INSTITUTIONAL ARRANGEMENTS AND FUNDING OF BULK INFRASTRUCTURE & IMPLICATIONS FOR THE PROVISION OF MUNICIPAL SERVICES TO LOCAL GOVERNMENT
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1 Welcome INSTITUTIONAL ARRANGEMENTS AND FUNDING OF BULK INFRASTRUCTURE & IMPLICATIONS FOR THE PROVISION OF MUNICIPAL SERVICES TO LOCAL GOVERNMENT MILE (ETHEKWINI) Solid Waste Master Class 29 May
2 Introduction Context and aim of the study : Review the current bulk infrastructure funding arrangements for solid waste management. Identify issues and causes that lead to inadequate bulk infrastructure provision and management in Regional Level (District Municipality). Recommendations of bulk infrastructure funding for Regional Level (District Municipality). 2
3 Approach Why the need for Bulk Waste Infrastructure? To accommodate the need for Bulk Waste Infrastructure as a District. To alleviate service delivery backlog at Local Municipality. Offer District support to Local Municipalities. Develop common indication rather than have each LM develop their own Waste Infrastructure which will never be used in its entity. Geographical Footprint Identification of a service area. Skills/ Expertise/ Capability sharing at District Level. Capital and Operating Cost to high for Local Municipality. 3
4 Approach (continues) Identification of issues and causes of inadequate Bulk Infrastructure No funding mechanism. Local Municipality unable to meet financial obligations. Lack of Technical capacity 4
5 Definition of Bulk Solid Waste Infrastructure Bulk services for waste can be described as a shared infrastructure which services municipal customers and private individuals or businesses. Bulk Waste Infrastructure primarily consist of Regional Landfill and Regional Transfer Station that services multiple jurisdiction within the District Municipality. In the future a Regional Transfer Station might be required, currently the Transfer Stations are included as connector infrastructure. 5
6 Status Quo Technical National Level : Give authority to other tiers of government. Provincial Level : Responsible for technical compliance e.g. general landfills standards to minimum requirements. Local Level : Service provision for waste services e.g. collection, recycling, planning and operations. 6
7 Status Quo (continues) Institutional National Government - Competence to legislate, maintain essential national standards, establish uniform norms for ensuring that the Waste Act (2008) is implemented and that the various provisions are harnessed. Provincial Government - Are tasked with the implementation of the national waste management strategy e.g. service delivery targets Local Government Are required to ensure the sustainable delivery services, subject to national and provincial regulations and standard 7 e.g. by laws.
8 Roles and responsibilities of District and Local municipalities District municipalities are responsible for: Ensuring integrated development planning for the district as a whole. This includes the development of a framework for IDPs and ensuring that IWMPs inform the IDP process. Promoting bulk infrastructure development and services for the district as a whole. The infrastructure refer to the establishment of regional waste disposal sites and bulk waste transfer stations that can be used by more than one local municipality within the district. 8 Local Municipality functions include: Compiling and implementing integrated waste management plans and integrating these into IDPs; Running public awareness campaigns; Collecting data for the Waste Information System; Providing waste management services, including waste removal, waste storage and waste disposal services, in line with national norms and standards. Municipality specific standards for separation, compacting and storage of solid waste that is collected as part of the municipal service, may be set and enforced by the municipality.
9 Roles and responsibilities of District and Local municipalities-continues Building local municipality capacity where a local municipality fails to perform its management functions, the District municipality can enter into a Service Level Agreement (SLA) with the local municipality to provide the service for a stipulated period until such time that the local municipality can offer the service. Promoting the equitable distribution of resources between the local municipalities in its area, for example, ensuring that resources are deployed in municipalities within their area of jurisdiction, where it is most needed. Implementing and enforcing waste minimisation and recycling (including the encouraging of voluntary partnerships with industry and waste minimisation clubs). 9
10 Status Quo (continues) Institutional Arrangement (Functionality) Area Broad Function Activity Current assignm ent Issue 10 Nat Prov Local Pvt Policy-making Standard Setting Norms and standards X X What is to be provided Access targets X X Planning Plans for service expansion X X Adequate facilities and services Plans for service improvement X X X Service Provision Asset creation Social capital X Adequate facilities and services Physical capital X X Financing Tariffs X Financial sustainability Subsidies to Consumers X Grants to Service Providers X Operation Consumer selection X Effective and sustainable services Recurrent expenditures - General area cleansing X X - Waste minimization X X - Waste collection X X - Waste transport X X - Waste disposal X X Maintenance X X Staffing Economic X X X Financial X X X Regulation M&E Quality of service delivery Operational X X X Monitoring & Evaluation X X X X
11 Status Quo (continues) 11
12 Status Quo (continues) Financial See flow diagram which depicts the financial waste mechanism in the waste management sector. 12
13 Waste Process Flow Layout Diagram 13
14 Case Studies 1: District Municipality and their Approach for Funding and Finance Recovery Models - Planned 14
15 Case Studies 2: District Municipality and their Approach for Funding and Finance Recovery Models - Existing 15
16 Are the DM charging the Local Municipalities for waste disposal at the Regional Landfill Site? The District Municipality are charging for waste disposal on a fixed cost per erf that is being serviced by the Local Municipality. The only material received free of charge is the builders rubble (utilised as cover onsite) and green waste (chipping) that is utilised for composting. There is a drive to recycle these waste streams. 16
17 How does DM pay/fund for development or an upgrade of the Regional Landfill Site? PPP Initiative (Detailed Study/ Feasibility), design, build, operate over fixed term (break even point). Apply for loans e.g. DBSA or Commercial Banks. Donor Funding e.g. IFC and GTZ. MIG only a portion ( needs to be motivated to Treasury). Approach National Treasury. Recover costs through levies on LM for every ton of waste disposed to Regional Landfill Site. Recover cost through gate charges on LM for every ton of waste 17 disposed to Regional Landfill Site.
18 How does DM pay/fund for development or an upgrade of the Regional Landfill Site? (continues) The DM do not qualify for MIG funding because the formula used does not recognise the household to which the service is rendered to households of the district. (They are recognised as households belonging to the Local Municipalities). 18
19 Solid waste indicators Compo nent Calculation Unit Comment Transfer and disposal Cost of transfer stations and landfills / Mass of waste landfilled R/ton landfilled Data for transfer stations not readily available Collection costs / mass of waste collected, OR R/ton collected Collected mass not often recorded Collection Collection costs / (households with kerbside collection+ α*households with communal collection+β*nonresidential consumers) R/equivalent households Equivalent factors up for debate Recycling Recycling cost / mass of waste recycled R/ton recycled Public cleansing Public cleansing cost / Length of paved road network R/km Finance cost (Interest + depreciation + bad debt) / number of res + non-res consumers) R/consumer Overheads Municipal governance, planning and administration costs / number of res R/consumer Distributed to each service by proportion of operating
20 Cost recovery through tariffs A B1 B3 B2 B3 B1 B3 Ratio of revenue from service charges to total operating cost Western Cape Gauteng Mpumalanga Eastern Cape Limpopo Free State Water Sanitation Electricity Solid waste
21 Overheads R/hh and non-res customers served Solid waste results A B1 B3 B2 B3 B1 B3 Solid Waste Western Cape Gauteng Mpumalanga Eastern Cape Limpopo Free State Collection cost R/ton collected Collection cost R/equivalent service point Transfer and disposal cost R/ton landfilled Recycling cost R/ton recycled Public cleansing cost R/km paved road 23,605 1, Finance cost R/hh and non-res customers served
22 Challenges Technical: The lack of in house technical capacity to run the service in an efficient and effective manner. Institutional: Establishing a proper organisational structure. No proper allocation of waste service management responsibilities; and Staffing structure not enough number of staff for various levels e.g. labourer, intermediate and 22 management.
23 Challenges (continues) Financial: No funding mechanism for Regional Bulk Infrastructure. There is no standard approach to the financing of Regional Landfill Sites. District Municipalities not qualifying for MIG funding because the formula used does not recognise the households to which service is rendered to households of the districts. District Municipalities not coping with the growth trend which leads to additional capital cost, resources and having pressure of developing more waste infrastructure. 23
24 Recommendations Review of policy options on regionalisation of waste infrastructure. Develop collaborative working groups between Treasury, Council of Provinces, SALGA and DEA. Unpack challenges and explore solutions for National Waste Infrastructure Fund for Districts. Understanding the full cost benefit analysis of regionalisation options together with the risk, namely fiscal. The development of guidance toolkits to inform District Municipality on investment options and governance requirements. 24
25 Recommendations (continues) Creation of Regional Bulk Infrastructure Grant (RGIB) fund for waste infrastructure (currently a discussion paper COGTA). Public Private Partnership transaction for fixed term as DBO Project. Capital loan with recovery through levy on each municipality in the Region. 25
26 Way Forward Develop Bulk Infrastructure Grant to reduce the number of Landfill in a District to one central facility. Explore on undertaking a proper status quo assessment of what is currently happening in the country at the various districts. DM together with LM to revisit the tariff structure. 26
27 Way Forward (continues) Encourage the Minister, DEA and Provincial MEC to broaden the assessment of: Subsection 7.2 (c) under the National norms and standards of NEMWA (Act 59 of 2008). Subsection 8.3 (b) under Provincial National norms and standards for NEMWA (Act of 59 of 2008). Encourage robust dialogue on the regionalisation of waste infrastructure through the Environmental Departments and Stakeholders in each Province. Establish a task team comprising DEA, SALGA, COGTA, National Treasury to evaluate the need and level of Bulk Waste Infrastructure requirements 27 and potential capital requirement in light of Best Practice.
28 Discussion Any questions and comments 28
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