Private Sector Participation

CONTEXT AND BACKGROUND

Private Sector Participation (PSP) within the framework of Integrated Solid Waste Management is a concept that is currently intensely debated all over the METAP Region with varying degrees of understanding of the guiding principles. On the one hand PSP is often considered to be the ultimate solution to all waste management problems, whereas at the other extreme, there are severe reservations against any type of private sector involvement in the delivery of waste management services. This guideline therefore intends to clarify the different options for PSP, the pre-requisite conditions and mechanisms for ensuring success and implementation procedures. The intention is to make the decision making process on how to introduce PSP more informed and therefore objective.
If existing public services are efficient and effective, then there is no need to change to private sector provision of services. However, this is not the case in the region, with only very rare examples of good ISWM services. The region is generally characterised by the following:

Existing public institutions for ISWM often operate under more or less static framework conditions, in a situation where the quantity and pollution potential of waste is increasing in a dynamic way. In spite of the fact that solid waste disposal consumes about 20 to 50 % of the annual budget for many municipalities, waste disposal is not at all an important political issue, neither for the decision makers nor for the population.

Annual budgets for solid waste management are often insufficient to replace / upgrade outdated equipment and the services are generally not well structured.

The monopoly position of public service providers hinders the much needed increases in efficiency. In addition staff incentives for those working in the public sector are limited, and waste management services are in particular a thankless task.

JUSTIFICATION

The Region produces about 35 million tonnes of municipal waste per year and spends between US$ 325 - 400 million annually to manage solid waste. There is an urgent need to protect public health and to secure the protection of very limited water resources from solid waste related pollution, and also to explore and exploit the scope for involvement of the private sector in the delivery of improved waste management services.
The rapidly evolving policy, legal and institutional framework conditions in all eight METAP member countries presents new opportunities for investment projects including private financing and other proven operational alternatives (e.g. DBO or BOT).
The pre-requisite institutional capacity development for effective regulation of public sector services is a very important step towards mobilising international and national consultants and contractors in the planning, construction, operation and implementation of sustainable ISWM-Projects. There are several interesting examples of PSP in the delivery of ISWM services in METAP Region and these are reflected in the case studies provided with this guideline.
The implementation of private sector participation requires the adjustment of various regulations and the development of a responsible and competent regulator institution. Private sector companies can only be as successful and effective as the framework, within which they operate allows.