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Recycling history

Lebanon set to repeat past mistakes

by Executive Editors

We are being governed incompetently. 2015 proved that. Not only did the government’s handling of waste management allow one of the country’s worst environmental disasters to unfold, but it is replicating bad decisions it made nearly 20 years ago. In 1997, the cabinet gave one local company a monopoly on most of the nation’s waste without a competitive tender. As 2015 came to a close, the cabinet was set to simply split that monopoly between two international firms, again without a competitive tender. But for double the price. Worse, the alleged will to let municipalities handle their own garbage announced in September 2015 has yet to translate into action, meaning that if this temporary solution is truly temporary, rotting trash on the streets will be back in fashion for summer 2017.

It’s important to remember that the great “trash crisis” of 2015 actually started with a government decision in early 2014 to close the nation’s largest sanitary landfill. While there was nothing wrong with the decision to shutter the landfill, the blunders soon began piling up like so many uncollected bags of garbage. First and foremost, a ministerial committee tasked in early 2014 with finding a replacement for the Naameh landfill failed spectacularly. The plan this committee eventually settled on consisted of dividing the country into six service zones and tendering waste management in those zones to private companies. Bidding did not open until late in the first quarter of 2015, meaning that even if the tenders were successful, winning companies could not have had replacements for Naameh constructed before the landfill closed. Further, the plan once again would have given one contractor (admittedly a consortia of local and international companies) in each zone full control of waste management, which is not standard international practice and arguably the main grievance against Averda, parent company of waste managers Sukleen and Sukomi.

On top of that, the tender conditions were outrageous. The contracts were slated to last seven years, yet winners were expected to: 1) secure land on which to build waste management facilities; 2) build and operate those facilities; and 3) decrease landfilling from around 80 percent of the total waste stream to 40 percent in the first three years and to 25 percent thereafter. Land in Lebanon is expensive. Capital expenditure on technologies needed to decrease landfilling can cost millions, and resident opposition to waste management facilities “in my backyard” is high. Every private sector player Executive spoke to about the tenders — including those who ultimately submitted offers — said the tenders seemed designed to fail. Executive has not been able to discern exactly how the tender conditions were formulated, but Parliament should do its job and question all involved in an open, televised session. The legislature has this authority, as evidenced by an October committee hearing the press was asked to leave when MPs nearly came to blows.

When the tender winners were finally announced in August — over one month after Naameh closed and trash piles and open burning were common — the contracts were immediately cancelled because of supposedly high costs. As Executive noted at the time, proper waste management is not cheap, and several local politicians are well aware of that. The fall-back plan, formulated in a matter of days and approved by the cabinet in September, had two components: sanitary landfilling for 18 months and devolution of waste management responsibilities to the municipalities. The second part was the more important, as it was envisioned to be long-term and sustainable. Flawed as the reasoning may have been, the idea called for cities and villages to work together, establishing their own service zones and choosing local sites for waste treatment and disposal. While the public generally seems to have no problem littering or despoiling this nation’s natural beauty with festering open trash heaps, the Lebanese have traditionally opposed modern waste management facilities being built anywhere near their homes. The government was supposed to create a committee to build capacities among municipal leaders, getting them ready to handle their own trash — with or without private sector participation. By March 2017, the entirety of Lebanon should have had plans approved, contracts signed and all needed waste management facilities built and ready for operation to accommodate the full devolution of responsibility for this most basic service. While the temporary landfilling component of the plan hit the expected brick wall of public opposition, authorities have done absolutely nothing to prepare for full municipal takeover of waste management. If even one minister who approved the plan took it seriously, he or she should have loudly and frequently called for action on the long-term component. Instead, time has been much better spent bickering over temporary sanitary landfill sites.

[pullquote] The state simply gave the work to Averda instead of going to tender.This is a bad pattern. [/pullquote]

The most confusing part of this saga, however, is the seemingly final chapter. At time of writing, the government says it wants to export the nation’s waste for 18 months at a cost of $212 per ton. Given an average waste generation rate of 3,000 tons per day in the areas that incumbents Sukleen and Sukomi have been servicing, the total bill will be nearly $350 million — more than double the estimated $165 million for 18 months of waste management services the government would have paid Averda, Sukleen and Sukomi’s parent company. And awarding these new contracts without public discussion or competitive bidding is simply a repeat of the worst sin the government committed in dealing with Averda these past two decades.

Executive believes in private enterprise and responsibly earned profit, so we’ve been paying special attention to the so-called “waste file” and have dug deep into allegations of corruption levied against the private company that has been cleaning up after most of us since 1994. We were able to completely debunk some of the accusations against Averda (namely that politicians hold shares in the company and that its prices are extravagant). We could not disprove some of the other allegations against the company (namely that Averda paid bribes to get work, shared profits with the political elite and/or earned profit margins in excess of 30 percent). What is absolutely clear, however, is that Averda’s workload, and thus its revenues, expanded repeatedly without competitive bidding. The tendering process, however, is the government’s responsibility, not the contractor’s.

In dealing with Averda, successive governments seem to have viewed it as the path of least resistance. For example, in 1997 when the government faced a self-imposed deadline to close the open dump in Bourj Hammoud, the cabinet approved an ambitious emergency plan that envisioned the construction of waste sorting and composting facilities as well as a sanitary landfill in around 18 months. The state simply gave the work to Averda instead of going to tender. This is a bad pattern. We should be ashamed of it, not repeating it.

And, while it is uncommon for one company to be offering the full spread of waste management services, what the state pays Averda is not higher than in other countries with Lebanon’s income level for the same range of services. Doubling that cost with no guaranteed long-term benefit, however, is ludicrous and proof our leaders are happy to make incompetent decisions. Everyone loves to hate Averda, but the company did not create the situation in which it works. It should not be demonized for doing its job. That said, more transparency in waste management — as well as all state financed contracts — is long overdue.

Parliament needs to assert itself. If the government awards no-bid contracts, lawmakers should demand answers. In public. The legislature is supposedly the cabinet’s watchdog, and the “waste file” demands immediate action for the greater public good.

And years of accusations against Averda should teach us a few things. Parliament should also develop listing requirements for any company that wins state work of a significant value or duration. The exact requirements are open to debate, but the bottom line is that when public money gets spent, those ultimately footing the bill have the right to a basic level of knowledge and access to information.

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Executive Editors

Executive Editors represents the voice of the magazine.

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