Opinion:Monopolisation & Cartelization of Waste

Monopolisation & Cartelization of Waste

Background:

Privatisation through government tenders of the waste management sector in India started about two decades ago. These tenders included door-door collection, segregation, treatment and disposal of municipal waste, but door-door collection was mostly done by the unorganized sector. The unorganized sector collected this waste, segregated high values recyclables and dumped the rest in makeshift garbage rooms made across the city, from where the private contractors transported it to government dump sites on a tipping fee basis.

I still recall studying abroad reading a newspaper clipping that my father had sent me about how waste was being privatized in Delhi and if my memory serves me right, the tipping fee paid to these companies at that times was Rupees Four Hundred & fifty per metric ton. Companies awarded tenders use to stop in route to the dump sites and fill their trucks with construction debris to increase the load, hence directly increase their billing. As the process of privatization started spreading to large metros across India, certain large regional infrastructure companies got their skin in the game and the same model and process started repeating itself across India. What emerged was handful of companies mostly from the south and the north who slowly started gaining control of the waste management sector in India, while the unorganized sector, continued to spread its wings unchecked collecting, transporting, aggregating and treating recycling (plastic) waste. Delhi became the capital, as the recycling hub for plastic and E-waste in Asia. 

In the year 2006, there was a lot of noise being made about waste to energy as the new thing that will change the dynamics of the waste management sector in India. A bunch of government officials and politicians on tax payer’s money travelled to various European countries to see first-hand how they managed their waste, and to learn more about this miracle technology that they called waste to energy. They returned to India, with the noble idea that waste can be easily converted into electricity and made this technology part of all tenders moving forward. Little did they realize that India, has a thriving unorganized sector that segregates all high value recyclables from the waste. This started becoming a challenge, as the calorific value required for energy generation from waste is about 1440 and the waste that was being delivered at these plants provided value of about only 650. Companies who had set up waste to energy plants, had to add wood chips or coal to increase the calorific value of the waste. Economics of operating the plant was another challenge, with cost of production per unit working out at rupees 7-8 per unit and the government offering only rules 4.5 per unit as buy back. Many if not all the waste to energy plants are still struggling for lack of raw material or other operational issues. 

Meanwhile, the unorganized sector continued to grow both in metros and satellite cities around metros, engaging in collection, segregation, aggregation and treatment of municipal waste. Numerous NGO popped up, claiming to be the saviors of these ragpickers and waste collectors, fighting for their rights, while getting contracts form organizations and residential societies to collect and treat waste in an organized manner. Most if not all of these NGO’s engaged in process of getting the contract from the concerned and simply passing it on to the unorganized sector to do the work. Little or no capacity was built in terms of setting up infrastructure, and most of these NGO’s till date remain and act like middlemen. The unabated spread of the unorganized waste collection sector created many challenges as the competition to collect and recover high value recyclables from municipal waste started to intensify between vendors.

These waste collectors started offering money to collect municipal waste from residential, commercial and industrial establishments. The more the value of recyclables in the municipal waste stream the more the vendor was willing to pay for the waste. This process also started creating a massive challenge of dumps across the city, as these local unorganized contractors were only interested in recovering high value recyclables, the rest including organics was dumped on empty plots of land, on the road side, in the drains and in make shift dumps from where either government agencies or contractors collected the same and transported it to government dups such as Gazipur in East Delhi. Small unauthorized shack like warehouses sprung up all over the place where these individuals would stock their recyclables to trade them up.

Plastic, paper and iron were most sort after, with many individuals setting us small processing units to convert plastic waste into granules. Delhi became the capital and the hub in India for recycling plastic waste, with places like Mundka, Tekri, Noida, Gurugram, Moradabad and many more areas turning into illegal and unorganized hubs for waste disposal, aggregation and treatment.  

Over a period of two decades, the unorganized sector singlehandedly was able to change how organizations and residential establishments looked at waste. They in most cases looked at waste as a revenue stream. It did not matter to them what was being done with it as long as they received money for it. Garbage was being sold and is still being sold in many parts of India, and the unorganized sector continues to pay for this as this is their lively hood and the line is long in terms of competitors willing to do the same. With the generator pay model being introduced slowly, no wonder it is hard for many of these organizations and individuals to make the mental switch from getting paid to paying to get rid of their waste. 

MSW 2000 & SWM 2106 Policy: 

In the year 2000 the Ministry of forest & environment introduced MSW rules 2000. These rules delegated responsibilities onto waste generators, collectors, processing units, urban local bodies etc to start segregating their waste, and handing it over to authorized vendors. They also made the local government responsible for creating infrastructure, such as treatment facilities and scientific landfill sites. The follow up to this policy as the SWM Rules 2016 which added a few things such as inhouse treatment of organic waste by establishments covering over 5000 sq/miters of arear or generating over 100 kilograms of waste daily, introduction of user fee and guidance on what type of technology should be used to treat waste. 

There were severe lapses in both policies in regards to addressing structural challenges and the inclusion of MSME and the unorganized sector. The policy also failed to address the fact that the sector does not have industry status and remains unorganized to a great extent, ignoring completely how recyclables should be managed and along with not addressing major challenges pertaining to food wastage and the scrap market. The current policy makes it next to impossible for an entrepreneur looking to entre the sector, specially the collection, segregation and aggregation side, due to the vague nature of the language used and lack of clarity on many fronts. Further most, central and urban local bodies do not have expertise in the field of waste management, and their understanding of the sector is general in nature. Experts from large consulting firms have been hired both by the central and local governments to advise them on how waste should be managed. Most of individuals who have been tasked with creating policy and implementing the same at a ground level have little practical experience of how things function.  

This lack of understanding percolates down to the municipal level, where there understanding to what waste management means, revolves around collection, dumping and waste to energy. Even though the policy clearly states that authorized vendors must be given the waste, it fails to let us know how one can get authorization. Upon asking government employees working in the health department of various municipalities to provide permission to collect, segregate, aggregate, treat and dump waste, these individuals have a standard response, the entire cities waste has been contracted out, or is in the process of being contracted. Some municipal bodies & authorities have gone to the extent of registering a few technology providers (waste to compost/waste to bio gas) and then demanding that companies and residential establishments use only the technology from these companies to treat their organic waste. Privatizing the waste management sector through government tenders means that there is no scope of competition, with one vendor responsible for collecting and managing the entire cities waste. 

The policy is effectively creating a monopoly in the market for a few large companies, weeding out SME’s and the unorganized sector which will create massive challenges moving ahead in regards to unemployment and managing the city’s waste in the most effective manner. Instead of privatizing the waste management sector through a tendering route, the government should open the sector up for private companies and focus on building infrastructure and creating a policy framework that encourages competition. 

Current Situation:

Major metros, have all started tendering the collection and transportation of waste to single vendors. In some cases, there are multiple vendors, as is the case in Delhi. It is a well-established fact that one company cannot and is not being able to manage the entire cities waste. There are numerous news articles spanning the over the last decade establishing this fact. SME’s and the unorganized sector play a vital role in managing the waste of our country and are responsible for ninety five percent of all door to door collection, transportation, segregation, and supply of raw materials to the recycling industry. There is dire need for hundreds of small and large companies to enter this sector, for only where there is competition will there be innovation and best in class customer services. Yet there is disdain, little support for SME who have invested a modest amount of their own money to set up a system that costs the tax payer nothing, adds to the countries tax kitty and GDP growth, while supporting manufacturing sectors such as commercial vehicles, heavy machinery, travel and hospitality to name a few. 

Many organizations, residential societies and commercial establishments have the requirement for customized services. Some require vehicles multiple times, other require detailed reporting and accounting of what happens to their waste. Most large organizations have to meet their sustainability targets with waste being a massive part of it. SME’s in the organized sector charge a user fee from the waste generator, insure that the maximum amount of waste is recycled, with the organic waste is treated at the client’s site itself. In fact, companies such as our have even proposed to local and central governments to charge a tipping fee from us for the waste that we tip at their landfill sites, this insures that we remain motivated to recycle and treat the maximum amount of waste and only dispose items that the market provides no treatment option for. 

The tax payer’s money must be used for building infrastructure and the free market system must be left alone to decide which company grows based on the value they bring to the customer rather than building road blocks that create artificial barriers to entry. As our honorable prime minister stated, maximum governance and minimum government, I think the time has come to start applying the principal on the ground to insure a free, fair and competitive market environment. 

Manik Thapar (Founder & CEO) 

Eco Wise Waste Management Pvt Ltd