Building Kuwait’s first waste to energy plant

Kabd Municipal Solid Waste Project

October 2014

1 Partnerships Technical Bureau (Kuwait) 1

2 The current waste situation in Kuwait 3

3 Solving Kuwait’s waste challenge 5

4 Structure of the Project 8

5 Next steps and concluding remarks 11

Page Section Overview

Table of Contents

October 2014

Partnerships Technical Bureau (Kuwait)

Section 1

1 Kabd Municipal Solid Waste Project • Overview

October 2014

Partnerships Technical Bureau Who we are and what we do

  The Partnerships Technical Bureau (PTB) was established in 2008, under Article 12 of Law No. 7/2008 and serves as the main body responsible for PPP projects implementation

  PTB aims to utilize private sector skills and expertise to maximize value for money and service quality.

  Increasing Kuwait’s Gross Domestic Product and diversifying its sources

  Encouraging private sector participation in development projects   Improving public sector service quality   Promoting human development and creating job opportunities for

Kuwaiti nationals   Promoting scientific research and technological development

Objectives PTB’s Key Objectives

Key

Sec

tors

Invo

lved

In

Power

Education

Water/ Wastewater

Healthcare

Transportation

Sold Waste Management

Real Estate

Communication

Kabd Municipal Solid Waste Project • Overview

Section 1 – Partnerships Technical Burea (Kuwait)

2

October 2014

The current waste situation in Kuwait

Section 2

3 Kabd Municipal Solid Waste Project • Overview

October 2014

Waste Generation

Comments

• In 2010 Kuwait’s municipal solid waste generating capacity reached 1.75Mn tons, expected to reach 2.75Mn tons by 2025.

• Demand forecasts from 2011 to 2025 are based on average municipal waste per capita (Kg/Capita) per year for the last 4 years (2006-2010) multiplied by the population size forecasted for the next 15 years.

• Kuwait has only three operating landfills currently, which do not meet international environmental standards. • Even though the Kuwaiti waste recycling industry has an estimated market size of approximately $100Mn, it

remains relatively unexploited.

Section 2 – The current waste situation in Kuwait

4

October 2014

Kuwait’s waste challenge Waste management is a critical problem in Kuwait with high per capita municipal solid waste generation and limited space in landfills • All municipal waste in the country is sent to

landfill

•  Poses a growing environmental threat due to ground water contamination and leaching

•  Limited landfill capacity available

•  Increasing use of illegal dumpsites

5 Kabd Municipal Solid Waste Project • Overview

Section 2 – The current waste situation in Kuwait

October 2014

Solving Kuwait’s waste challenge Section 3

6 Kabd Municipal Solid Waste Project • Overview

October 2014

Building Kuwait’s first waste to energy plant It was determined that a 1 mn tonne waste to energy plant would be an effective solution to address Kuwait’s waste management problem How we approached the problem

•  PTB appointed PwC to lead an international group of legal, technical and financial experts

•  The team developed a feasibility study and solution to address up to 50% of Kuwait’s municipal solid waste

•  It was proposed that a 1 million tonne waste to energy plant be developed using a PPP structure

•  The project will be developed through a design, build, finance and operate structure where in the private sector will be responsible for the development and operation of the facility

Key objectives for the Project

•  Diversion of waste from landfill;

•  Generation of renewable energy; and

•  Minimising water usage

7 Kabd Municipal Solid Waste Project • Overview

Section 3 – Solving Kuwait’s waste challenge

The Kabd MSW project will be amongst the largest waste to energy projects in the world

October 2014

Waste composition •  To determine Kuwait current and future MSW characteristic and composition , a waste composition study for 6 month was part of feasibility scope of work .

Section 3 – Solving Kuwait’s waste challenge

8

October 2014

Project definition and key features The Kabd project would be a turnkey solution covering construction, operations and maintenance and financing

9 Kabd Municipal Solid Waste Project • Overview

Section 3 – Solving Kuwait’s waste challenge

Construction

•  Waste treatment capacity : approximately 1 million tpa

•  Power generation : 650 GWh/year

•  4 combustion lines of approx. 34 tph each

Operations and maintenance

•  25 year operations including maintenance

•  Continuous operation of 7,500 to 8,000 hours per year, 24 h/7 days

Financing

•  Procurement of debt and equity capital to fund the project

October 2014

Structure of the Project Section 4

10 Kabd Municipal Solid Waste Project • Overview

October 2014

Project contractual structure The contractual structure is based on international best practices adapted for the Kuwaiti market

11 Kabd Municipal Solid Waste Project • Overview

Section 4 – Structure of the Project

Project Company

Ministry of Electricity and Water (MEW)

Kuwait Municipality

(KM)

Concession Agreement

Power Purchase Agreement

EPC Contractor

O&M Contractor

Funders Equity holders

•  Robust contractual structure

•  Based on international waste PPP deals

•  Cognisant of investor requirement and risk appetite

•  Clear and transparent risk allocation between government and investor

October 2014

Project payment structure Payments to investor are linked to the key outputs and performance of the project

The investor will be paid primarily through two key payments

1.  Availability Payment for the acceptance of waste and diversion of landfill; and

2. Electricity Payment for electricity generated by the facility

There may be additional revenue from recyclates and sale of slag

12 Kabd Municipal Solid Waste Project • Overview

Section 4 – Structure of the Project

MEW KM

Project Company

Third parties

Availability payment

Electricity offtake

Any 3rd party revenue

October 2014

Next steps and concluding remarks Section 5

13 Kabd Municipal Solid Waste Project • Overview

October 2014

Project status The procurement follows a structured process to enable bidders adequate time to design a competitive and compelling proposition

14 Kabd Municipal Solid Waste Project • Overview

Section 5 – Next steps and concluding remarks

Completion of Feasibility Study

Completion of EOI Commencement of

RFP phase Negotiation and finalisation of contract agreements

Financial Close

Release of RFQ

Completion of waste composition and characterization study; Preliminary EIA and SIA studies

RFQ Evaluation

October 2014

Concluding remarks Kabd is an important project for Kuwait and central to providing an environmentally sustainable solution to Kuwait’s waste challenge

15 Kabd Municipal Solid Waste Project • Overview

Section 5 – Next steps and concluding remarks

Summary of what we hope to achieve • Diversion of waste from landfill; •  Provision of base load renewable energy

(saving of fossil flue resources); • Reduction in greenhouse gas emissions; •  Support sustainable waste management; and •  Protection of water resources.

The Kabd waste to energy project will be an example for subsequent waste to energy projects in the MENA region

October 2014

Thank you

16 Kabd Municipal Solid Waste Project • Overview

Section 5 – Next steps and concluding remarks