PRIVATISATION - OR - PIRATISATION?

with thanks to : 

e c o w a r r i o r Z

Friday, December 30, 2011

PRIVATISATION - OR - PIRATISATION?

Introduction

Rubbish is like an endemic disease with uncollected waste choking our rivers, and littering our highways and byways.  The vast proportion of the waste that does get collected ends up on a dumpsite where it contaminates the environment and causes public health concerns. For, in spite of the billions of Ringgit of public money that have been spent on the collection and disposal of our Municipal Solid Waste (MSW) over the years, there are still only 8 sanitary landfills servicing the whole nation.

As 2020 approaches it is obvious that in terms of public cleansing and waste management, we are still in the dark ages when compared to developed countries.

Back in 1999 the European Union issued the European Landfill Directive for its member states with the overall aim of preventing the negative effects of landfills on the environment.  

In these developed countries it is well understood that landfills result in pollution of surface water, groundwater, soil and air, and have a negative effect on the global environment in terms of contributing to the greenhouse effect, as well as presenting risks to public health. There is also the recognition that even sanitary landfills can become compromised after a period of time and offer no guarantee when it comes to keeping the toxic residues produced by MSW from entering the ecosystem.

This legislation forced the member nations to reassess how waste is handled and disposed of and by eliminating landfills the European countries have shifted the paradigm of how waste is regarded.

And herein lies the crux of the issue in Malaysia: Historically waste has always been regarded as an expensive problem, a natural bi-product of our consumer society.  This is however an erroneous perception, for in reality waste is a renewable national asset, a storehouse of resources that can be reused, recycled and recovered to the benefit of the environment and society in general.

Yet, in spite of lip-service to the notion of reclaiming, reusing and recycling, the government’s master plan for waste disposal is still totally dependent on landfills, and despite the huge amounts of public funds that have been diverted into waste management, we haven’t made any progress in solving our waste problem.

In contrast, the European model of recovering as much of the waste as possible has spawned a multi-million dollar industry.

The new Act

The 2007 Solid Waste and Public Cleansing Management Act was finally enacted in September 2011. It transfers responsibility for solid waste management and public cleansing from the Local Authorities to the Federal Government. As a result, new federal institutions including the Department of National Solid Waste Management and the Solid Waste Management and Public Cleansing Corporation were established.

This Act claims to bring solid waste management (SWM) in line with global state-of-the-art practices at no additional cost to the public. It includes regulation and enforcement tools as well as imposing higher responsibilities on the stakeholders. The Act also enabled the privatization of SWM. 

This privatization was bulldozed through parliament in much the same way as the recent Peaceful Assembly Bill and the development of Kg. Baru were hastily passed through the house with little debate, despite a lack of support from the majority of the people who will be affected by it.

When we take a close look at the Malaysian government’s strategy for implementing the act we find that the master plan is almost totally committed to building sanitary landfills to cope with the situation. Of course sanitary landfills are better than dumpsites, but it is clear that the same old mindset is still at play; the one that regards waste as a costly problem and not as a constant supply of untapped and renewable resources. 

This shows at best how misguided the Malaysian government is in trying to provide a world-class service.  At worst it illustrates that the solid waste management strategy has been developed with the interest of the industrial players in mind rather than what is best for the environment and society in general.

Lack of transparency and accountability

There is strong evidence of mismanagement and a lack of transparency in our national waste management strategy. Take, for example, the Bukit Tagar sanitary landfill in the north of Selangor, which is managed by KUB-Berjaya Enviro Sdn. Bhd. This 1,700-acre site was reportedly chosen because of its isolation from important groundwater aquifers thus eliminating the risk of water pollution.  However sceptics claim that the choice of location was determined by the then minister of housing’s desire to help out a friend who had already acquired the land thinking that the new airport was going to be located nearby. Since KLIA was subsequently built in Sepang, the minister’s friend was left holding a pretty worthless piece of real estate.  Then, or so the story goes, the government announced the closures of the Taman Beringen and Air Hitam dumps, in Kepong and Puchong, and acquired the land from the minister’s friend to build the Bukit Tagar sanitary landfill.  In addition to the cost of the land, the government reportedly handed out RM400 million to build the landfill.

On top of that, there’s the cost to DBKL for using Bukit Tagar to consider. At present the tipping fee at Bukit Tagar is RM28.80 per ton. By this time next year it will have risen by a staggering 58.7 percent to RM49 per ton. Then there’s the cost of transporting all that waste 50 kms north, and we mustn’t forget the cost of collecting the waste; the cost of transporting it to the Taman Beringen transfer station and the compacting fee.

According to KUB-Berjaya Enviro’s statistics, the Bukit Tagar landfill receives about 3,000 tons of waste per day.  However, if this amount of waste was sent to a Waste to Energy plant and processed to extract its latent energy, it could supply up to 25MW of energy - enough to power around 50,000 modern 3 bedroom homes using 2 air conditioners, a fridge and a television. Because Waste to Energy management strategy is sustainable it’s bankable and can be funded by private venture capital. In addition, the different revenue streams that are created, which make it sustainable, ensure that tipping fees can be kept at an affordable level.  

Immediately after the Solid Waste and Public Cleansing Management bill was accepted by the cabinet, the Housing and Local Government Minister, Datuk Chor Chee Heung government announced the award of contracts to three companies: Alam Flora, Southern Waste Management and E-Idaman. Besides payment from the local authorities, Chor said the companies had not been doing a good job because of a lack of funds and so they were also awarded between RM500mil and RM600mil a year from the Federal Government.This decision was made public just one day after the legislation came into force and, to the best of my knowledge, without any open tender exercise having taken place.  

The Act also raises issues of accountability, for under it, the minister’s decision is final and cannot be challenged in court. Furthermore, the legislation places all decision making in the hands of the Director General of the Waste Department, with no checks and balances to ensure that abuse of power does not occur.

The ‘red tape’ associated with the Act creates a barrier to local innovators and new players trying to enter the industry. For example, the National Waste Committee, headed by the deputy prime minister, is supposed to meet quarterly to look out for new ideas, and technology that would enhance and innovate the waste industry. All potential players wanting to enter the industry or suggestions on new technology must go before the committee for consideration.  However, I am reliably informed, that the National Waste Committee hasn’t met for the past year. Therefore, nothing gets done.  This is a classic ‘Catch 22’ situation, and hardly an incentive to develop local technologies. 

On the other hand, One German company who has been given approval to build biological composting plants are using a technology that, as far as I know, has not been proven with our waste profile.  I’m not implying by any means that they are not doing a good job, but I’m sure there are Malaysian companies that could do an equally good if they had been given the opportunity.

In effect Malaysia’s solid waste management system operates like a cartel, with only a few, select industry players getting contracts.  Private companies and individuals offering green technology solutions are constantly being sidelined.

Financial mismanagement

The privatisation of solid waste management comes with an additional cost of about RM250 million just to cover administrative costs. Waste disposal is already an expensive business with billions of Ringgit of the public’s money being spent to: develop new landfills, operate and maintain existing landfills, and to close old ones, therefore these new administrative charges will place an additional financial burden on the public.

With all the decision-making and purchasing power residing with the Director General, How can we be sure that the people are getting the best deal?  The short answer is we cannot!  And in the light of the government’s gross overspending highlighted in the recent Auditor General’s report, the public can be forgiven for being suspicious that financial manipulation is in play.

Bin buying is one area where financial mismanagement seems to have taken place. Following privatisation, the government ordered 70,000 waste bins to be dispersed to householders and the price of each bin was tagged at around RM260. This would mean additional public expenditure of RM18.2 million. However, when bought in bulk, these bins can be procured for as little as RM88 each, even my local hardware store sells them for RM150  - a lot less than the government is paying.

Wasting money in the waste industry is not a new phenomenon. Over the years, successive governments have bought expensive technology that has proven not to work with local waste parameters.  Our spending on incinerators is a case in point.  Let’s take the fiasco of the Labuan incinerator as an example of what I mean.

In the 1990s, George Kent (Malaysia) Berhad, were given a multi-million Ringgit contract to build waste incinerators for the islands of Pangkor, Langkawi, Tioman and Labuan. The Labuan incinerator alone cost RM40 million and was written-off without running for even one day. In fact, all of the incinerators were scrapped due to faulty design, high maintenance costs and operating expenditure.  In plain language this means that the technology was unsuitable for Malaysian waste. 

The incinerators that were chosen were designed to run without the need for auxiliary fuel but this wasn’t viable because of the high moisture content of the waste (60-70%).  This bumped-up the operating expenditure enormously as an auxiliary fuel such as gas or diesel would be needed to actually burn the waste instead of the waste itself being the only fuel required. This is a classic case of not doing enough research before buying technology.

However, instead of learning from this costly mistake, the government went ahead and commissioned 5 new incinerators designed by XCN Technology, for Langkawi (100 tons a day), Labuan (50 tons), Cameron Highlands (40 tons), Pangkor (20 tons) and Tioman (10 tons). The costs range from RM20.3mil to RM68.4mil. Only the Langkawi plant will be a waste-to-energy facility, capable of generating 1MW of electricity.

Despite reassurances from Datuk Dr. Nadzri Yahaya, who is Director General of the Department of National Solid Waste Management, that these new incinerators have been custom designed to cope with the high moisture content and to run with much lower operating expenditure, it is unlikely that the tipping fee alone will be sufficient to operate these new incinerators. That means higher assessment charges or a yet another subsidy, which ultimately will come from the householder and taxpayer pocket.

By 2020 we will be spending at least RM20 billion of the public’s money on this industry with little or no accountability.

Obsession with landfills

The decision to continue with landfills as the main avenue of waste disposal also makes a mockery out of the river cleaning programme as even sanitary landfills cannot guarantee that leachate will not eventually enter the water table.  This was highlighted during Hari Raya 2010 when leachate from the Sg. Kembong dumpsite entered the river and caused the closure of the Semenyih water treatment plant leaving 300,000 households (1.2 million people) without water during the festive season.

Landfill advocates are always quick to explain the virtues of sanitary landfills. It is true that some companies are now collecting landfill methane and are generating electricity.  However what they do not mention is that locally developed Resource Recovery/Waste to Energy technology generates 5 times the amount of electricity and comes with the added bonus of keeping the land clear of waste, as the waste itself is processed and the energy inside it recovered for public use.

Other landfill companies are covering old landfills with expensive solar panels in order to generate electricity for the nation. However, if these old landfills were mined instead, the energy recovered from the waste would supply the national grid with renewable energy and restore the land to be used for other, more positive, purposes.

Just to give you some idea of the hidden cost of closing old landfills: the government has already given Cypark Resources Berhad more than RM400 million to close 17 landfills.  Closure entails covering these old sites with soil.

Time to come clean

It is now time to question the motives that drive decision-making in the waste management industry and not just in terms of federal accountability.

Even though the Penang State government didn’t sign the privatisation agreement they still need money from the Federal Government in order to implement their waste management programme.  In Penang’s case they have decided to buy an untried solution using overseas technology. In order to pay for this scheme the state government needed Northern Corridor money and in so doing needed to get approval from the EPU and Pemandu. On further investigation it would appear that their mechanism of decision making also involved issuing contracts to friends and close associates in much the same way that the non opposition states have been operating all this time.

It’s time the government and the local authorities started explaining themselves and answering some very pertinent questions:

Why doesn’t the government have a KPI to reduce landfills when we know that landfills are not the best solution and our continued use of them will act as a barrier to achieving fully developed status?

Why has the MACC not investigated, what appear to be many examples of gross mismanagement and overspending within the industry?

Why have the decision-makers decided to ignore international trends and refuse to seriously consider Waste to Energy options, which are cheaper to build and operate and are fully sustainable?

Why does the National Solid Waste Department continue to undermine local industry rather than supporting it by approving the appointment of foreign consultants who bring in their own technologies at the expense of local companies using homegrown technology?

Why are contracts still awarded without passing through a transparent tender process?

Why hasn’t the government implemented Agenda 21, which calls on governments to adopt national strategies for sustainable development? It specifically states that these strategies should be developed as a result of working partnerships with international organizations, business, regional, state, provincial and local governments, non-governmental organisations and citizens’ groups.

Lastly, Why is waste management still under the Ministry of Housing and Local Government when it would appear to be more appropriate to move it to the Ministry of Energy, Green Technology and Water?