 0.47/kWH (USD 0.0608). Share of revenue from power sales: VES will get 50% of the powersales if the power generation exceeds the designed level



Projects in China – Guangzhou Likeng WTE


Projects in China – Shanghai Puxi WTE

Location: Jiangqiao, Puxi, ShanghaiCapacity: 1,500 tpdCommenced Construction: Nov 2000 by Shanghai GovernmentFormal Commencement of Operations: Dec 2003Ownership: Shanghai GovernmentContract with VES: - Owner’s Assistance Agreement providing testing and

commissioning services- 20 years Operations and Maintenance contract

Capacity output: 20 MWPower price: RMB 0.427/kWH (USD 0.0553).



Projects in China – Shanghai Puxi WTE


Projects in China – Tianjin Hazardous Waste

A sino-foreign joint venture with VES taking 44% equities; providing technical and management assistance.Scope of services:o Collection and treatment of hazardous industrial wasteo Treatment of medical waste

Major Processes:o Incineration capacity: 13,500 tpy o Landfill capacity: 40,000 tonnes in totalo PCT: 10,000 tpyo Stabilization: 5,000 tpy

Operational since September 2004Current waste volume:

942 tonnes per month of industrial waste301 tonnes per month of medical waste

Bank financing: China Construction Bank; current interest rate is 6.73%.



Projects in China – Tianjin Hazardous Waste


Projects in China – Huizhou Hazardous Waste

Location: Huizhou, Guangdong ProvinceStructure: Partnership with local environmental company. The JV signed a 30-year concession agreement with the Provincial Environmental Protection Bureau covering collection and treatment of hazardous waste in 5 cities of Guangdong, one of which also includes medical waste. Scope of services:o Incineration capacity: 10,000 tpy (total of 22,300 tpy with the

addition of the second incinerator)o Landfill capacity: 3 million tonnes; expect to receive 40,000 tonnes

for the first yearo Will add in WEEE recycling in Phase II of the project.

Commenced Construction: Jun 2005Bank financing: Standard Chartered Bank; current interest rate is 6.075%.



Projects in China – Huizhou Hazardous Waste

Schedule of major treatment processes:o Landfill: trial run in March 2007o PCT and stabilization: May 2007o Incineration: Target completion in July 2007 followed by testing

and commissioning


Projects in China – Latest Development

Medical Waste Treatment Facility in Foshan, Guangdong Provinceo Location: Gaoming Landfill operated by VESo Capacity: 15 tpd through incinerationo Contract with VES: BOT for 28 years




Laogang Landfill – World Bank’s SupportBenefits

Acted as a catalyst to assist the Shanghai municipal government in the planning and development of a modern waste management system.Helped ensure the tender was conducted in an open, fair and justmanner according to international best practices.Loan conditions at the time when World Bank’s support was offered were more favorable than those offered by the financial institutions in the market.



How would the LaogangLandfill project have evolved if World Bank was not involved?




Considerations for Future ProjectsLengthy tender and contract approval procedures may impact projects that may have an operational urgency or time implication. Direct payment and/or reimbursement payment system and procedures may be streamlined.Loan recipient is traditionally a state-owned entity. However, with the diversified company structure that has evolved over time, consideration can be made to allow the JV / foreign company operating the project to be more directly involved.Full disclosure to the operating entity on items related to the loan requirement will be beneficial.Reasonable conditions for early repayment of loan if beneficial to the Project JV.



Considerations for Future ProjectsWorld Bank loan costs have become unattractive with the addition of commitment fee and penalty for early repayment, particularly at a time when China’s economy surges. Local bank re-financing easily done.Borrowing in local currency is preferred to mitigate foreign exchange risk.Monitoring and follow-up on the project should not be limited to environmental, procurement and financial audit but should also include review of the commercial contract.

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