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

reka.soos@greenpartners.roMobil: +40 740 554 430

Cristina ArdeleanJunior Environmental Consultant

cristina.ardelean@greenpartners.roMobil: +40 749 155 962

Green Partners Ltd.Cluj-Napoca 400294Fântânele 18, RomaniaTel./Fax: +40 264 589 291gp@greenpartners.ro