contents _______________________________________________________________________

Waste Management PPP: City of Johannesburg Alternative Waste Treatment Technology Project

Municipal PPP Conference 18 February 2010

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Contents______________________________________________________________________

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• Background

• Institutional Arrangements

• The Need

• Legislative Mandate

• Project Planning

• CoJ Process

• Lessons Learned

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Proactive absorption of the poor

Balanced & shared growth

Social mobility and equality

Settlement restructuring

Sustainability & environmental justice

Innovative governance solutions

• The GDS presents the City’s understanding of the longer term strategic direction and future efforts needed to accelerate growth and enhance development

• The GDS ensures harmonisation and alignment with National & Provincial strategies

• GDS developmental paradigm consists of six principles, which collectively reaffirm the City’s commitment to its Constitutional objects and duties

Background_____________________________________________________________________________________

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The Growth and Development Strategy

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Background_____________________________________________________________________________________

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The City’s Vision

“In the future, Johannesburg will continue to lead as South Africa’s primary business city, a dynamic centre of production, innovation, trade, finance and services. This will be a city of opportunity, where the benefits of balanced economic growth will be shared in a way that enables all residents to gain access to the ladder of prosperity, and where the poor, vulnerable and excluded will be supported out of poverty to realise upward social mobility. The result will be a more equitable and spatially integrated city, very different from the divided city of the past. In this world class African city for all, everyone will be able to enjoy decent accommodation, excellent services, the highest standards of health and safety, access to participatory governance, and quality community life in sustainable neighbourhoods and vibrant urban spaces”

Proactive absorption of the poor

Social mobility and equality

Settlement restructuring

Sustainability & environmental justice

Innovative governance solutions

Balanced & shared growth

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Background_____________________________________________________________________________________

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Planning Instruments

Precinct Plans / Development Frameworks / Community

Participation

1 x SDF*

1 x IDP*

7 x RSDFs

Jo’burgGDS

Jo’burgGDS

13 Sectoral Plans

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INFRASTRUCTURE AND SERVICES SECTOR

SECTOR FOCUS AREAS KEY OUTPUTS

WATER

JOBURG

WATER

ENERGY

CITY

POWER

WASTE

PIKITUP

DELIVERY OF BASIC SERVICES

IMPROVE SERVICE DELIVERY

WA

TER

1. MAXIMISE REACH 2. REDUCE BACKLOGS 3. REDUCE LOSSES 4. INFRASTRUCTURE UPGRADE

EN

ER

GY

1. MAXIMISE REACH 2. REDUCE BACKLOGS 3. REDUCE LOSSES 4. INFRASTRUCTURE UPGRADE5. REDUCE OUTAGES

WA

STE

1. CLEAN CITY 24/72. IMPROVE OPERATIONAL EFFICIENCIES 3. MINIMISE WASTE TO LANDFILLS

IMPROVING THE QUALITY OF LIFE OF CITIZENS

Institutional Arrangements ______________________________________________________________________

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Infrastructure & Services Sector

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Institutional Arrangements______________________________________________________________________

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Infrastructure & Services

PikitupEnvironmental Health, Planning,

JMPD

EnvironmentalManagement

Waste Management

Regulatory

Enforcement

Planning & monitoring

Service Delivery

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Institutional ArrangementsMandate

ISD: Waste Sector

• Develops waste service delivery framework

• Ensure Pikitup delivers services in line with Agreement

• Monitors Pikitup performance

• Assess & verify Pikitup performance

• Reporting to Mayoral Comm & Portfolio Committees

• Tariff modelling & determination

• Implements strategic projects e.g LFG & Alternative waste treatment Technology projects.

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Institutional Arrangements

Pikitup Johannesburg (Pty) Ltd

• Municipal Owned Entity, 100% owned by CoJ

• Delivers waste services according to Service Delivery Agreement (SDA)

• Implements critical priorities as per GDS, IDP & other priorities

• Develops annual business plans outlining service levels, methods

• Renumerated by CoJ via service fee & Capex funding

• Reports monthly, quarterly & annually

Mandate

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The Need______________________________________________________________________

• Major growth period for the City

• Limited landfill airspace

• Difficulty to establish new landfills due to:

– NIMBY & lack of suitable land

– New Waste Act & Relevant authorities support for new landfills

• IDP requires 15% waste diverted from landfill

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The Need______________________________________________________________________

Landfill Annual Tonnage

(Tons)

Current Airspace

(Years)

Knock-on Effect

Linbro Park 0 0 _

Robinson Landfill 279 568 3 _

Marie Louise 186 484 7 4

Ennerdale 63727 10 3

Goudkoppies 156 547 17 3

Private landfills (Chloorkop, Mooiplats)

200 000 _ _

Total 1 572 652 _

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The Need______________________________________________________________________

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The Need______________________________________________________________________

0

10

20

30

40

50

60

70

80

90

composting Builder'sRubble

recycling AWT

Pecentage

current

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Legislative Mandate______________________________________________________________________

– The Constitution• A right to an Environment that is not detrimental to human

health• Schedule 4 & 5

– National Environmental Management Act• Duty of Care• Polluter pays principle

– Environmental Conservation Act• Section 20

– Municipal Systems Act• Municipalities to ensure universal access to essential services• Integrated Development Planning (IDP) process

– NEMA: Waste Act

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• Polokwane Declaration

– 50% of waste away from landfill by 2012

– A plan for zero waste by 2022

• CoJ IDP Targets

– 15% diversion of waste from landfill by 2010

– 50% composting of waste by 2010

Currently only 5-7% diversion achieved

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Waste Hierarchy

Prevention & Minimisation

Re-useRecovery

Composting

Cleaner Production

Recycling

Physical, chemical destruction

Landfilling

Treatment

Disposal

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Project Planning______________________________________________________________________

• Why Waste Treatment Technology (Waste to Energy)?

– Reduce waste to landfill by about 60-80%

– Electricity Generation

– Potential for earning carbon credits

– Proven technology world-wide; Europe leading

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• Thermal Treatments

– Incineration

– Autoclaving

– Emerging Thermal Treatment

• Gasification

• Pyrolysis

• Biological Treatments

– Windrow Composting

– In Vessel Composting

– Anaerobic Digestion

• Mechanical Biological Treatments (MBT) and Mechanical Heat Treatments

Ash Recycling

plant

Gases

Ferrous metals

extracted

Household Rubbish

Mixing Chamber

Furnace

Incinerator Bottom Ash

Heat and Electricity

Filter to Landfill

Recycling

Gases

cleaned

Ash Recycling

plant

Gases

Ferrous metals

extracted

Household Rubbish

Mixing Chamber

Furnace

Incinerator Bottom Ash

Heat and Electricity

Filter to Landfill

Recycling

Gases

cleaned

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Packaging Waste: Recycled 56% (2000)0% 20% 40% 60% 80% 100%

Household Waste

Bulky Waste

Garden Waste

Industrial Waste

Commercial Waste

Building Waste

Recycling Incineration Landfill/Disposal

In Denmark:

• 13 organic household waste composting plants

• 33 incinerators

• 120 garden waste composting plants

• ~5 biogas facilities

• ~15 major landfills

• ~20 inert landfills

Ref: COWI

20Comparison of treatment technologies Ref: COWI

Treatment technology

Is it proven? Cost (invest / oper / revenue)

Landfill diversion

Input quality Output risks

MBT - aerobic Yes. > 60 plants10 yearsProven

I: MediumO: High R: Negative

Low - no RDF)Medium - with RDF

Size reduction RDF off-taker?Quality of recyclables

Compost to landfill

MBT - Anarobic Yes > 30 plants10 yearsProven

I: HighO: HighR: Low/neg

Low - no RDF)Medium - with RDF

Size reductionStructure/fiber material

WtE moveable grate /rotary

Yes > 1000 plants100 yearsProven

I: HighO: LowR: High

HighVery high if ash recycling

Receives all except excess bulky

FGT to H:h

Ash recycling

Pyrolysis /gasification

No. Very few plants5-10 yearsNot proven

I: HighO: LowR: High

HighVery high if ash recycling

Size reduction and sorting

Char, syngas user?Landfill of residue?

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The optimum combination of technologies for an integrated waste management system depend on the following key decision-making parameters:

– Landfill diversion targets

– CO2 reduction / Environmental targets

– Energy recovery and material recovery targets

– Affordability targets (Capex, Opex, household levy /gate fee)

– Procurement, ownership & financing strategy (risk allocation)

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CoJ Process______________________________________________________________________

1.Mayoral Approval to initiate the project

2.RFI Issued

3.Feasibility Study Conducted in line with PPP guideline

4.Procurement process to follow involving:

– RFQ

– RFP

5.Appointment of preferred bidder

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CoJ Process______________________________________________________________________

Technical Feasibility Study

1.Needs Analysis – Summary of need for alternative waste treatment technologies in the City.

2.Technical Solutions Options Analysis – This is a full analysis listing Technologies available.

3.Technical Options to be considered for Johannesburg

4.Service Delivery Options Analysis- A full review of service delivery options carried out.

5.Proposed solutions

6.Summary and Recommendations.

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CoJ Process______________________________________________________________________

Other Aspects of Feasibility Study

1. Detailed Due Diligence of all the key issues associated with the selected options

2. Execution of a Value Assessment exercise in terms of affordability of the selection technical options as compared to avoided landfill costs

3. Risks & costing thereof

4. Detailed Procurement Plan for the various options

5. Submission of Report to Treasury & Council

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CoJ Process______________________________________________________________________

Description Tons Total Cost

Cost per

ton without

Waste-to-

Energy

Cost per

ton with

Waste-to-

Energy

Total waste disposed 1 650 250 68 000 000R 41.21R

Less: Waste disposed of at Mooiplaats (annualised) 80 376 4 179 552R 52.00R Less: waste disposed of at Chloorkop (annualised) 57 600 3 244 800R 56.33R

Waste to landfills 1 512 274 60 575 648R 40.06R

Less: Builders' rubble 156 768 -R -R Less: Gardening waste 142 283 -R -R Less: Composting - -R Less: Recycling 29 580 -R -R

Waste to landfills after intervention 1 183 643 60 575 648R 51.18R

Less: Waste-to-Energy 500 000 -R -R

Waste to landfills after intervention and Waste-to-Energy 683 643 60 575 648R 88.61R

Rehabilitation cost as per financial statements -213 243 035R

Term in years 10Interest rate 11%Payment 32 620 695.19R 27.56R 47.72R

Cost of landfills including rehabilitation 93 196 343R 78.74R 136.32R

Notes:

Cost does not include cell developmentRehabilitattion cost as per financial statements

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CoJ Process______________________________________________________________________

Gate fees Income

Description Unit Description Units

Waste Tonnes/annum 500,000

Fee Rand per tonne R112

Total Rands R56,000,000.00

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CoJ Process______________________________________________________________________

Refit Tariff

Net electricity available for sale per annum

R277,222,713.60

Price per KWh 0.76

Total income R210,689,262.34

2828

Electrical Connection

• Load Study

– Linbro Complete - Eskom Connection

– Other 4 sites Complete City Power connection

• Embedded Generation Application.

• Systems Use Agreement / Supplementary Supply Agreement.

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Electrical Connection

Generation plantGeneration plant

Meters

REPA/ ISOREPA/ ISO

Municipality / EskomMunicipality / Eskom

Invoice for K W sold at REFIT tariff

Invoice for K W sold at Eskom Tariff

Power delivered to end user

PPA between ENER-G and REPA

PPA between Municipality and Eskom

A three party agreement for systems use

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Power Sale Agreement

• City Power was initially approached to purchase the power.

• NERSA, Renewable Feed In Tariff - April 2009.

• License application with NERSA - May

• Government Notice R.721 - Electricity Regulations Act (4/2006): Electricity Regulations on New Generation Capacity published in August 2009

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Electricity Amendment Act

• NERSA to draft rules for Independent Systems Operator (ISO)

• REPA / ISO to purchase power from all Independent Power producers

• REPA / ISO Tender process

Conditional upon;

• REPA needs Cost recovery Mechanism ( CRM) to be approved.

• IRP 1 - Integrated Resource Plan 1

• National Treasury Support (Guarantee) for the costs of the program

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CoJ Process______________________________________________________________________

Key Considerations from Feasibility Study

• Site Selection

• Calorific value of the waste

• Hazardous landfill site

• Suitability of technology for CoJ purposes

• CoJ By-Laws

• Financing of the project

• How to address the risks & sensitivities

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Lessons Learned______________________________________________________________________

• PPP process requires proper time management & project management

• Use the support from National & Provincial PPP Units

• Establish a multi-disciplinary Steering Committee

• Ensure to procure Transaction Advisor with prior PPP & Project Finance experience

• Being a 1st in South Africa, international expertise is necessary

• Ensure Buy-in from Senior Management & Politicians

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Thank You!

Palesa Mathibeli

Director: Waste Sector

Infrastructure & Services Department

Tel: (011) 381 0323

E-mail: [email protected]

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