MSW management via PPP in Lebanese medium-size communities

Abstract

Public authorities around the world have been historically responsible for the management of their municipal solid waste. The burden of this task has been increasing through the years considering the rapid expansion of urban cities and their corresponding populations along with a decline in land availability. The escalating figures in municipal solid waste generation increased the technical and financial challenges faced by local authorities, especially in developing countries. In the case of Lebanon, political conflicts and corruption, weak law enforcement and lack of planning in addition to the influx of over one million Syrian refugees presented additional challenges to the efficient management of municipal solid waste. The sector have witnessed subsequent crises since the 1990s that were handled through unmaintainable emergency plans on every occasion leading to catastrophic results in terms of environmental and financial sustainability. In 2015, the main component in the 1990s waste management plans, the Naameh landfill that was receiving the majority of the country’s waste since 1990 was shut down, leading to a mega crisis that resulted in tons of waste piles in the streets of Lebanon. In the absence of alternative solutions, in year 2016 the government adopted two coastal landfills as part of another emergency plan prior to the development of a national strategy for solid waste management as per the integrated solid waste management law that was later enacted in year 2018. Today at the end of year 2020, the government has failed to develop its national strategy while both landfills in Jdeideh and Costa Brava reaching their design capacities. Moreover, an unprecedented economic crisis has deepened the sector’s wound leading to successive strikes by waste collection contractors whose operations have been severely affected by the devaluation of the Lebanese Lira against the US dollars. In addition, an enormous explosion at the port of Beirut on August 4th generated tons of debris, glass and demolition waste for handling and caused damages to the existing waste treatment facilities in the area. Faced by these challenges, this thesis have been developed as a contribution towards an efficient solid waste management in Lebanon. The main aim of this research is to develop a framework for decision making to be used by local policy makers at the municipal level who aspire to engage in public private partnerships for the management of their municipal solid waste while providing them with the required monitoring tools. These municipalities are currently incapable to bear the sector’s burdens due to the technical, institutional, administrative and financial challenges they are facing despite several attempts around the country that resulted in different success rate outputs. For this reason, partnerships between the public and private sectors can provide a great opportunity for these municipalities to develop their waste management infrastructure especially with the establishment of the high council of privatization and PPP and the enactment of law 48 of 2017 for public private partnerships. PPP in solid waste management have been historically established around the world and had their success and failure stories depending on the process they followed. The roadmap established in this thesis for local Lebanese municipalities took existing experience and lessons-learnt into consideration along with the guiding of reports from the World Bank and the Asian development bank to produce a framework based on four pillars that includes: needs assessment, feasibility evaluation, PPP scoping and structuring, and procurement. The developed framework was implemented on a case study for the union of municipalities of Sahel El Metne El Janoubi including member municipalities of Chiyah, Furn El Chebak, Hazmieh and Araya. The case study project’s analysis included semi structured interviews for data collection, evaluation of technical options that yielded to an implementation of an integrated solid waste management based on awareness campaigns, source reduction and separation, collection and transportation, treatment through composting and recyclables recovery in addition to landfilling. The project’s financial analysis over 15 years yielded a positive NPV of 297,839 US dollars and an internal rate of return of 20.30% that exceeded the calculated weighted average of capital cost of 18.76% in the case of the base scenario that is based on an annual cash injection from the municipality of 4,000,000 US dollars from municipalities. The NPV and IRR can achieve much higher values in case additional capital is injected from municipal budgets or exterior funding. A sensitivity analysis was also performed on the key factor’s influencing the project’s viability. Based on the analysis, the project was found to remain financially viable for a maximum exchange rate of 2,276 Lebanese Liras for 1 US dollar, a maximum of 9% inflation rate while being less sensitive to user fees collection and revenues from compost sales with the availability of cash injections. Moreover, a value for money analysis was performed for PPP MSWM project that was found to achieve a 33.4% reduction in budget expenditures compared to the current situation and yielded a positive NPV of 297,839 US dollars compared to a negative public sector comparator which implies that the project has achieve value for money through PPP compared to traditional procurement.