Solid waste divestment still some way off

BY ALPHEA SAUNDERS
Senior staff reporter
saundersa@jamaicsaobserver.com

Tuesday, October 22, 2019

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CHAIRMAN of the enterprise team handling the proposed divestment of the island's solid waste collection and management system, Lyttleton Shirley says there has been some progress with the process, but that it will be at least another nine months before a proposal is ready for market.
This month is the 14-month mark by which Prime Minister Andrew Holness last August promised the enterprise team would have completed its work. The team was appointed in October 2016.
Shirley, in a Jamaica Observer interview, said “there is a progressive path being taken [but] there is a lot of work to be done”, as the divestment has to be handled carefully to ensure that the request for proposal (RFP), when completed, contains terms and policies that will attract investors.
“It will take a few more months to make a proper RFP for us to go to tender, and then Cabinet for final approval,” Shirley said, noting that the Ministry of Finance has now approved a budget for a consultant to carry out the technical work to set out the terms of reference.
“Sometimes you put timelines when there are great expectations,” Shirley said when asked about the 14-month commitment made by the prime minister, but stressed that “more work has been done than the public can imagine”.
The chairman argued that asking investors to pump US$1 billion into waste management is not to be taken lightly, and that a State-run system and an efficient, privately run, profitable enterprise are significantly different.
He said other variables that must be taken into account are the review of laws and policies in order to facilitate investors, noting, for example, that Government will have to make a decision as to how much of the funds towards waste collection, which comes through property tax, will flow to the investor.
Shirley, in the meantime, dismissed assertions made recently by chairman of the board of the National Solid Waste Management Authority (NSWMA), Dennis Chung that the Government could automatically save $7 billion annually through privatisation.
Shirley said he was surprised that Chung would have made such a baseless statement.
In an Observer interview last year, Chung expressed frustration with the pace of the privatisation process, stating that “between the last Administration and this Administration, [talks] has been going on for about six years – and there is no reason why it should go on so long”.
Shirley pointed out that previous proposals had not been successful because they were not properly done. “We have to be able to show the investors that when this US$1 billion is invested they can make back their money. We have to look at it from a business sense, not an emotional approach,” he insisted.
He explained, for example, that at least three waste-to-energy conversion plants will be needed at significant cost to the potential investor, and that the island's dumps will have to be sterilised.
The enterprise team chairman said Jamaica, while an apt market for waste-to energy-enterprise where the returns for investors will be favourable due to high energy costs, the challenge will be in the management of waste collection. He noted that presently the National Solid Waste Management Agency only collects 70 per cent of waste, with the remainder collected by private entities.
Collections, he added, are hard to manage and an investor must, therefore, be assured of how their compensation for collection will be streamlined. “All these things will have to be put in context to attract investors, so we have to be careful [when making statement],” said Shirley.
In the meantime, Shirley said the enterprise team will continue to engage interested parties. “What we don't want is Government divesting and still getting caught up in this. If we are going to divest, it must be a clean divestment. We have a good team – in the Development Bank of Jamaica – and we will get this thing done. When you have this amount of investment there is no room for error,” he told the Observer.
Managing director of the Development Bank of Jamaica, Milverton Reynolds has also expressed confidence that the divestment will be successful, stressing that the pace is deliberate in order to prepare a solid RFP.


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