Presentation Transcript

1. Waste to Energy: PPP opportunities in India:

   Rakesh Bangera Head – Urban Practice Date: 13-March-2012 RENERGY CONFERENCE 2012
2. Agenda Key Conclusions Introduction MSWM Challenges Processing Technologies Investments Funding Way forward and Key success factors
3. 1. Key Conclusions
4. PPPs, Tipping Fees and Incineration are the future of MSWM The above changes will take place on account of improvement in service levels brought about by private sector, the need to comply with MSW Rules 2000, improvement in technology and the constraints being faced by ULBs in bringing about the desired changes on their own. Urban India generates ~50 MMT/p.a. of MSW today which is largely disposed in landfills without any treatment. Government of India estimates capital investment of ~Rs 49,000 crores for putting in place the infrastructure for collecting, processing and disposing MSW between 2012 - 2031. ULBs are expected to use PPPs to provide for MSWM due to lack of technical, financial and managerial capabilities with ULBs for MSWM. The investment and operating costs are increasingly expected to be recovered through support from ULBs. Incineration, a proven technology for MSW treatment in Europe, Singapore, China, etc. is expected to be the major processing technology adopted in India.
5. 2. Introduction
6. What are MSW1 & MSWM2? 1: Municipal Solid Waste 2: Municipal Solid Waste Management MSW refers to solid waste generated by households and commercial establishments. MSWM refers to process of handling and disposing MSW. MSW Rules 2000 make the ULBs responsible for MSWM. Key activities in MSWM are: Collection & transportation refers to aggregation and transportation of MSW. Processing refers to treating MSW to recover valuables viz. recyclables, compost, power, etc., reduce volume to be landfilled and prevent pollution. Scientific landfilling is the disposal of residues obtained from processing in a scientific manner to control pollution. MSWM is outsourced in three different types of contracts: C&T Contracts comprise MSW collection and its transportation to a MSW processing and disposal facility. Processing and Disposal Contracts comprise processing and scientific land-filling of MSW. Integrated Contracts comprise all the three activities.
7. Institutional Structure Central Pollution Control Board State Pollution Control Board Municipal Authority State Administration (Secretary in charge of Urban Development) District Administration (District Magistrate/ Deputy Commissioner) Monitor implementation of guidelines Grant of authorization for setting up waste processing and disposal facility or land fill Renewal of authorization Overall responsibility of SWM in the state Overall responsibility of SWM in the district Infrastructure development Apply for grant for setting up waste processing/ disposal facility Notify waste collection and segregation schedule to generators to help them comply Organise awareness programmes Review of standards and guidelines Compilation of monitoring data Monitor implementation of guidelines
8. Evolution of PPPs in SWM Only Collection and Transportation Service/Mgmt. Contracting No processing and disposal Gradual Shift A mix of BOTs, BOOTs and Service Contracts was observed Increased PPPs Integrated SWM services are being sought – focus on the entire value chain Pre 2000 2000 2000-2005 2005 onwards Future Supreme Court directed MSW Handling Rules Paradigm Shift towards Processing and Disposal JNNURM Thrust Integrated Contracts Composting and Waste To Energy technologies
9. 3. MSWM Challenges
10. Increasing MSW generation and lack of efficient MSWM Urban Population and MSW Generation Projections# Compliance with MSW Rules 2000* # Source: HPEC Report of Urban Infrastructure in India and CRIS Analysis * Source: India Infrastructure Report, 2006 MSW Rules 2000 made it mandatory for ULBs to provide MSWM by December 2003 but the service levels continue to be abysmal. MSW generation in Urban India is expected to increase ~2.3 times to ~115 MMT over the next 20 years necessitating deployment of processing technologies.
11. 4. Processing Technologies
12. Is incineration the right technological option? Assessment of Processing Methods* * Source: CRIS Analysis Incineration is a technology that is able to process MSW at a large scale while generating a valuable product electricity in the process. Incineration is perceived to be environmentally unfriendly on account of emissions but technological advances have enabled emission control thereby mitigating any adverse impact on environment. UNEP report estimates that air pollution control equipment e.g. fabric filters, electrostatic precipitators and scrubbers are able to control up to 99% of emissions. Incineration is successfully used as a MSW processing technology in Europe, China, Singapore, etc.
13. Incineration expected to be successful in India now * Source: Waste Generation and Composition Study conducted by CPCB with NEERI in 2004-05 Incineration was attempted in India in the 1980s but it was not successful in processing MSW. A key reason was the low calorific value (CV) of Indian waste. Low CV will not impact deployment of incineration going forward on account of the improvement in the CV of Indian MSW and technological progress. The CV of MSW increases as income increases on account of higher consumption of packaged items. Advances in incineration technology allow for processing MSW with a minimum CV 1,400 kcal/kg. Typical Urban Centers in India have MSW GCV above 1400 kcal/kg allowing MSW to be incinerated successfully. E.g. Mumbai – 1794, Delhi – 1786, Bangalore – 2386, Hyderabad – 1969, etc.*
14. 5. Investments
15. MoUD# assesses Rs 49,000 Crores of investment for MSWM # MOUD: Ministry of Urban Development High Powered Expert Committee appointed by MoUD has assessed capital investment of Rs. 49,000 Crores for MSWM for Urban India. The assessment is based on: Current and projected waste generation; Expected population growth; Existing compliance with MSW Rules 2000; and Requirements for ensuing 100% compliance with MSW Rules 2000.
16. 6. Funding
17. Waste to Energy: Economics Waste to energy technologies in India are commercially unviable Capital costs of Rs. 40 Crore for a 5 MW waste to energy plant, this is four times the investment required for thermal power per MW Operating costs of Rs. 4-5 Crores per MW for thermal of hydel power as against 16-43 Crores for waste to energy To support this high cost, the municipalities will have to support the waste to energy plants by giving a tipping fee Alternatively MNES or other agencies will support the plants with subsidies, but the justification for paying a high cost is doubtful Funding of capital costs through JNNURM is expected to reduce the tipping fees # MOUD: Ministry of Urban Development
18. Investments incurred by private sector to be recovered by tipping fees Sectorial Allocation for JNNURM funds# # Source: HPEC Report of Urban Infrastructure in India Most of the ULBs in India lack the finances to provide for MSWM. JNNURM allocation to MSWM has traditionally been low. ULBs will increasingly favor PPPs to provide for MSWM and the investment as well as operating costs will be recovered through a mix of user fees , tipping fees, and revenues from sale of power, recyclables, compost, etc. Tipping fees are expected to play a greater role going forward.
19. 7. Way Forward and key success factors
20. Increasing involvement of Private sector in provision of MSWM ULBs will leverage private sector expertise for undertaking MSWM using the PPP route. ULBs will use ‘integrated contracts’ that comprise MSW collection, processing, and disposal to improve their compliance with MSW Rules 2000. The private sector will rely on incineration as the primary technology for processing MSW. The capital and operating costs incurred by the developers will be paid through tipping fees. The private sector will need to focus on commissioning incineration facilities and stakeholder management for successfully implementing MSWM.
21. Deployment of Incineration and Stakeholder management will be the drivers to success Deployment of Incineration Incineration can process large volumes of waste and generate a valuable product (power) in the process. Stakeholder management Stakeholder management will be needed to increase the acceptability of PPPs to the stakeholders and translate into support for the project and collection of user fees. The private sector will need to undertake extensive ‘stakeholder engagements’ with citizens/civic society, NGOs, politicians, and ULB officials. They will need to bring about tangible improvements in service levels and make themselves visible through facilities such as call centers, participation in clean-up drives, etc.
22. Credentials CRISIL Infrastructure Advisory
23. About CRISIL CRISIL Limited was incorporated in 1987, to provide financial ratings to bond issues and thereby deepen the capital markets in India. CRISIL has played a pivotal role in the very approach to risk analysis and today is the fourth largest credit rating agency in the world CRISIL has introduced a number of services including infrastructure advisory, fund services, industry and company research, risk management and economic advisory CRISIL’s majority stakeholder is Standard & Poor’s (S&P), USA. CRISIL and S&P have a long standing association and jointly work on critical and cutting edge assignments for global clients Our Values and Businesses
24. About CRISIL Infrastructure Advisory Is a part of CRISIL Risk and Infrastructure Solutions Limited, a wholly owned subsidiary of CRISIL Ltd. Closely involved with both public sector entities and private sector entities in infrastructure development and investment Is present across various infrastructure sectors Is present throughout the investment cycle Our Local Presence
25. Sectoral presence of CRISIL Infrastructure Advisory Power Energy Fuels Infrastructure Roads Transport Ports Airports Water and waste Urban Infrastructure Transportation Real estate and tourism