Public Private Partnership: The Key to Greener Future

Greener Future

With the government pushing Swach Bharat, Sameer Rege points that it is important for the Private Sector to step in.

Sameer Rege

Sameer Rege

India’s major weak spot in reference to trade and business has always been infrastructure. While necessities like hygiene-care, efficient waste-disposal, mobility and public transport, etc. are abysmal in the rural areas; the cities aren’t that much better off either. Considering that cities are an integral part of the business sector of India, it has always been in the best interest of private companies to improve urban infrastructure.

Due to the heavy density of population in cities, the infrastructure should have been impeccable in urban areas. The amount of waste that a city dispenses should be segregated, collected and dispensed off effectively to avoid resource wastage and health problems. However, the current scenario on Municipal Solid Waste (MSW) Management is bleak in the developed areas. Almost 1.3 Lakh metric tonnes of MSW are generated every day and only a miniscule percentage of this is treated. According to estimates from a study done a few years ago, the National Task Force on Waste to Energy calculated that a potential of 439 MW of power can be generated from 32,890 tonnes of waste per day (12 million tonnes a year). The committee also estimated that India’s municipal waste production will rise to 165 million tonnes a year by 2031 and 436 million tonnes by 2050.

Having recognized this, the government has started taking steps to combat the dire waste problem that India is going to be facing soon. Initiatives like Swacch Bharat and Nirmal Bharat are admirable but as seen till now, the effect of these efforts have been minimal on ground. One of the main reasons for this is lack of execution and percolation of the projects undertaken. This is mostly due to the scarcity of financial resources faced by most of the Urban Local Bodies (ULB). In this situation, a radical improvement only on the basis of government initiatives is a tough, uphill task.

To help change the situation, participation from all sectors of society is important and that is where the Public Private Partnership (PPP) models can be a game-changer. A public–private partnership is a government service or private business venture which is funded and operated through a partnership of government and one or more private sector companies. Advanced technology and efficient processes being key for SWM projects, it was acknowledged that this sector could benefit greatly if government bodies tied up with private organizations.

While this model seems to work on paper, overall it hasn’t worked very well in India. Despite a few key projects like the Delhi and Mumbai metro, there aren’t many successful examples of PPP one can think of. Analysing this situation, some of the reasons for this could be:

  1. Lack of proper understanding at ULB levels of meaning of partnership with private sector
  2. Inadequate and faulty concessional agreements. Agreements were a one-way bond and not an agreement heavily loaded in favour of the ULBs.
  3. Bureaucracy issues also took over and this caused dis-settlement with the private sector.

However, these issues can be easily solved. With systems being set in place, the private sector could be incentivized to partner with government projects successfully.

With the availability of various technologies well adapted to the peculiar characteristics of Indian MSW, availability of finance from banks through Green Bonds, awareness amongst population and the passion to do something on ground amongst the ULBs, the private sector can play a major role to make our urban areas clean and green.

With authorities realizing that the renewable energy tariff needs to be higher than conventional rates because solid waste has to be segregated and then processed to generate power. On the same lines compost from Municipal Solid Waste is being considered for special support price, making it more viable financially for the private sector. It was also recognized that the gestation period in execution of waste management projects adds additional financial burden. To counter this, the concept of viability gap funding by the ULBs and the central government was proposed. Through the Swach Bharat Kosh, not only the ULB’s but also the central government invests in a PPP project. The profits are then later shared in the same percentage as the investment. This ensures that the ULB’s, government nor the private organizations lose interest in the project and see it through. The government has also mandated that projects undertaken for sustainable environment can be part of the Corporate Social Responsibility activities. This too is an added incentive for the private sector to play a lead role along with ULBs to make our cities a better place to live in.

Overall, the steps being taken to merge the prowess of the private companies with government initiatives are in the right direction. If the pace keeps up, India may be on the brink of a new, cleaner, greener tomorrow.

(The author is Chief Executive Officer, Mailhem Ikos Environment Pvt. Ltd.)