PPP projects in household waste processing

Recycling is a very pressing issue for Russia. This issue is very important for waste producing spheres such as mining, metallurgy, and also for consuming spheres: tires production, plants protection means, household appliances, food industry, retail trade.

According to the Audit Chamber, in Russia there are more than 1 thousand grounds, about 15 thousand authorized dumps, 17 thousand unauthorized dumps and about 13 thousand unauthorized waste locations. Total area of authorized and unauthorized dumps and industrial platforms of the enterprises for the production and consumption wastes placing makes about 4 million hectares, besides,  about 0,4-0,5 million more hectares of lands are allocated every year under their placement. Their area is comparable to the area of such states, as the Netherlands and Switzerland. At the same time lea than 40% of industrial and 10% of household solid waste is processed in Russia, so Switzerland is not the limit for the Russian dumps.  

Taking into account that waste grounds are filled for 50–90% on average in the country, a garbage collapse can happen soon. The Civic chamber of the Russian Federation offered a resolution under which by 2025 solid waste landfills have to be forbidden completely in Russia for the purpose of municipal solid waste utilization rationalization, except for small dumps near waste recycling plants (WRP) and the dumps intended for not processed waste (food, medical, toxic waste, etc.).

According to data of Rosprirodnadzor, in Russia less than 400 HCW sorting and utilization enterprises operate. This number is three times less, than it is required for the scales of our country. Public-private partnership is called the solution of the current problem for some years. This mechanism consists of the conclusion of agreements concession between region municipalities and private investors for the purpose of objects placement construction/reconstruction, use and neutralization of municipal solid waste. In many federal ecological documents PPP development is declared in the ecological sphere, however there are almost no results of effective partnership development of the state and business.

As for the beginning of 2014, according to data of PPP development rating of in regions of the Russian Federation, 131 projects 7 PPP projects of which belonged to concession projects in the sphere of HCW processing. Concession agreements represent a partnership where investor projects and builds the object, and then during certain term (10, 15, 20 years) runs its operation, services providing and thus returning the investments in construction. As soon as the term of the agreement comes to an end, the investor transfers the possession and use right to the state.

Even the most known PPP project on HCW processing — construction of Yaninsky waste recycling plant which had to begin in 2011, is still at the stage of agreements signing, transfer of rights and duties and other formal procedures. In 2011 the government of St. Petersburg and the Greek consortium Aktor S.A. — Aktor Concessions S.A. — Helector S.A. signed the concession agreement on this project, and in May, 2014 Aktor-Helector transferred all the rights and obligations under the project in favor of new structure — "Levashovo" LLC. Musoropererabotka. Project» (LMP), with which administration of St. Petersburg and "VTB Capital" signed the financing agreement. It is planned that the waste recycling plant will be constructed within two next years. It is one of the few examples of PPP in the HCW processing sector. The regional government is ready to guarantee the partners a tariff for utilization providing their investments payback that is an important and favorable factor. Taking into account that tariffs of the operating grounds are much lower without the regional authority’s guarantees, modern waste recycling plants projects are failure.