STUDY ON THE WASTE TREATMENT FACILITY BOT PROJECT IN DKI JAKARTA, THE REPUBLIC OF INDONESIA

Transcription

1 STUDY ON PRIVATE-INITIATIVE INFRASTRUCTURE PROJECTS IN DEVELOPING COUNTRIES IN FY2011 STUDY ON THE WASTE TREATMENT FACILITY BOT PROJECT IN DKI JAKARTA, THE REPUBLIC OF INDONESIA SUMMARY February 2012 Prepared for: The Ministry of Economy, Trade and Industry Prepared by: EX Reseach Institute Ltd. ARAX Corporation

2 (1) Background and Necessity of the Project 6,200 tons of municipal solid waste (MSW) is generated daily in Special Capital Territory of Jakarta (hereinafter Jakarta) which is mostly landfilled at Bantar Gebang final disposal site located in Becasi, West Java Province, which is located to the East of Jakarta. Considering this situation, from the perspective of efficient transport system, it would be more effective to have a final disposal site for the Western part of Jakarta. This is the reason why Jakarta had planned to construct and operate waste treatment facilities in Ciangir, Tangerang Regency, Banten Province. However, as the project site was designated as residential area, it became impossible for Jakarta to construct waste related facilities in that area. Meanwhile, Tangerang Regency has shown interest in providing land in Jati Waringin as an alternative project site. The objective of the proposed project is to secure land in place of Jakarta and to operate waste treatment facilities under the BOT scheme in Jati Waringin, Tangerang Regency. This project will construct waste treatment facilities for the Western part of Jakarta and will contribute to environmentally sustainable and economically efficient waste management. / (2) Basic Policy for Determining the Project Contents The basic principle for the determination of the content of the project is the realization of an environmentally sustainable system for treatment and disposal system of MSW that can be achieved at low cost. Therefore, this project aims to reduce environmental impact while realizing economic benefits. (3) Project Outline The outline of the project is shown in Table-1 Item Target wastes Capacity Facilities Managed final disposal site MBT (mechanical bio-treatment) facilities Table-1 Project scale and component facilities Contents, Capacity and Component Equipment, etc. MSW (Municipal solid wastes) discharged in Jakarta 1,500t/d Semi-aerobic landfill structure with landfill area of 16 hectares and landfill capacity of 2.5 million m 3 (stable gradient earth-fill dam utilizing excavated earth, sandwich building method, seepage control structure, gas extraction pipes, leachate collection and drainage system, leachate treatment system) Daily treatment capacity 1,410 ton (1, ton), treatment method: resources screening facilities, crushing facilities, belt conveyor, fermentation tank, buildings, post-treatment screening facilities, storage facilities, packaging facilities iii

3 Item RDF manufacturing facilities Compost facilities Project period Project ordering mode Contents, Capacity and Component Equipment, etc. Treatment capacity: 480 t/d (quantity of product: 430 t/d) Treatment capacity: 410 t/d ( t/d) (quantity of product: 165 t/d) 20 years Build, Operate Transfer (BOT) project (ordering entity: Jakarta) (Source: Prepared by the authors of this report) a. Total Project Cost The total cost of the project (CASE 1) is 29.6 billion yens ( trillion Rp or million USD) as shown in Table-2. Table 2 Total Project Cost Item CASE 1 1,000Rp 1,000 yen Land acquisition 60,000, ,000 Commercialize cost 2,325,000 20,000 Initial investment 1,061,537,000 9,129,000 Operation & maintenance 1,614,651,000 13,886,000 Financing cost 245,700,000 2,113,020 Contingency 186,035,000 1,599,902 Tax 268,061,000 2,305,329 Total 3,438,309,000 29,569,251 Total (thousand USD) 381,539 (Source: Prepared by the authors of this report) b. Results of Preliminary Financial and Economic Analysis As a result of financial analysis, it was shown that FIRR of the project is 12.2%, net present value (NPV) is 5.8 billion yens, and that benefit/cost (B/C) ratio is It is evaluated that the project is commercially feasible as the cash flow was maintained and FIRR was 12.2%, which exceeds the interest rate of the long-term Indonesian government bonds. The values of NPV and B/C also showed commercial feasibility of the project. As a result of economic analysis, it was shown that when (1) the reduced pressure to existing disposal sites, (2) reduced transportation cost to existing disposal sites, and (3) reduced green house gas emissions are taken into consideration, EIRR is 6.68%. As this exceeds the interest rate of the long term Indonesian government bonds, it is considered that this project is economically beneficial. iv

4 c. Examination of Environmental and Social Aspects Table-3 and Table-4 summarize the present environmental and social conditions in addition to expected environmental and social improvements and impacts by the implementation of the project. These items were studied for both (1) areas near the Bantar Gebang final disposal site and (2) project site. Table-3 Present environmental and social conditions and expected environmental and social improvements and impacts by the Project (in areas near the Bantar Gebang final disposal site) Item Current Conditions Improvement Effect Impact Environment Waste is being Construction of a new concentrated into 1 final treatment facility will disposal site, causing mitigate load, reduce the overload, and there is number of incoming vehicles concern over air and improve air pollution. - pollution, etc. caused by Construction of a disposal transporting vehicles. site in the West side of the regency will resolve the issue of over-concentration on the east side. Society Concentration of The number of incoming incoming vehicles is vehicles will fall, leading to causing traffic improvement in traffic congestion. congestion. (Source: Compiled by the Study Team) Reduction in the amount of incoming waste will lead to reduced employment on the disposal site. Table- 4 Present environmental and social conditions, environmental and social improvement effects and likely impacts of the implementation of the Project (in areas near the Project site) Item Present Conditions Improvement Effects Impacts Environment Air There is air pollution The Project will have The increased number al Aspect caused by smoke from the the effect of of vehicles autogenous ignition of improving the existing transporting waste waste at the existing disposal site, will increase the disposal site. At one survey preventing autogenous overall amount of site, the TSP value of 414 ignition to improve emissions while the g Nm 3 far exceeds the the air environment. increased amount of reference value (230 For the new disposal waste will increase g-nm 3 ). site, the sanitary the amount of landfill method with emissions from heavy Water Qualit y The river water is polluted by the operation to wash recovered plastic bags, etc. and human sewage produced by waste pickers and others. For example, the BOD value increases from 21 mg/litter in the no autogenous ignition will be adopted. The activities of waste pickers in the area should be guided to more environmentally sound activities to reduce the overall environmental load by the Project machinery. Careful attention will be required to deal with dust, etc. associated with the landfill work. Treated leachate is discharge from the project site and its environmental load should be taken into consideration. v

5 Item Present Conditions Improvement Effects Impacts upstream to 48 mg/litter in the downstream. Waste At present, the Jati Waringin disposal site is operated by the Tangerang district authority but is marred by a number of problems as described in this table because of its open dumping method. Soil Polluti on Noise and Vibrati on Groun d Subsid ence Odour Groundwater is polluted by Cr6+, etc. released from a source located upstream of the project site (a Cr6+ level of 0.14 mg/litter which is well above the reference value of 0.05 mg/litter was detected at three boreholes, including one located in the upstream). While there are no private houses in the immediate vicinity, noise and vibration may occur at the disposal site due to the operation of heavy machinery. Noise and vibration will also occur at the roadside due to the passing of dump trucks. No ground subsidence has been observed. The impacts of the disposal site are observed, including As the Project will take place at land adjacent to the existing disposal site, it does not directly aim at improving the existing disposal site. However, with the opening of a new disposal site, positive impacts, including improvement of the operation and management, are expected to be realised at the existing disposal site. *It is inferred that there must be a groundwater pollution source which has nothing to do with the waste disposal site. This pollution should be carefully monitored as known pollution. With the introduction of low noise heavy machinery, the noise level at the new disposal site should be much lower than that of conventional disposal sites. With the completion of the Project, the area will become a major destination for waste from Jakarta. While individual issues are described under the suitable headings in this table, it is essential to ensure an appropriate design, construction work and management of the new site to prevent an increase of the environmental load. The pollution of groundwater by leachate from the final disposal site can be avoided by the introduction of an impermeable layer. The prevention of groundwater pollution also requires an appropriate design, construction work and management of the disposal site. The increased number of dump trucks required to bring in a much greater volume of waste means a likely increase of noise and vibration. The introduction of appropriate measures (quiet operation, use of low noise machinery and others) will be important. - As no component of the Project is likely to cause ground subsidence, this aspect can be disregarded. It is important to regularly cover the The introduction of the sanitary landfill vi

6 Item Present Conditions Improvement Effects Impacts an ammonia concentration method should curtail level of 2.6 mg/litter on the the bad odour. leeward side compared to a reference value of 2.0 mg/litter. Social Aspect Sedim ent Natura l Enviro nment Reloca tion of Reside nts Local Livelih ood Cultur al Assets Landsc ape Indige nous People and Ethnic Minori ties Work Enviro nment Transp ort Although the bottom material at the riverbed has not been analysed, there can be an accumulation of pollutants in the material in view of the state of river water pollution. There is a mangrove forest some 7 km from the site. Even though this is not an official reserve, mangrove trees are subject to protection under a government policy. There are some 10 temporary buildings used for storage of valuables or for resting. 843 waste pickers earn an average of 22,450 Rp per day from the recovery of valuables. There are no cultural assets designated by the government There are rice fields in the project site There are no communities of indigenous people or ethnic minorities locally. The work environment is not quite safe because of the piled up waste and autogenous ignition of the waste. The access road is used by some 115 dump trucks Improvement of the treated water to be discharged to the river should reduce the burden on the river, etc. There are no likely impacts on the natural environment in need of protection but the project design should take harmony with the surrounding natural environment into consideration. - Employment will be created for the recovery of valuables and the operation and management of the disposal site and the income of local residents increase. will dumped waste with soil to prevent the occurrence of bad odour. As an increased amount of waste transported to the disposal site means a likely increase of the leachate load, it is essential to conduct the proper management of leachate. No adverse impacts on the natural environment in need of protection will occur. These temporary buildings will require relocation. There will be some shifts of the local production and industrial activities due to the reduction of farmland The construction of a safe disposal site will improve the work environment. - The overall traffic volume will increase vii

7 Item Present Conditions Improvement Effects Impacts transporting waste and 145 other vehicles a day. - due to a large number of dump trucks and other vehicles connected to the operation at the new disposal site. (Source: Compiled by the Study Team) In implementation of the project, environmental impact assessment (or AMDAL: Analisis Menganai Dampak Lingkungan in Indonesian) will be conducted in accordance with Indonesian laws and regulations indicated in Table 5. Because this project will involve construction of a final disposal site which will cover area larger than 10ha, conducting of AMDAL will be essential, based on Decree of the Minister of State for Environment No. 11/2006 about Types of Business or Activity Compulsory Equipped with Environmental Impact Analysis Law Decree of the Minister of State for Environment Table-5 Laws and regulations on EIA in Indonesia Government Regulation No.27/1999: Process of the conduct of Environmental Impact Assessment (EIA/AMDAL) Law No.32/2009 concerning Environmental Protection and Management Decree of the Minister of State for Environment No. 11/2006 about Types of Business or Activity Compulsory Equipped with Environmental Impact Analysis Decree of the Minister of State for Environment No.2/2000 on Guidance on the Evaluation of the EIA (AMDAL) Document Decree of the Minister of State for Environment No.8/2000 on Guidance on Public Participation and Information Disclosure of the EIA Process. Decree of the Minister of State for Environment No.9/2000 on Guidelines for Preparation of Environmental Impacts Decree of the Minister of State for Environment No.40/2000 on Guidance on the Working Procedure of the EIA Commission. Decree of the Minister of State for Environment No.41/2000 on Guidance on the Establishment of Commission for the EIA Evaluation in Regency/City. (Source: Ministry of the Environment, Indonesia) (4) Implementation Schedule If this project is to be implemented as solicited PPP project and if the contract with Jakarta is to be signed in May 2014, bidding will start from January to February 2014 and detailed designing will start from February 2014 if it is to start right after winning the bid. Construction of facilities will start from May viii

8 (5) Feasibility of Implementation The results of the financial analysis showed that this project will be successful as a private business operation. In addition, it was confirmed that transportation will be reduced compared to the current transportation system. The results of studies on environmental and social aspects also showed that the expected positive effects exceed the expected negative impacts. Therefore, it can be concluded that the implementation of this project is feasible. The private companies which are to be the investors for this project is currently preparing for this project through actions such as preparing to purchase the land. (6) Advantage of Japanese Corporations from Technological and Other Perspectives a. Technological superiority The technological standard of Japan regarding landfills and intermediate treatment facilities is of a very high level. Japan`s capability of system design and workmanship of landfill construction and general engineering capabilities, design and workmanship technology of intermediate treatment facilities is very superior. Japan`s general construction companies and environmental engineering firms have the know-how in these areas. This fact is well known among developed countries and also the developing ones. From the technological perspective, Japan outstands other countries in operating facilities in high quality and a stable manner. b. Economic superiority Economic superiority is achieved with the ability to supply treatment facility that is cost competitive. As this project will be carried out with a private operating body, it will be necessary to reduce the initial investment to the lowest amount possible. Hence, even if the supply of equipments is done from Japanese companies, it will be important to cut down cost from the viewpoint of business feasibility.. The second economic superiority lies in the procurement of fund. By using the fund schemes of Japan to the maximum, it will be possible to get a long term-low interest investment which makes it economically superior. In a way, this project has nonprice competition characteristics. It seems nearly impossible that Jakarta provincial government will be able to secure a landfill within the province. It also seems nearly impossible to secure a landfill through competitive tendering. In such a scenario, it is possible to secure a landfill project through the proposal-based PPP project. Setting of an appropriate rate for waste intake is a prerequisite which will also impact the stability and economic characteristics of the project. ix

9 (7) Detailed Schedule to Realize the Projects and Possible Risks a) Detailed Schedule to Realize the Projects Detailed Schedule to Realize the Projects is as follows. Pre Feasibility Study Discussions with DKI Jakarta on Project Implementation Establishment of the Project Development Company for Land Acquisition Starting Land Acquisition in Tangerang Revision of MOU on Waste Reception Between Kab. Tangerang and DKI Jakarta Recommendation to JICA on Project Preparation Study for PPP Project Implementation of the Preparation Study for PPP Project Final Recommendation to DKI Jakarta Official Authorization/Approval of the Project by DKI Jakarta EIA and Application for Development Permits of the Project Waste Management Concession Agreement with DKI Jakarta Establishment of SPC Approval of JICA Loan and Investment Facility Construction Completion of Construction Table-6 Work Schedule (Source: Prepared by the Authors of this report) b) Risks that May Hinder the Realization of the Project Risks associated with the project implementation are shown below. Table-7 Risk Associated with Infrastructure Projects Type of Risks Details of the Risk and Measures to Minimize the Risk Risk related to Risk that the project does not achieve the expected capacity or function construction Conduct an extensive feasibility study to evaluate the associated risks Risk that raw materials and equipments that satisfies the required standards Risk associated cannot be procured with procurement Procure raw materials and equipments from Japanese companies of raw materials present in Indonesia Risk related to Risk that there would be unexpected stagnation of transaction volume; providing of Risk that products would not circulate in the market. x

10 Type of Risks service and bargaining Environmental risk Details of the Risk and Measures to Minimize the Risk Conduct adequate waste management planning Risk that the project results adverse environmental and social impacts in the host country Study carefully the required countermeasures in the feasibility study (Source: Prepared by the authors of this report) (8) Map of the Project Site in Indonesia Project site is at Jati Waringin, Tangerang Regency, as shown in Figure-1. (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) (21) (22) (23) Jati Waringin Figure-1 Project site (Source: Prepared by the Authors of this report based on Google Map) xi