Modernizing landfills trough PPPsA comparison of Romania, Bulgaria and SerbiaCosmin Briciu – Green PartnersReka Soos – Green PartnersCristina Ardelean – Green PartnersBeacon ISWADecember 2010, Novi Sad, Serbia
Brantner Group: Gerhard Wagner
Tamara Stanacev
Andrea Gyorgy
RWA Group: Borislav Mourdzhev
Acknowledging contributions:
Facts about our countries
Policy context – focus on landfills
Where is the money from?
Facts about LF modernization
Challenges of LF modernization
Options for modernization: PPP, Private, Public
Case studies Oradea and Arges, Romania
Conclusion
Content
Facts about our countries
Population total
# of cities above 100,000
Waste generation rate/ capita/ year(kg)
Collection coverage in urban areas in %
Status of accession to EU
ROMANIA 21.584.365 25 380 90 1 January 2007
BULGARIA 7.528.103 9 468 100 1 January2007
SERBIA 7.498.001 6 348 90 Period of pre-accession
Policy context focus on landfills - Romania
2013• closure of 238 existing municipal landfills which are not in
compliance with EU;• construction of 65 municipal landfills which are in compliance with
EU regulations (min. capacity of 100,000 t/year – regional) –transfer stations;
• reduction of the quantity of liquid waste disposed in 23 plantswhich are not in compliance with EU regulations;
2016• reduction of the quantity of solid waste disposed in 101 municipal
non hazardous waste which are not in compliance with EUregulations.
Policy context focus on landfills - Bulgaria
2010
• 55 regional waste collecting depots and processing plants need tobe built (28 of 55 have not been built yet).
2016• the country has to comply with EU regulations and to dispose
with new WTP in all agglomeration areas with population over10,000 people (120 agglomeration areas)
Policy context focus on landfills - Serbia
2003
• adopted The National Strategy for Managing Waste;• envisages the establishing of 29 regional sanitary landfills + a number
of other facilities that are expected to help waste management tobecome more efficient and effective.
• the infrastructure needs are the following:
– 29 regional sanitary landfills
– 44 transfer stations
– 17 recycling centers
– 7 composting facilities - (revision phase)
– 4 incinerators
Policy context focus on landfills - Serbia
• adopted the Waste Management Strategy (2010-2019)• cleanup existing dumpsites that pose the greatest environmental risk
and hot-spot locations• proposed measures/activities:
- to prepare cadaster (SEPA, 2010)
- to define risk assesment and methods of remediation and priorities
for sanation
- to close, to do sanatization and recultivation
- to establish monitoring system for recultivation with high risk
May 2010-2019
Where is the money from?
Romania Bulgaria Serbia
• ISPA financing• National budget• OPE 2007-2013•PHARE• Private investors• Local budget
• ISPA financing• National budget• OPE 2007-2013 • PHARE• Private investors• National co-financing
• Serbian Environmental ProtectionFund grants and loans• Municipalities and Public utilities• Loans from local commercial banks• State budget• IPA funds• Bilateral donations and loans• Loans from international financeinstitutions i.e. the World Bank, EBRD,EIB• Private investors
Facts about Landfills modernization progress
# LF sanitary Population served
# LFs planned # LF closed
ROMANIA 26 15 890 000 65 220
BULGARIA 27 4 600 000 54 180
SERBIA 5 4 500 000 29 No data
•change driven by EU legislation
• slow absorption of EU funds
• Issues with LF siting
• high turnover of public officials (HR capacity)
• counties – county head city (conflict of interest)
• service users – service providers (communication)
• artificially high and unaffordable standards (high gate fees)
• highly competitive market (low gate fees)
• private investors – municipalities (allocation of cash out operations)
• procedures, bidding, tendering
Challenges in Landfill Modernization - Romania
Challenges in upgrading disposal - economics
cooperation between public authorities and businesses, with the aim ofcarrying out infrastructure projects or providing services for the public (EC)
Options for modernization: PPP, Private, Public
Scale of Public-private partnerships models
PPP EU financed project
•Faster implementation•Better risk allocation •Cost-recovery oriented•Greater efficiency in the use of
resources • Improved quality of service •Generation of additional revenues •Enhanced public management • Investment in infrastructure •Generating commercial value from
public sector assets
•Slower implementation•Not all the risks are allocated
correctly•No focus on cost recovery•Les efficient in the use of resources•Poor quality of the services •The financial part of the project is
established from the beginning of the project with no additional revenues
•Support the goals of individuals and organizations
•Focus on research activities
Main differences between EU financing and PPPs
• PPP specific legislation between 2002-2006
• 2006 – the legislation was repealed when Government enacted GEO 34 –
no relevant stipulations related to PPPs
• No piece of legislation dedicated only to PPPs after 2006
• GEO 34 - award of public procurement contracts, public works concession
contracts and services concession contracts
• End of June 2010 - Romanian Parliament adopted the “PPP Law” - will
simplify the procedures for concluding PPPs
Story of the Romanian legislation
Case study ECOBIHOR Oradea Sanitary Landfill – PPP (20 years)
PPP Actors Local Authority Oradea, Keviép Kft. (contract signed in 2003)
Financial Structure 100% private
E.U. Support? No
Landfill capacity ≈ 120 000 m3/year
Additional Facilities Waste sorting plant, composting plant, leachate pre-treatment station, landfilling, all necessary utilities (water, energy, buildings, access roads)
Services provided Sorting, composting, disposal
Beneficiaries of the services provided by the landfill
Legal beneficiary: local authorityFinal beneficiaries: the population, economic agents, public institutions, NGOs
Waste operators The most important collection service providers - S.C. RER Ecologic Service Oradea S.AOther collectors AVE, VALMAX, REOSAL,URBANA + a series of small waste operators
Total cost of the investment Since 2003 - €12.500.000
Tariffs Disposal tariff 12.87 Euro/ton
Profit The local authority will receive a part of the profit over a certain level - education and awareness actions related to the importance of waste collection
Problems from the point of view of authorities
Major problem – the selective collection
ECOBIHOR/ ORADEA
ECOBIHOR/ ORADEA
ECOBIHOR/ ORADEA
• Part of the profit of the authority will be used for educational and awareness programs and other he annual sanitation activities.
Annual profit share of investor
Annual profit share of Public Authority
< 30% 100% 0
30% - 39,99% 95% 5%
40% - 49,99% 90% 10%
50% - 59,99% 85% 15%
60% - 69,99% 80% 20%
70% - 79,99% 75% 25%
80% - 89,99% 70% 30%
>90% 65% 35%
Case study Albota Arges Sanitary Landfill – ISPA Project with a PPP component(20 years)
PPP Actors County Council Arges, IRIDEX Group
Financial Structure EU Grant- ISPA (€18.375.000 ), Arges County through EBRD loan(€ 6.1250.000), Government of Romania contributions (€ 10.932.315,07)
E.U. Support? Yes (€18.375.000)
Landfill capacity Cell 1: 750000 mc
Additional Facilities Sorting plant, composting plant, crushing plant, landfilling, leachate treatment plant
Services provided Collection, transportation, pre-treatment and final disposal facilities
Beneficiaries of the services provided by the landfill
Final beneficiary – County Council Arges
Landfill operator Landfill Operator: IRIDEX Group Waste collectors: Salubris, Salubritatea
Total cost of the investment € 35.432.315,07
Tariffs 11,5 Euro/ton
Profit - (the landfill was opened in May 2010)
ALBOTA/ ARGES
ALBOTA/ ARGES
• Form of contracting the waste service operators
ALBOTA/ ARGES
Public Authority Risks PPP Operator Risks
• Discriminatory Changes in Law
• Authority variation of contract term
• Waste supply risk
• Licensing and approvals
• Cost overruns, performance
standards, financial risks
• Waste supply risks
• Market and demographics risks
Ecobihor Albota comparison
parameter Ecobihor – privateinvestment
Albota – EU financing
• time for project preparation
• period of implementation,
from contracting to LF operation
• flexibility of contracts
• gate fee
> 1 year
1 year
Lock- in, municipality stuck
with cash- out operations
12,87 Euro/ton
3 years
2 years
Flexibility, several
service contractors
11,5 Euro/ton
Who Should Pay ?
Conclusion• EU is a driver for change, but sometimes very demanding
• PPP is possible and viable, but PPP legislation could be improved
• Private investors active in LF development to gain market share
• High competition among waste management operators
• More than ½ of population is served by engineered LFs in the region
• Gate fee: affordability versus profitability
Modernization is a slow process:
• Bureaucracy of EU financing
• A highly politicized market place
• Capacity
There is no one magic solution that fits all the situations.
Important to make informed local choice on source of financing and the contractual arrangements based on local needs and priorities.
Thank youfor your time.
Reka SoosDirector
[email protected]: +40 740 554 430
Cristina ArdeleanJunior Environmental Consultant
[email protected]: +40 749 155 962
Green Partners Ltd.Cluj-Napoca 400294Fântânele 18, RomaniaTel./Fax: +40 264 589 [email protected]
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