Waste Management PPP City of Johannesburg Alternative Waste

Waste Management PPP: City of Johannesburg Alternative Waste Treatment Technology Project Municipal PPP Conference 18 February 2010

Contents ____________________________________ • • Background Institutional Arrangements The Need Legislative Mandate Project Planning Co. J Process Lessons Learned 2

Background ___________________________________________ The Growth and Development Strategy • • The GDS presents the City’s understanding of the longer term strategic direction and future efforts needed to accelerate growth and enhance development Proactive absorption of the poor Innovative governance solutions Balanced & shared growth The GDS ensures harmonisation and alignment with National & Provincial strategies Sustainability & environmental justice Social mobility and equality • GDS developmental paradigm consists of six principles, which collectively reaffirm the City’s commitment to its Constitutional objects and duties Settlement restructuring 3

Background ___________________________________________ The City’s Vision Proactive absorption of the poor Social mobility and equality Balanced & shared growth Settlement restructuring Sustainability & environmental justice Innovative governance solutions “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” 4

Background ___________________________________________ Planning Instruments 1 x IDP* Jo’burg GDS 1 x SDF* 7 x RSDFs 13 Sectoral Plans Precinct Plans / Development Frameworks / Community Participation 5

Institutional Arrangements ____________________________________ Infrastructure & Services Sector INFRASTRUCTURE AND SERVICES SECTOR KEY OUTPUTS SECTOR FOCUS AREAS 1. 2. 3. 4. MAXIMISE REACH REDUCE BACKLOGS REDUCE LOSSES INFRASTRUCTURE UPGRADE WATER 1. 2. 3. 4. 5. MAXIMISE REACH REDUCE BACKLOGS REDUCE LOSSES INFRASTRUCTURE UPGRADE REDUCE OUTAGES ENERGY DELIVERY OF BASIC SERVICES 1. 2. IMPROVE SERVICE DELIVERY 3. CLEAN CITY 24/7 IMPROVE OPERATIONAL EFFICIENCIES MINIMISE WASTE TO LANDFILLS WASTE WATER JOBURG WATER ENERGY CITY POWER WASTE PIKITUP IMPROVING THE QUALITY OF LIFE OF CITIZENS 6

Institutional Arrangements ____________________________________ Waste Management Regulatory Environmental Management Environmental Health, Planning, JMPD Enforcement Planning & monitoring Infrastructure & Services Pikitup Service Delivery 7

Institutional Arrangements Mandate 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. 8

Institutional Arrangements Mandate Pikitup Johannesburg (Pty) Ltd • Municipal Owned Entity, 100% owned by Co. J • 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 Co. J via service fee & Capex funding • Reports monthly, quarterly & annually 9

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 10

The Need ___________________________________ Landfill Linbro Park Annual Tonnage (Tons) 0 Current Airspace Knock-on Effect (Years) 0 _ Robinson Landfill 279 568 3 _ Marie Louise 186 484 7 4 63727 10 3 Goudkoppies 156 547 17 3 Private landfills (Chloorkop, Mooiplats) Total 200 000 _ _ 1 572 652 _ Ennerdale 11

The Need ___________________________________ 12

The Need ___________________________________ 13

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 14

Legislative Mandate ___________________________________ • Polokwane Declaration – 50% of waste away from landfill by 2012 – A plan for zero waste by 2022 • Co. J IDP Targets – 15% diversion of waste from landfill by 2010 – 50% composting of waste by 2010 Currently only 5 -7% diversion achieved 15

Legislative Mandate ____________________________________ Waste Hierarchy Cleaner Production Prevention & Minimisation Recycling Re-use Recovery Composting Treatment Physical, chemical destruction Disposal Landfilling 16

Project Planning ___________________________________ • Why Waste Treatment Technology (Waste to Energy)? – Reduce waste to landfill by about 6080% – Electricity Generation – Potential for earning carbon credits – Proven technology world-wide; Europe leading 17

Project Planning ___________________________________ • 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 18

In Denmark: • 13 organic household waste composting plants • 33 incinerators • 120 garden waste composting plants • ~5 biogas facilities • ~15 major Packaging Waste: Recycled 56% (2000) • landfills ~20 inert landfills Ref: COWI 19

Treatment technology Is it proven? Cost (invest / oper / revenue) Landfill diversion Input quality Output risks MBT - aerobic Yes. > 60 plants 10 years Proven I: Medium O: High R: Negative Low - no RDF) Medium - with RDF Size reduction RDF off-taker? Quality of recyclables MBT - Anarobic Yes > 30 plants 10 years Proven I: High O: High R: Low/neg Low - no RDF) Medium - with RDF Size reduction Structure/fiber material Compost to landfill Wt. E moveable grate /rotary Yes > 1000 plants 100 years Proven I: High O: Low R: High Very high if ash recycling Receives all except excess bulky FGT to H: h No. Very few plants 5 -10 years Not proven I: High O: Low R: High Very high if ash recycling Size reduction and sorting Char, syngas user? Landfill of residue? Pyrolysis /gasification Comparison of treatment technologies Ref: COWI Ash recycling 20

Project Planning ___________________________________ The optimum combination of technologies for an integrated waste management system depend on the following key decision-making parameters: – Landfill diversion targets – CO 2 reduction / Environmental targets – Energy recovery and material recovery targets – Affordability targets (Capex, Opex, household levy /gate fee) – Procurement, ownership & financing strategy (risk allocation) 21

Co. J 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 22

Co. J 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. 23

Co. J 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 24

Co. J Process ___________________________________ 25

Co. J Process ___________________________________ Gate fees Income Description Units Waste Tonnes/annum 500, 000 Fee Rand per tonne R 112 Total Rands R 56, 000. 00 26

Co. J Process ___________________________________ Refit Tariff Net electricity available for sale per annum Price per KWh Total income R 277, 222, 713. 60 0. 76 R 210, 689, 262. 34 27

Electrical Connection • Load Study – Linbro Complete - Eskom Connection – Other 4 sites Complete City Power connection • Embedded Generation Application. • Systems Use Agreement / Supplementary Supply Agreement. 28

Electrical Connection REPA/ ISO Generation plant Meters Invoice for K W sold at REFIT tariff PPA between ENER-G and REPA Power delivered to end user A three party agreement for systems use Invoice for K W sold at Eskom Tariff PPA between Municipality and Eskom Municipality / Eskom 29

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 30

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 31

Co. J Process ___________________________________ Key Considerations from Feasibility Study • • Site Selection Calorific value of the waste Hazardous landfill site Suitability of technology for Co. J purposes Co. J By-Laws Financing of the project How to address the risks & sensitivities 32

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 1 st in South Africa, international expertise is necessary • Ensure Buy-in from Senior Management & Politicians 33

Thank You! Palesa Mathibeli Director: Waste Sector Infrastructure & Services Department Tel: (011) 381 0323 E-mail: palesamat@joburg. org. za 34