286 India Infrastructure Report 2003

Table 10.2.4
Profile of BOT Projects in the NHDP (31 July 2002)

Category Promoter Revenue No. of Length Total project

source contracts (kms) cost (Rs crore)
Toll based projects Non-NHAI Tolls 7 435 3314
Annuity projects Mostly Non-NHAI Annuity 8 476 2354
NHAI driven SPVs NHAI Tolls 7 241 1364
Total 22 1152 7032
Per cent of BOT projects to total under NHDP 8.23 12.12
Per cent of BOT toll based projects to total under NHDP 4.83 8.07
Source: http://www.nhai.org

projects. Other fundamental deterrents are perceived risks Considering the above, annuity-based projects rather than
due to problems in estimating traffic demand and the toll-based ones seem to have a better future. Annuity-based
willingness to pay. projects are those where the revenue streams are provided
Tolls-based road projects are demand-sensitive. This is to the BOT operator, either based on traffic volumes, or as
more so in the case of urban roads where the willingness a predetermined amount. Thus, the recently announced
to pay is almost nil. Also, the extent of homework done to National Highways Development Project (NHDP) plans to
identify various user segments (for example, single-trip versus build part of the main highways by using annuities. While
multiple-trip users) and develop an appropriate tolling this idea directly addresses the unwillingness to pay tolls by
structure is significant. Otherwise the consequence would the user, it moves away from the economic principle of
be that the construction and maintenance of city roads demand being influenced by the user fees.
would be ignored under the toll-based road development The Coimbatore Bypass project also has a lesson for project
concept. structuring, in that, we cannot resort to ‘inappropriate’
This aspect raises the basic issue of sustainability of tolling bundling to make the projects financially viable.
on the Indian highways. Commercial truck operators (who The NHDP is concentrating on arterial road building with
form the largest segment of road users) have been opposing appropriate incentives for quick construction and
the concept of tolls since they are already paying motor maintenance. The primary financing is through a cess on
vehicles tax and a cess on diesel and petrol. They have also fuel. The BOT framework has been used to a certain extent.
expressed concerns that a significant share of their For the BOT projects, annuities rather than tolling seems
revenues is consumed by tolls. (The Tribune Online Edition, to be the preferred route, though the NHAI has reserved
2002) the right of tolling (Table 10.2.4)7.

10.3 THE PRIVATE SECTOR IN MUNICIPAL SOLID WASTE MANAGEMENT:

THE CASE OF POABS GREEN

Biju Varkkey

Urban areas are centres for economic activity and employment administrations. Through the 74th amendment of the
generation and the spatial dimension of all that is dynamic Constitution of India, urban local governments (municipal
in the society and in the economy. Estimates place their and city corporations) were empowered to deal with urban
contribution to India’s GDP to around 60 per cent. According waste. That responsibility places a heavy burden (financial
to the 2001 Census, nearly 28 per cent of the Indian population and otherwise) on the local governments, who were already
is urbanized. Urban areas contribute 57 per cent of non- short of funds. As a result, they have increasingly sought
agricultural employment. The growth of urban areas, including private participation to manage urban waste8. Interventions
the growth due to the natural migration from rural areas in by the Government of India and the Supreme Court of
search of better opportunities, puts pressure on urban
infrastructure in areas like transport, housing, water, power, 7 See Chapter 3 of this report for discussions on the initiatives
sanitation and waste management. of the NHAI.
Managing the increasing amount of waste produced in 8 Urban waste is highly heterogeneous in character. Discussions
urban areas continues to be a challenging task for the civic in this section are confined only to solid waste management.
 The Sectors 287

India had reinforced the need for urgent attention to the aircraft safety. Other sites were near residential areas and there
problem. was considerable public pressure to relocate them.
Urban solid waste management (SWM) may be divided As the city grew, the administration was under pressure
into a four-stage process comprising of a) waste generation, to identify more land for dumping waste. Irrespective of
b) collection, c) treatment and d) residue management. political affiliation, it became a common issue for all
Over time, urban bodies had created their own systems to political parties10. The need was to create a sustainable
handle the waste, and in the process enlisted a separate cadre solution, but it never happened. Some attention was given
of employees. Unorganized ragpickers were also involved by to increasing collection efficiency, but as the dumping sites
default at different stages of the waste treatment process. became over-saturated, its impact diminished. Corporation
Landfilling and burning were the common treatment employees either refused to collect waste from the collection
methods employed to dispose the waste. Experience indicates points or, if it was done, offloaded it in vacant areas
that the efficiency level of solid waste handling, when done around the city. Informally, a limited amount of recycling
directly by the government, was low. Reasons for the and sorting of SW was undertaken through ragpickers.
inefficiency included factors like weak infrastructure, As a long-term solution to the problem, the corporation
financial constraints, lack of equipment, low employee decided to identify land outside the city limits, preferably
motivation, organization structure and process inappropriate in a sparsely populated area. In 1989, the corporation
to the task and existence of vested interests. procured 12.5 acres of land in Vilapil panchayat, 8 km
Privatization of the SWM process generally implied the away from the city limits. As soon as the news about the
transfer of one or more of the stages to the private investor. location of the corporation waste-dumping ground spread,
The agency got remunerated for the activity. There are the residents of Vilapil panchayat started an agitation. An
instances where community and non-government organization action committee of citizens, formed to oppose the
(NGO) involvement was experimented with successfully corporation’s decision, approached the court and obtained
(Rath, 2002). Current initiatives in SWM try to ensure that an order that temporarily prevented the corporation from
SW would be put to productive use through recycling, other further action.11
commercial propositions like energy generation, bio-fertilizers,
etc. In the capital of Kerala, the Thiruvananthapuram city Supreme Court Judgement and SWM
corporation handed over the responsibility of SWM to a Lack of proper attention to the safe and scientific treatment
private investor who planned to construct the treatment of SW could have disastrous consequences for the quality
plant on build, operate and transfer (BOT) basis and recover of life not only in the city but also in the surrounding areas.
its investment by selling the residue in the market. The effects were proved as being harmful to human, animal
and plant life. Untreated waste, apart from polluting land,
SWM BEFORE THE PROJECT water and air, contributed to the deteriorating quality of
life. Accumulated SW piled up on roadsides, obstructed city
Like all other urban centres, Thiruvananthapuram also faced traffic, and caused difficulties for pedestrians.
problems related to the disposal of SW. Often untreated SW The general apathy of civic administrations in India while
used to be left at public places and it created problems like dealing with city waste had forced environmental activists to
obstruction to smooth traffic flow, foul smell, blocking of approach the Supreme Court of India with a public interest
drains and other health hazards. Prior attempts to solve the petition. They prayed for a court directive to the central and
problem had not succeeded. Corporation employees collected the state governments to establish SW processing facilities in
the waste from the city and transported it to pre-identified all large cities. The Supreme Court (1999) passed an interim
locations where it was dumped or openly burned. judgement instructing the central government to ensure that
Due to a near uniform degree of urbanization across the all cities with a population of more than one lakh have
state of Kerala and the high population density of facilities for the scientific treatment of SW. Subsequently, the
Thiruvananthapuram,9 availability of vacant land was severely Government of India issued the Municipal Waste Management
limited. Moreover, land cost being on the higher side, it was and Handling Rules in September 2000, specifying the
not only difficult to procure land for dumping SW but such
an activity was also cost-inefficient. The city was thus forced
10 SWM continues to be one of the issues over which elections
to depend on sites that had already outlived their lives. One
of the sites was close to the international airport and threatened to local bodies are fought. Irrespective of political affiliation, the issue
figures in all the manifestoes.
11 Formal city limit in Kerala is merely an administrative category,
9 According to the census of 2001, the population of with little meaning otherwise. The above situation is because of
Thiruvananthapuram is 75 lakh. uniform urbanization in a large part of the state.
288 India Infrastructure Report 2003

parameters and compliance criteria for different activities from the farm were shipped to the Queen of England. The
related to SW handling in cities.12 Group had a captive waste processing plant that used
accelerated aerobic composting to convert farm waste into
organic manure. An in-house research team of the Group
THE PROJECT was engaged in developing environment-friendly pesticides
In order to comply with the Supreme Court directive, the for use in organic farms. In addition, the Group was one
corporation13 decided to establish a modern facility for the of the largest public works contractors in Kerala.
scientific treatment of SW. The GoK also supported the Meanwhile, the residents of Vilapil resumed agitation
corporation’s proposal.14 Since the corporation was not in after they learned about the project through the media.
a position to finance the venture, private participation was Their agitation was directed against the decision to transport
invited. According to the announcement made by the city waste to their locality in order to keep the city clean.
corporation, the SW treatment plant was to be located at All political parties (including the Left Democratic Front
Vilapil where the corporation had acquired land. Even though (LDF) that was in power at Vilapil) and social as well as
the corporation was interested in Excel Industries Ltd.15 religious groups supported the agitation. To avoid direct
and had contacted them directly to set up the plant, they confrontation between the residents and the bidders, the
were reluctant to invest directly in Kerala. corporation dissuaded the bidders from visiting the location
before submitting the bids. Poabs Group representatives
The Bid officially16 visited the location with police protection only
after the bid was finalized in their favour.
The corporation invited national bids for SW treatment
facility and four agencies indicated interest in the venture. Bargaining for Concessions
The Poabs Group of Companies, a Kerala-based industrial
group with interests in construction, farming, etc. was However, after the visit and after conducting a preliminary
awarded the contract for developing the SW processing feasibility study, the Group decided to withdraw from the
plant on Build-Own-Operate-Maintain basis. The Poabs project. The decision was verbally conveyed to the
Group had proposed using Excel Industries that converted corporation leadership. The feasibility study established that
organic SW into bio-fertilizer through the aerobic process. the project cost would be around Rs 9 crore, while the cost
The plant was to be located on the land leased to the for a similar capacity facility would have been closer to 5
company for 30 years by the corporation. The bio-fertilizer crore17. Financial institutions were reluctant to lend at such
would be sold in the market to recover the investment. high project-cost. Excel Industries who provided the
Though they did not have any prior experience in SW technology, also advised withdrawal. But the political
treatment, the Group had interests in organic farming. leadership of the corporation and GoK (both ruled by LDF)
Their 833-acre farm was the largest multi-crop organic farm were adamant about building the plant at the earliest.
in India and employed 700 workers. The Group had bought The corporation approached the Poabs Group to re-
the farm from European planters and every year oranges negotiate. The city mayor took a special interest in
negotiating with the Group and coordinating with GoK.
12 The specifications are rather exhaustive. There is a section that
At that time GoK had declared an informal moratorium
on payments to contractors who had undertaken
feels that the specifications are on the higher side, closer to developed
country standards. The quality of urban waste generated in Indian construction work for the government, and around Rs. 5
cities is different from that in the developed countries. Presence of crore was due to the Poabs Group on that account. As an
human faecal matter in higher quantities is a major source for waste incentive to accept the project, the Group was promised
contamination. There also, Kerala can be one exception, mainly due immediate release of the dues, bypassing the payment
to the availability of toilets with water closets and the higher sense schedule set by GoK. In addition, the following incentives
of personal hygiene. Scarcity of open land could also be another
were also offered18:
reason for the situation.
13 In order to win popular support, the corporation initiated a
16 They had made an informal attempt to visit the location, but
‘clean city’ movement, of which SWM was an important component.
14 The Left Democratic Front (LDF) was in power in both the failed to reach the site since the action committee members recognized
state government and the city corporation and this did help in them and they were forced to return.
17 The layout of the land was along a steep slope and it required
winning support. However, though Vilapil panchayat, where the
waste treatment facility was eventually located, was also with LDF, additional investment to level. After levelling, the effective useable
similar support form the facility did not come through. area got reduced to 4 acres from 12.5 acres. The entire plant area
15 Excel Industries Ltd. is a Rs 4000-million company, which has had to be covered with roof to protect against rain.
18 The concessions were negotiated at different points, some after
the required know-how about SWM through aerobic process.
www.excelind.com the plant was commissioned.
 The Sectors 289

• Thiruvananthapuram corporation would provide land, The plant was installed with the capacity to process 400
approach road, electricity at concessional rates, etc. on tonnes of waste per day and the corporation was obliged to
priority basis. deliver 300 tonnes to the plant daily. Corporation employees
• The corporation would be responsible for collection, had to collect SW from the city and transport it to the factory
sorting,and delivering of unprocessed waste to the site every in vehicles arranged by the corporation. They were expected
day. The corporation would bear all costs related to the to sanitize the waste before transportation. Sanitation was
above operation. necessary to prevent decomposition at the collection point.
• The corporation would deliver 300 tonnes of organic The company was entitled for compensation at the rate of
waste to the factory every day. In case the corporation failed Rs 49,000 per day from the corporation, if the delivery
to deliver the adequate quantity, compensation would be commitment failed. The revenue inflow came from the sale
paid to the company. of organic manure to the state agriculture department (as per
• Steps would be taken to settle local agitation and the agreement with the government) and in the open market.
obstructions to the smooth functioning of the plant. Poabs Poabs was expected to pay 2 per cent of the sales to the
could also request for police protection, if required. corporation as royalty. Some revenue was expected from the
• The government would help the company to avail sale of non-organic waste with resale value, like metal and
central government subsidy to the tune of Rs 5 lakh. rubber (truck tyres). Annual land rental payable to the
• The state agriculture Department would buy organic corporation was Rs 1 per sq m.
fertilizer directly from the company (without the normal
government procedure of tenders) at a fixed price19. The SW Treatment Process
Revised Business Model Corporation employees would collect unsegregated waste
from different parts of the city and store them at points for
Based on assurances from the corporation and GoK, the
transportation to the treatment plant. By that time,
Poabs Group formed a company called Poabs Envirotech
decomposition would have started, raising foul smell. Poabs
(P) Ltd. to develop and manage the new venture. The
maintained a weighbridge at the site to track the quantity
technology employed was aerobic processing developed by
and quality of waste. They had the right to reject the waste
Excel Industries20. Excel agreed to provide the required
if it was contaminated by construction, industrial, chemical
technical training to employees of Poabs Envirotech and
station their employees (technical experts) in the plant for or hospital waste.
supervision and troubleshooting. The Group generated Rs Inside the treatment plant, the waste was to be
9 crore for the project through internal accruals. (The mechanically sorted to remove non-organic contaminants
promoters expected immediate release of Rs 5 crore from like metal, rubber, plastic, stones, glass, etc. The organic
the Kerala government as well as the central government part was to be heaped and a special bacteria colony introduced
subsidy of 5 lakh, but both never came through. Though to accelerate the aerobic decomposition process. Special
the Ministry of Non-conventional Energy provides incentives chemicals would be added to prevent foul smell. Bacterial
for pilot power-generation projects from SW, the technology action would continue on each heap (churned in intervals
chosen by the Group did not support power generation. for better results) for 40 days, and the temperature rises to
Other concessions and help that had been promised, like 80°C. The heat neutralizes living seeds and other pathogens.
preferential treatment for power connection from the Kerala The final product would be sold in the market under the
State Electricity Board (KSEB), did not materialize.) brand name POABS GREEN.
19 This was not part of the contract signed by the corporation
Community Opposition to the Project—Stage I
and the Poabs Group. The agreement was arrived at after negotiations
with GoK, not the corporation. The residents of Vilapil village, led by the village panchayat
20 Technology choice was taken in favour of aerobic decomposition and various citizens’ groups, had opposed the location of the
since the Group had exposure to it on their farm. Also, this was garbage dumping facility in 1989 itself. As a result, the 12.5
considered more suitable to the waste composition, that included acre land owned by the Thiruvananthapuram corporation
harbour (fish) and slaughterhouse refuse, market waste, hotel waste,
etc. The process was fast (45 days) exothermic and without foul smell.
in the village was left as it was. Agitation against the
The process was considered superior to other organic waste conversion corporation restarted when news about the location of the
options like pelletization, grinding, power generation through anaerobic treatment plant in the corporation land became public. At
digestion and composting through vermi-culture. Treatment of garbage that stage, the protest was not directed against the Poabs
with specially developed biological inoculum causes accelerated Group, but against the corporation for locating the plant in
bioconversion in an exothermic environment destroying harmful
their village. Since the corporation already owned the land,
pathogens and seeds. The process is considered environment-friendly
and without any side effects on people handling the waste. the eviction of residents and the rehabilitation of the project-
290 India Infrastructure Report 2003

affected people were not the issues. The local community move, with the support of all political parties and other commu-
was worried about the possible deterioration in the quality nity leaders. According to the action-committee members,
of life and the reduction in land value. According to them, their apprehensions came true after the plant started functioning.
the village was a scenic attraction and preferred as a residential In the subsequent months, the media reported that:
location by city residents moving away from the city centre. 1. The quality of the air in the village, particularly in
Land prices in the locality had increased after city residents the surrounding area, had deteriorated due to the foul smell
started to purchase land in the area. Initially, citizens’ groups of decomposing waste.
led the protests. Soon the Vilapil panchayat and local affiliates 2. The freshwater stream flowing through the village
of political parties took over. While they recognized the need had become polluted resulting in health hazards to the
for such a project, they wanted the corporation to shift the villager who used it for bathing and washing. Some villages
project elsewhere, preferably within the city. reported skin rashes and sores after bathing.
At first, the corporation attempted a political solution 3. The village was attacked by swarms of flies and insects.
to the agitation, through the LDF that was in power at the 4. Decomposing waste from the corporation trucks
state, in the Thiruvananthapuram corporation and also in transporting garbage to the plant spilled over on roadsides
the panchayat. As a conflict-resolution technique, the and remained there. There was no system to collect the
corporation, at its own expense, sponsored a study tour for spilled waste and foul smell enveloped the area.
a 30-member delegation to a similar plant (technology 5. There was a presence of yellowish liquid mass around
provided by Excel Industries Ltd.) in Vijayawada, Andhra the factory and near the stream.
Pradesh. Representatives of residents, local leaders of all 6. Residents from other villages refused to enter into
political parties and elected representatives of the panchayat social relationships (marriage) with the village residents due
were in the delegation. The objective of the study tour was to the social stigma attached to staying near the plant.
to educate them about the technology and remove fears 7. Demand as well as price of land had plummeted.
about perceived harmful effects of a SW processing plant.
But the visit failed to help the corporation to alleviate the To express their protests, the action council decided to
fears and the opposition to the project. Political infighting block the garbage-carrying trucks from entering the village.
between parties complicated the dispute and the corporation The panchayat passed a unanimous resolution requesting
was not able to build a consensus. From the cost-benefit the government to close down the factory. The villagers
perspective, the project was seen to largely benefit the city were uncompromising about the plant and wanted it to be
and its population without any advantage to the panchayat. shifted elsewhere. Police acted against the agitators who had
blocked the trucks, and many activists were booked for
Project Execution obstructing public servants from discharging duty.
(Reportedly, there were also incidents like stone pelting and
In spite of protests from the local residents, the corporation physical assault of corporation employees accompanying
went ahead with the contract. The Poabs Group was the trucks.) Police action turned the villagers against the
pressurized to commence construction, before the agitation Group, and the villagers accused the company of influencing
turned more forceful. The plant, considered one of the the police to act against their peaceful agitation.
largest of its kind in Asia, was completed in record time, The villagers filed a petition before the High Court of
under the supervision of Excel Industries. Under the Kerala and the court ordered an investigation by the Kerala
agreement, the Poabs Group had 18 months to complete the state Pollution Control Board (PCB). In addition, several
construction of the processing plant and to commission it. cases were filed against the plant and the Group by private
However, the Poabs Group finished the construction of the individuals, in the lower courts. Following the adverse media
400-tonne-per-day- capacity plant in five months. 1.5 lakh reports against the plant, the state Ombudsman for Local
cubic metres of soil was shifted to level the land, In addition, Bodies issued a notice to the corporation and demanded a
the entire plant area was covered by asbestos to protect it report on the functioning of the plant and the environmental
from rain and the boundary was fenced so that fears about and health problems caused by its presence. Meanwhile, the
birds and animals spilling the garbage were removed. The action council initiated a mass signature campaign to be
Chief Minister of Kerala inaugurated the plant on 24 July submitted to the Chief Minister and planned protest
1999 and it became operational by October 1999. meetings inside Thiruvananthapuram city, including a
‘dharna’ (sit-in strike) in front of the Secretariat building.
Community Opposition to the Project—Stage II
A monitoring committee, chaired by the District
As a symbol of their protest against the processing plant and Collector, had to act as watchdog over the performance of
the government, the villagers boycotted the inauguration the plant. Though the committee had been set up before
function. An action committee of villagers led the boycott the plant had been commissioned, it had never functioned.
 The Sectors 291

Only after the court and the Ombudsman intervened in the it to decompose there. That turned the public against the
problem, did the corporation initiate steps to convene the company. On the other hand, employees complained about
meeting. The action committee suspended the agitation, the lack of tools for SW collection and loading, short supply
since their grievance was before the court. As a conciliatory of inoculums, and the lack of adequate number of trucks.
gesture, the corporation agreed to transport waste to the site Waste was a good business proposition for some
only at night so that residents along the truck route were corporation employees, who made money from it. Builders
protected from the transient odour. and landowners used SW as landfill material. Some farmers
The Group also got involved in the efforts to pacify the also sought the waste to convert it into compost for their
agitation. It offered the local residents daily wage employment farms. They bought waste directly from the employees, who
(Rs 150 per day) in the plant, but not many turned up used the corporation’s trucks to deliver the waste. There
because of the strong social ostracization. It complied with were also instances when the employees received some rent
the additional requirements imposed by the state PCB, like to clear waste regularly. The SW treatment plant implied
covering the sides of the plant and constructing a sedimentation an indirect stop to such rents, and they protested by engaging
tank to collect every drop of rainwater, though this increased in acts that brought down the reputation of the plant.
operating cost. (According to Poabs, some of the PCB The unions of government employees were apprehensive
requirements were unnecessary). Diary grass was planted on about the possible job loss and non-creation of further
unused land around the plant for the benefit of the villagers. employment opportunities. The feared, even if there was no
Eventually some residents were ready to sell the land at a good job loss, that the possibility existed of privatizing garbage
price and the corporation acquired additional 18 acres around collection in the next stage.
the plant21. But the populated areas (people there had The media was very active in highlighting the adverse
problems with the plant) were left out. effects of the plant on villagers. However, a section of the
media highlighted the vested interests behind the business
of garbage handling also. Some political activists were
FACT FINDING MISSIONS unhappy with the introduction of scientific waste treatment,
since it took away a very potent political weapon from their
As the dispute intensified, it invited a lot of media attention. hands. Many political leaders had exploited the issue to
While the corporation and the Poabs Group stood their their advantage and the installation of the treatment plant
ground that the project was environment-friendly, residents was a blow to them. They felt that the city mayor, who
complained about its effect on health and environment. piloted the project and supported Poabs, received public
Various agencies got involved in studying the operations. attention and political mileage. Subsequently, the demand
for closing the plant became a political agenda.
Internal Study
As per the agreement, the corporation was responsible for
State Pollution Control Board
collecting and transporting garbage to the plant. Corporation The state PCB was involved with the project from the initial
workers with government employee status did that work. stages itself. Later, on instructions from the court, the PCB
For processing effectiveness, specified pre-treatment of waste studied the plant for contamination of water, particularly
had to be done at the collection points and the corporation of the freshwater stream used by the locals for bathing and
was responsible for that. The waste had to be sanitized washing. They found no technical possibility of water
applying biological inoculums (a bacterial spray that reduces contamination, but raised the possibility of rainwater mixing
water content in garbage and lessens the foul smell) at the with garbage during the rainy season. (Kerala has heavy
collection point. rains for six months a year. According to company sources,
Corporation employees were not keen to sanitize the the stream was dry when the PCB inspected the plant).
waste, and even if they wanted to, the inoculums were in Since the plant was located on a hillside, there was possibility
short supply. Neither the corporation nor the company took of contaminated water flowing down. The board chairperson
the initiative to train the corporation employees in even went to the extent of describing the plant as ‘certainly
sanitization. Most trucks used for transportation were open- the best waste treatment plant in India’, but did not rule
bodied and loading was done carelessly. Untreated waste fell out negligence from different stakeholders (The Week, 2001).
out from the trucks during transportation. Corporation At the same time, company officials denied the possibility
employees refused to clean the spill from waysides and left of any contaminated rainwater flowing out.

21
World Bank Expert
According to the company, additional land was acquired at Rs
10,000 per cent, while the market rate was Rs 4000 per cent. A cent An SW consultant of the World Bank visited the plant and
is a hundredth of an acre. opined (comments recorded in the visitors’ diary maintained
292 India Infrastructure Report 2003

by Poabs Green) that the technology was very appropriate lead time to complete purchases. Efforts to hire private vehicles
and cost-effective. were unsuccessful due to the unattractive rent fixed by the
corporation and the reluctance of truck owners to rent out
Report by Expert Appointed by GoK their trucks for garbage transportation.
The quality of the SW delivered at the plant was another
In the light of allegations about environmental damages
concern. High-quality wastes like slaughter-house refuse and
caused by the plant, GoK requested a reputed
market waste were missing since they already had a ready
environmentalist to review the operations of the plant.
market outside. Instead, low-quality waste like leaves used for
While the expert accepted that odour was a problem, she
packing and coconut husks made up the bulk. The waste was
expressed satisfaction with the technology and the
also moist (up to 50 per cent, while the acceptable limit was
precautionary measures adopted by the plant. On the
25 per cent) and contaminated, predominantly by sand (20
contrary, the problem was traced to the waste collection
per cent). As a result, the final conversion rate was around
side. It was observed that the waste delivered to the plant
13 per cent, (13 tonnes of bio-fertilizer for 100 tonnes waste)
was already in decay due to collection and transportation
while the industry standard was 25 per cent. The wear and
inefficiencies. The night-only transportation rule was also
tear of machinery increased due to contamination, resulting
questioned, since it forced garbage to lie unattended during
in higher maintenance costs. The company was also finding
the daytime and caused it to rot.
disposal of contamination (sand) a problem.
The report lauded the company and suggested that the
corporation extend more support for its smooth functioning,
Output Risk22
including additional power for the plant (though promised,
power connection had not been given, forcing the plant to According to the business model, sale of bio-fertilizer
work on generators). The company was advised to go for manufactured from SW was the major revenue stream.
minor process improvements to reduce the odour and Before the Group initiated the project, GoK had promised
improve cost effectiveness. to procure the bio-fertilizer through the agriculture
department and other agencies of the government. Fertilizer
purchase was decentralized and the agriculture officer was
PROJECT RISKS AND THE STALEMATE
responsible for purchases. Subsequently, GoK issued a
Input Risk government order (No. 48916/03/99 L.S.G.D) instructing
the agriculture department to initiate necessary steps to
The corporation and the company acted on some of the procure the product at the government fixed price of Rs
concerns based on these reports. Apart from procuring more 4.50 per kg. The agriculture department also instructed its
biological inoculates for sanitization, the corporation officers to purchase the product. But, politically, the decision
constituted a separate supervisory squad to monitor the was questioned, since the government was seen to favour
garbage collection process. Even though, the smell from a single manufacturer. In spite of assurances by the
properly inoculated garbage was reduced after sanitization; government and the sales efforts by the company, the officials
it was impossible to fully control it. The company constructed refused to purchase from the latter. Many officers were
a boundary wall around the factory to prevent rainwater already engaged with established suppliers and they were
from mixing with the garbage. The villagers were then reluctant to break the relationship. There were also allegations
worried about the possibility of ground water contamination. about rent seeking.
In spite of commitments, the corporation failed to fulfil Though there was no single acceptable quality standard
even the daily quantitative obligations. While the contract for bio-fertilizers in India, the company ensured that its
required daily delivery of 300 tonnes of garbage, the product was of high quality and suitable for crops. Inputs
corporation was able to deliver on an average only 100 tonnes for the purpose were sought from the Kerala Agriculture
of garbage. According to company records the maximum University. Apart from the general purpose product, value
delivery was 150 tonnes. The corporation was not equipped added bio-fertilizer enriched with bacteria was also
with sufficient logistical support to fulfil the obligation. When introduced in the market. Faculty members from the School
the poor work habits and the rent-seeking behaviour of the of Environmental Studies, Cochin University of Science
corporation employees were cited as reasons for inefficiency, and Technology, closely monitored the quality standards.
the employee’s unions pointed to the shortage of trucks. The The company also maintained an in-house quality control
proposal to purchase more trucks was caught in red tape. and research laboratory. The quality check ensured that all
Moreover, the truck-purchase plans had got disturbed since seeds and parasites present in the fertilizer were dead and
the plant had been commissioned in five months instead of
the proposed 18 months and the corporation required more 22 Includes revenue and market risk.
 The Sectors 293

chemical traces were removed from the fertilizer. The Group Project Location and Community Interface
also devoted resources to brand their product as ‘Poabs Identifying suitable land for infrastructure projects is a
Green’, and retailed it through supermarkets and plant difficult task. The problem becomes more tricky when land
nurseries. requirement is in thickly populated localities. The local
Taking advantage of this, products with the generic community members, for multiple reasons that include
name ‘Organic’ flooded the market. Many small economic, health and political reasons, generally resist land
manufacturers with inferior technology and zero-quality acquisition. The existing legal framework for land acquisition
practices were able to save manufacturing costs and make and price fixation is inadequate to meet current market
their product available at cheap rates. The unregulated requirements.
quality standards for bio-fertilizers prevented Poabs from The case brings to focus (once again) the limitation of
differentiating its products from the rest. Bio-fertilizer ran the Land Acquisition regulations in defining ‘Project Affected
into a reputation risk in Kerala after some agencies marketed People’. In an urban waste-treatment project, the effects
burnt industrial waste as organic, causing crop damage. impact an entire community, not only economically, but
There were also instances where coloured and chemically also socially. Some of the social costs (like refusal to enter
treated farm waste was sold as organic product, and similarly into a marriage relationship with a resident from the vicinity)
where low cost manufacturers sold inferior products under are not considered under the legal framework. But for the
the Poabs Green label. These affected the market credibility community, the social effects are equally significant.
of bio-fertilizers, and also hurt the company. Agriculture Community opposition in this case has another
officers were reluctant to endorse the product in the absence dimension. Since the corporation had acquired land outside
of specific standards. city limits, it was interpreted as a deliberate move to harass
Though some revenue was also planned from sale of the people residing in the Vilapil panchayat area for the
reusable non-organic waste like metal, rubber, etc., the benefit of city residents.
company could not realize that. Informal ragpickers collected
this ‘valuable’ part of waste before it reached the plant. Employee Interface Issues: Government Employees
Moreover, the company found the storage and disposal of v/s Private Sector
non-reusable inorganic waste a problem.
Dealing with employees who are well entrenched in the
At Crossroads system is a contentious issue for all private-participation
initiatives. Employee’s unions have been in the forefront to
Even after two years of operation (December 2001), the stall privatization, both from an ideological standpoint and
situation at ground level had not improved much. The political to protect vested interests. Apprehensions about the loss of
composition of GoK changed after the general elections in job security and the maintenance of the conditions of service
April 2001. The new government demanded time to study are common demands raised. Lack of any social security
the issue. Local agitation also refused to die down. The scheme for such displaced employees forces them to cling
legislator who represented the Vilapil area, and had promised to the demand to maintain status quo. It is necessary that
during the election campaign that, ‘if elected, the plant will such concerns be addressed upfront, both at the political
be closed’ got actively involved in the agitations. Without any levels and operations levels. Dialogue with employee’s unions
improvement in sight, the Group decided to withdraw from and assurances about job continuation, retraining and an
the project and requested GoK to takeover the plant at cost. honourable exit option through a liberal separation scheme
However GoK prevailed on them to continue. can mitigate the resistance to some degree.
The next issue can be about the vested interests among
PRIVATE INVESTMENT IN SW: LEARNING FROM employee-groups. Inefficient performance-monitoring and
THE EXPERIENCE lack of accountability has created the culture of low
productivity and possible rent seeking among employees. In
Involvement of the private sector in SWM in Indian cities this case, evidence indicates that some employees did engage
is bound to increase. Traditional practices like landfilling in such practices. Often employees are observed to be
and open burning are not preferred anymore due to the involved in creating situations that prevent the private
high cost of land and adverse environmental impacts. Local investor from operating at the required efficiency level23.
governments are moving to alternative solutions like Waste-
to-Fertilizer, Waste-to-Energy and Waste-to-Reuse, with the 23 Media reports highlighted that when the Delhi Government
involvement of the private sector and the community. The went ahead with privatization of power transmission, various parts
experience of the Poabs Group discussed above raises some of the city experienced power disruptions. Restoration work, according
critical issues. to newspaper reports, took more time than what used to be taken
294 India Infrastructure Report 2003

More stringent monitoring (like surprise checks) and structures, the PCB has assumed the function of the regulator.
enforcement of accountability can help to stem the problems Since the technology itself is new, PCB faces a situation
to some extent. where the specialized competence required to advise and set
standards is missing. Monitoring committees controlled by
Process Improvement and Technology Selection the district administration become ineffective, since its
overburdened members may not be able to devote sufficient
The approach to SWM in India is mistakenly focused at time. An independent regulator with jurisdiction covering
trying to resolve the problem by introducing technology the entire state would be a better option.
solutions at the end stages of the SW chain, that is, processing.
Sometimes the decisions are taken under pressure, including Will Sops and Promises Work?
political compulsion, or due to pressure by international
It is quite customary for governments to offer concessions
agencies that finance such projects. At-source intervention
and sops to attract private investment for infrastructure
that results in reduction, segregation and recycling of SW is
projects with high risk and low potential for return.
not attempted, except in isolated pockets. Experience indicates
Realization of the promises is necessary for the smooth
that the results of any attempted solutions without focus at
functioning of the project, since the investor would have
source will be unsustainable and uneconomical. In that context,
factored the promises into the business model. Often such
the contribution of the informal sector, that is, ragpickers,
promises fail to materialize and the entire project suffers.
cannot be ignored. Community involvement, education, and
As this case indicates, the Group was forced to invest in the
coordination between waste generation points and collectors
project by offering sops that even amounted to bending the
will improve the quality of SWM in Indian cities.
rules. Failure of the government to fulfil commitments has
Different technologies are being used for SW treatment.
created a difficult situation for the company, the government
The Municipal Waste Management and Handling Rules
and the public. The investor also has to share part of the
2000 has specified standards for some of them. However,
blame for resorting to hard bargaining tactics and attempting
questions have been raised about the choice of technology
to leverage the vulnerability of the government to build
versus the economics of operation. Though both—Waste-
monopoly positions. In this case, the initiatives taken by the
to-Energy and Waste-to-Fertilizer—technologies are costly,
mayor, who wanted the project to be completed, has invited
local bodies favour them. As a result SW facilities are
criticism. Failure of such incentive-driven projects can have
centralized at one location, requiring investments in
strong signalling effects on the state government’s credibility
transportation and collection point sanitization to prevent
and affect future investments.
damage (in case of composting). Low-cost alternatives like
recycling or even localizing composting may be considered. The Drama Continues
Since an informal local market for waste (using it for
landfilling, composting, swine farming, etc.) exists, local The repeated pleas to the government to ensure that the
bodies can think of converting it into a commercial plant’s output be maintained as agreed, failed. The company
proposition where individuals can procure waste for a price. refused to accept waste and notified the corporation about
Community groups and NGOs can participate in such its decision. (June 2002). That placed the corporation and
initiatives that will reduce the quantity of waste that needs GoK in a tight spot since it was impossible to find an
to be processed at high cost. alternative arrangement at short notice. With the intervention
of the Chief Minister, A. K. Antony, the matter was
temporarily resolved. A high-level committee consisting of
Case for Regulation
a minister and a secretary, and members of the local
In this case, the absence of a proper regulatory framework administration department was appointed to study the issue.
is a reason for the precipitation and non-resolution of issues. After a month, (19 August 2002) the company again
Proper regulation is necessary in such instances to ensure notified the corporation about its inability to accept any
a level playing field and conflict resolution within a uniform more waste for further processing. According to them, they
framework. The void allows other agencies to interfere, were already saddled with accumulated stock as a result of
since there is no clarity about jurisdictions. In such cases, the refusal of government agencies to abide by the assurance
issues get pushed to the government for resolution or are given earlier. Even at the time of writing, the stalemate
challenged in the courts. Currently, in the absence of other continues while, uncollected garbage piles up in the city.

by the state enterprise, Delhi Vidyut Board (DVB). One reason cited unhappy about the loss of extra income from graft, hence they
for the above situation was that the erstwhile employees of DVB were restored to sabotage and delayed attending to complaints. But the
deliberately sabotaging the power lines. More than any sort of reasons cited by the government were the learning curve of the private
ideological opposition to privatization, the employees were reportedly agencies and rampant power pilferage.