Waste [mis]management

How our politicians got us into this mess and what they’re not doing to get us out of it

Greg Demarque | Executive

If there was a prize for bungling the award of state contracts, Lebanon’s solid waste management tender would win hands down. Lack of bidder interest pushed the round’s closure date back several times. Lack of information on waste in different proposed service areas delayed the announcement of winners. And lack of understanding of the expense of modern waste management technologies – or feigned ignorance of – scuttled the plan before it even began. Beyond that, what qualifies this as the country’s most mismanaged tender process – and what makes this tale a tragedy rather than a comedy – is that it only prolongs the environmental catastrophe it was initially envisioned to avoid.

Over 45 percent of Lebanon’s garbage is collected, treated and – until July 17 – largely disposed of at a sanitary landfill near the town of Naameh. The landfill received far more waste than originally intended (although it was consistently expanded and still is a sanitary landfill, as opposed to an open dump). Residents had long wanted it closed, and the government did just that on July 17 without identifying an alternative site to put the 2,500 tons of waste per day it was receiving. The solutions that municipalities now rely upon are limited to open dumping and waste burning. Having a solution before closing Naameh – as a ministerial committee has been studying since March 27, 2014 – would have avoided this stinky situation. Looking forward, whether there is a sustainable national solid waste plan in place next year or another emergency plan, rotting piles of garbage will be this government’s lasting legacy.

2

With the contracting of solid waste management to the private sector off the table for now, the proposed solution for handling waste from the districts of Beirut, Metn, Keserwan, Baabda, Aley and Chouf floating around at time of writing calls for sending the refuse to a landfill in Akkar, which will reportedly be built to last three years. Ignoring the parallels of this emergency plan to the 1997 plan that led to Naameh’s creation, if policy makers do choose to implement this idea, be prepared for some serious traffic problems. On a tour of Naameh in mid-August, an official with Sukomi – the private company that operates the landfill – tells Executive that, when it was being used, 125 trucks per day were depositing waste there. They worked 24 hours. That’s around 5 trucks per hour, every hour, every day of the year. Cabinet has yet to publically disclose the environmental, social and financial costs of trucking waste about as far from Beirut as one can go. However, it seems unreasonable to expect Sukomi to transport the waste to the country’s northernmost district for the same fees it charged to move the garbage from its sorting facilities in Karantina and Amrousiyeh (south of Beirut) to Naameh (less than 20 kilometers from either facility).

On top of this, if the cabinet chooses to build a sanitary landfill in Akkar (as opposed to simply dumping the waste without any control of the toxic substances it leaks or the methane it produces as it decomposes), tendering the project, conducting the legally required environmental impact study to choose the landfill’s location and actually building it will all take time. Neemat Frem – CEO of Indevco, one of the companies that was in line to win one of the cancelled waste management contracts – tells Executive that once the land is secured, a sanitary landfill can be built in “two to three months.” He should know because Indevco partnered with a French company – Pizzorno – specialized in building sanitary landfills. All of the winning companies had foreign partners.

If the government chooses to try re-tendering, it is unclear who will bid. When asked what impact the tender cancellation would have on the willingness of international companies to participate in public sector bids in Lebanon in the future, Frem, a former head of the Association of Lebanese Industrialists, laughs. “Please don’t let me think [about that]. It’s horrible.” Policy makers will also have to lower their expectations of what waste management solutions should be provided if price is such an important consideration. Modern waste management technologies are expensive. For example, Saida operates a waste treatment facility which currently landfills only 15 percent of the waste it receives with a goal of zero waste landfilled by end-of-year. However, this facility has so far come with an investment price of $45 million and is not yet breaking even, charging $95 per ton with a daily waste load of 250 tons, says Nabil Zantout, the plant’s general manager.

burning1

The solutions that municipalities now rely upon are limited to open dumping and waste burning

National solutions could be even more expensive. According to a presentation about waste in Lebanon prepared by the Ministry of Environment, building three waste-to-energy plants in the country would cost $950 million. It is therefore unclear how the costs proposed by bidders surprised the cabinet’s 24 ministers when 8 of them – representing all of the main political parties in the government – have been preparing for this tender since early 2014. Unlike the general public, the committee did not have to wait until August 24 to know the various financial offers being tabled, (which ranged between $104 and $134 without street sweeping, according to a document obtained by Executive.) The committee evaluated the financial offers which broke those prices down into collection, treatment, investment cost and so on prior to the announcement.

Beyond that, at least some of Lebanon’s political class have been interested in waste management best practices for a few years now. Riad al-Assad – CEO of South for Construction, which was slated to win one of the contracts – tells Executive that his company only got interested in waste management at the prompting of Walid Jumblatt. The Druze politician was so interested in finding sustainable solutions for Lebanon’s trash that his sons formed a company – EcoParks Holding – with Assad in mid-2014. Assad explains that this was supposed to in turn be the parent company for special purpose vehicles (SPVs) that would have bid and managed different parts of the proposed waste treatment process. Jumblatt lost interest, Assad says without elaboration, but EcoParks is still listed in Beirut’s commercial registry with Jumblatt’s sons, Taymour and Aslan, who are listed as board members (but not shareholders). Further corroborating Jumblatt’s interest in waste solutions, Maysarrah Sukkar – CEO of Averda, the parent company of Sukleen and Sukomi, which collected and treated, respectively, the waste of Beirut and most of Mount Lebanon since the 1990s – said in a July interview on Kalam an-Nas that he and Akram Chehayeb, a Jumblatt confidant who is on the waste management ministerial committee, toured Germany in 2008 or 2009 to see waste-to-energy plants. With all of this interest in and, presumably, knowledge about trash technology, it seems very strange that Jumblatt was one of the first politicians to slam the tender bids as too costly.

Assessing the cost of waste disposal

When announcing the winning bidders less than 24 hours before the entire tender was trashed, Environment Minister Mohammad Mashnouq explained that, while the tender documents did not specify what technologies the companies had to use, there was a stipulation that in the first three years, winners could only landfill 40 percent of the waste they collected. In the final four years of the contract, that percentage was scheduled to fall to 25 percent. Sukleen and Sukomi, he noted without naming the companies, were landfilling 80 percent of the waste they collected. The tender documents, therefore, necessarily required bidders to invest in technologies that would keep garbage out of landfills, the least expensive of modern waste disposal solutions. The cheapest method of waste management is collection and open dumping which, according to a 2015 presentation by the Ministry of Environment, was the fate of around 26 percent of the trash generated in Lebanon – and that was prior to Naameh’s closure.

4

With an open dump, investment costs are zero. The problem with open dumping, of course, is that it damages the environment, poses risks to human health (each of which no doubt have their own associated costs) and kicks the cost of cleaning up to the next generation, much like the war-time dumps in Normandy and Bourj Hammoud. Actually treating waste has an investment cost, whether it is building sorting facilities to recover recyclables, a composting plant or incinerators. That said, assessing that cost and trying to compare one place to another is not as straightforward as it might seem. A 2001 report on the costs of handling garbage in Europe written at the behest of the European Commission notes that one of the many hindrances in trying to compare the costs of one system to another is private sector involvement as “commercial confidentiality is also frequently cited by private companies as a reason for not revealing detailed costs.” Additionally, when making comparisons, the report explains that the full system needs evaluation so like is held up against like.

Bringing this principle home, the cost of trucking waste from Karantina to Naameh is significantly lower than transporting it from Karantina to Akkar, which will impact the cost the operator charges the client (a municipality, or the Council for Reconstruction and Development, for example). And trying to compare Lebanon to Europe is particularly difficult given the differences in economic baselines, differences in who pays for trash collection (some households in Europe pay direct fees) and in how waste is collected, to name just a few. Further, the 2001 report explains European countries have legally mandated sorting-at-source (i.e, home separation of waste) and each individual type of trash has a different collection fee associated with it. On top of that, in Lebanon Sukleen collects from curbside locations on a daily basis. In European cities, collection is sometimes door-to-door, curbside or “brought in” (meaning households take things like recyclables to specific drop off points). Collection frequency in Europe also varies.

What we’re paying now

Comparing old and new in Lebanon is equally challenging. What are Sukleen and Sukomi charging? There are a variety of figures in different reports and media accounts ($130/ton; $140/ton; $147/ton; $150/ton; $160/ton; $174/ton). More often than not, sources for the figures are not provided, nor is it explained what that price includes (i.e., only collection and treatment; collection, treatment, landfilling; street-sweeping, collection, treatment and landfilling). In a 2010 report on the environment in Lebanon produced by UNDP, the Ministry of Environment and Ecodit, a local environmental consultancy, some figures are presented and sourced to a council of minister’s decision from 2010. The report states that waste collection is $26.60 per ton in Beirut for ordinary waste and $17.60 per ton for bulky items. Collection in Mount Lebanon is listed as higher at $34.60 per ton. Landfilling in Naameh, meanwhile, is listed as between $38 and $54 per ton, without explanation of why there is a range. It is unclear if collection prices include street sweeping or not. This is all to say that even assessing the current situation is no easy task. With different components of a waste management system having different costs, quoting those costs in one, per-ton price is arguably meaningless as a base for comparing between different systems.

masks1

In fact, some of the bidders even accuse Environment Minister Mashnouq of distorting their offers when announcing the lump-sum prices. Indevco’s Frem argues the price per ton in his joint venture’s offer of $171.60, as announced by Mashnouq, was misleading. Those responsible for the JV bid, which covered Jbail, Keserwan and Metn (minus a few suburbs that were part of the Beirut service area), told Executive that their price offered for collection, treatment and disposal of waste was $120 per ton. While two of the three districts are part of Sukleen and Sukomi’s service area, Sukleen does not do street sweeping in Metn or Keserwan like it does in Beirut. Frem explains that as part of the tender rules, the JV also included an estimated price for street sweeping (which is calculated by kilometer of streets swept, not tons as the amount of trash collected is usually very small) as well as an estimated number of kilometers in the service area. He insists that street sweeping would have been a service municipalities could choose to have, not something that would have been forced on them. When Mashnouq said the JV offered a cost per ton of $171.60, this was inclusive of the optional street sweeping, and made the quoted cost some 40 percent higher than for only collection, treatment and disposal. It also made the cost seem “high” compared to the unverified prices attributed to Sukleen and Sukomi.

And this is not the only accusation of mismanagement or misinformation concerning the tendering process. In an early August press release, Averda explained that it would not bid in part because “the prerequisite diversion from landfill and recycling rates required by the tender can only be achieved with a complete re-configuration of the existing composting and sorting plants, building additional facilities and completing the requisite environmental impact assessment studies. This cannot be achieved as indicated by the tender within six months due to the volume of work needed.” South for Construction’s Assad, who insisted the tenders were rigged to keep the incumbent in place during an interview in late July, sharply criticized their 7-year lifespan. He argued that the investment in waste management technologies could not possibly be recouped in such a short timespan. Nabil al-Jisr – president of the Council for Reconstruction and Development, which would have been the contractual partner of the winning bidders – told Executive the day the winners were announced that companies were allowed in their bids to suggest longer time spans for operating big-ticket investments.

Finding truth, given that even the tender documents were not made public, has not been possible. Not that it matters now that our country is slowly becoming a stinking dump.

Matt Nash

Matt is Executive's Economics & Policy Editor. He has been reporting on Lebanon since 2007 with a focus on oil and gas, policy and legal matters.

One Comment;

  1. Rolfen said:

    If the government does not cooperate – and this later crisis does not add to it’s reputation on the matter, any company who gets this responsibility (let’s dream there is no corruption and a real, fair, tender) will have to shoulder the costs of separating (triage) of garbage all by itself.
    Why bother.

*

Top