The Impact of Privatization of Solid Waste Collection and Transportation in Delhi: The Impact on the informal Recycling Sector

Background

Since the late 1990s, two important public interest litigations have been filed in the Supreme Court, the highest court in India. Both demand greater accountability from the municipality for cleaner cities. The first, B.L. Vadhera Vs the Union of India, resulted in several court orders, even personal appearances of senior officials in the Court and rules being created for Hospital Waste. The second case, Almitra Patel Vs. The Union of India, has resulted in rules being made for Municipal Solid Waste. The case was also focused on technology as a primary solution for a cleaner country.

Apart from their individual outcomes, both these cases resulted in great pressure on the municipal authorities to perform their tasks in a more efficient manner. The media keenly reported the proceedings and frequently mocked municipal inability to meet the courts’ and public’s exacting standards.

Continuous court pressure and frustrated attempts to clean the city was an important reason for the municipalities in Delhi to seek privatization as an opportunity to respond to the courts. Subhash Chopra, a vocal member of the Delhi Legislative Assembly has stated, “privatization of garbage collection and disposal will be for the city. The MCD has been a total failure on this count.”

Other Roads to Privatization

Another reason was the change in Delhi’s own position as the capital of an increasingly important player in the global economy. The Masterplan 2021 includes many new features that are geared towards international conferences, entertainment etc. The problem of waste handling and a filthy city remained an environmental and visual impediment to the new city. With legislation that encouraged investment in services and several developing countries seeking to privatize waste management, Delhi was encouraged to do so too, as part of its quest to be what is often described as a ‘world class city.”

Another important reason was Commonwealth Games, scheduled to be held in 2009 in Delhi. The leader of the Delhi Parliament described the need, “All these measures would enable Delhi to become a clean and neat city, which is the need of the hour in view of the fact that the Commonwealth Games are due to take place in 2010 and thousands of foreign tourists would be visiting Delhi. There is a need to give a complete facelift to the Municipal Solid Waste Management System in MCD.”

Hence, privatization of waste collection and transportation (hereby referred to as privatization) was not just a policy, but indicated a fundamental loss of confidence in the ability of the municipality to supply the city with essential services. The decision also indicated the perceived new needs of a rapidly changing Capital City.

This paper unpacks the interaction between the informal sector and the private waste contractors and the impact of privatization on the informal sector in Delhi. It uses the unfolding of privatization in Delhi and global experiences to understand the issue and to suggest how waste can be handled in an equitable manner.

Framing Privatization

There have been several ways by which governments across the world have approached privatization of services. The early ideas of privatization began in the late 1970s and 1980s, with governments like that of Margaret Thatcher in the UK and Ronald Reagan in the USA. In this context, privatization came to mean a shift in activities or functions from the state to the private sector as well as the shift of production of goods from the public to the private sector. Governments then began to stop directly producing services, but enacting legislation and the framework for these to be privately produced.

In this case, privatization has been ‘privatization by attrition,’ as the quality of services was seen to be allowed to run down and in need of urgent reinvigoration.

In India, privatization of solid waste handling has two components, from the municipal perspective. The first is related to transportation of the waste and the second to its appropriate disposal, recycling or use in waste to energy projects.

Privatization of waste handling in Delhi is currently limited to the MCD. It has been framed by officials here as a taking over of existing municipal systems for more efficient functioning. Hence, the waste contracts demand efficient collection from the dhalaos, transportation to the landfill and a stage wise segregation of the waste.

A few of the most significant clauses in the contract are as follows:

Article 5.15 : Sale/distribution of recyclable substances

The concessionaire shall be free to sell or otherwise dispose of recyclable substances and other materials recovered from the Municipal Solid Waste at such price and to such persons and using such marketing and selling arrangements and strategies as it may deem appropriate.

Article 5.19d : Endeavor to improve the ancillary conditions and infrastructure related to the project, including assistance to the project including assistance to informal recycling workers Article 5.19l. Be responsible for all the health, security, environment and safety aspects of the project at all times during the concession period. Article 5.19t :Endeavour to employ the informal Municipal Solid Waste collectors within the concession area to carry out the work of collection and segregation of MSW, in accordance with this agreement and applicable law. Article 6 : MCD Obligations : Give all assistance to the concessionaire to employ the existing informal Municipal Solid Waste collectors including rag pickers and assist the concessionaire in solving issues arising from the redeployment and employment of such waste collectors by the concessionaire

Therefore, the contract shows that the MCD is aware of the sector.

In the context of this discussion, the following aspects of the contract must be kept in mind:

The private contractor is paid for the waste collected by weight The ownership of the recyclable waste lies with the contracting company The private contractors have the right to manage the dhalaos as their own spaces , with rights to advertise on the walls and to fence off the waste dumped there Additional spaces to store the segregated dry waste will be allocated to the contractors during the 8 year contract period. The contractor is expected to segregate waste in a graded manner over time

Therefore, despite how it is framed in official discourse, privatization in Delhi is not a direct transfer of a set of services from the government to the private sector.  A new role, in keeping with evolving thinking by technical experts, and the changing nature of the city itself, was created for the private company. Both the collection and disposal services provided by the government and the segregation services by the informal sector, were handed over to the private contractor. Public assets of built land and space were also handed over as part of the contract.

II. Implementing Privatization

In order to implement the process, the IDFC (Infrastructure Development and Finance Corporation), was contracted to manage the process of privatization on a turnkey basis. A global tender was put out and bids sought. There were no detailed discussions or consultations with any other interest groups, except for an initial meeting prior to the writing of the bid. During this meeting, there was intense opposition by NGOs to the privatization on various counts. These included the in-build disincentive for waste generators to segregate, the marginalization of the informal recycling sector and the level of private involvement. The last point was based on whether the contractor should also be involved in collecting waste from the households or not. There was no further discussion.

Finally three companies were selected and their work was scheduled to begin in June 2005.

The most notable amongst the private companies, Delhi Waste Management (DWM), is a consortium of transportation companies and financiers. What sets this company aside is that it was allocated what were perceived by the competing companies and the municipal workers as the most ‘lucrative’ zones. The others were allotted zones that were less developed, or older and therefore, with poorer infrastructure and with less influential residents.

Each contractor was to ensure that the waste in the dhalao (an intermediary transfer point, often like a room )  was segregated, the dhalao and its defined surroundings of 25 feet was clean and the waste was collected and transported at regular hours to the landfill. Each contractor was given a list of existing dhalaos to ease their work.

Prior to this, for over two years, the Delhi Government initiated the Bhagidari (literal meaning : partnership) scheme where middle and high income residential areas were trained to understand the importance of segregation of waste into dry and wet categories. This programme was well publicized and several hundred residents from the more affluent parts of Delhi were invited to attend these trainings. This does not seem to have been implemented, since the waste arrived at the bins in an unsegregated manner, despite a law that made it mandatory for waste generators to segregate. The task of the private company therefore was not impacted by the Bhagidari scheme, underlying the failure of the exercise. This failure also drove home the point that residents were unlikely segregate their waste and an external agency would have to continue to do so for them. Traditionally, the informal recycling sector has always segregated the waste and sold it in the chain for reprocessing.

A survey of the privatized areas undertaken in January 2006, preceded by a discussion with managers of DWM revealed that the company had sub-contracted each area to smaller players, who acted as labour providers. Using this model, each sub-contracted party would provide a fixed number of workers who would be called bin guides. They would be stationed at a dhalao or bin, cleaning the bins, segregating waste and helping load the compactors. Many of them would also live in the bins overnight, as they were unable to find inexpensive housing neaby. Few of them were waste pickers, but several were simply paid daily wagers. On an average, they were paid appx. 1/3rd of the minimum daily wages, or Rs. 1000 and had no social security. However the workers had informal access to dry waste, which was sold to a junk dealer and significantly supplemented the income.

This model was only viable in high income areas where there was adequate recyclable waste discarded. In lower income areas, the worker was forced to live off the payments and often, undertake responsibility for a cluster of bins, in order to optimize his earnings. This resulted in lower quality of work and poorer work conditions. It was also difficult to implement this in areas where large amounts of organic waste were produced. In South Delhi’s Dakshin Puri area, the waste from processing fruit and vegetables was so enormous that the workers were forced to stay out of the dhalaos  and work from a distance.

According to several media reports, the performance of DWM in handling waste has been poor, based on the quality of visual cleanliness. Other companies have received less flack and none of it is reported as yet in the media.

The NDMC is also now preparing to privatize the waste handling, on the same lines as the MCD.

Initial cost comparisons are known only informally and via discussions with the private operators. According to a former official of DWM,  the cost per truck to the company was only $ 40, which is significantly less than that of the MCD’s $ . 140 or the NDMC’s $ 180 per truck. Greater efficiency and stricter monitoring is likely to be one cause for this significant drop, as are, possibly, different approaches to calculating the cost, which may hide some costs. A recent World Bank reportsuggests that this difference is an India wide phenomenon, and that the difference can be in the range of 20-40%. Comparing the costs of waste collection and transportation in 10 towns in the southern Indian state of Karnataka, the report shows the trend of cost reduction across the board. However, the Bank suggests that “One of the reasons for the relatively lower costs incurred by the contractor is quoted as differential wages, particularly when private contractors tend to pay lower than minimum wages to their sanitary workers.” The government, on the other hand, cannot indulge in such practices and therefore would incur much higher costs for the same labour performed by the same number of workers. It also pays social security to many of them.

Comparing these findings, it is likely that the privatization process is economically viable only at the cost of underpaying the workers.

III. The Impact on the Informal Sector Waste Recyclers

According to the former Municipal Commissioner of Delhi, Rakesh Mehta, the design of the privatization system was intentionally different from that of other cities in that the contract did not start at the doorstep of the generator. Instead, this space was left open for informal players, so that they could access the waste that they wanted. Another reason was also that this was likely to prove too complex for the private contractors themselves.

Despite this, a study of the contract signed with the private contractor reveals that the work of the informal sector, as it is being actually performed, has not been taken into account. Although their role has been acknowledged by various government bodies for well over a decade prior to privatization, it finally excludes them. This is likely to be for three reasons. Firstly, that the sector has not been well appreciated in the past to merit adequate inclusion. It is not on the radar of government bodies. Second, the working of the sector is poorly understood by those involved in designing the process and its inclusion is therefore unlikely to have a good fit, should it be undertaken. Thirdly, the vision of a city with an efficient system of privatized waste does not include wastepickers or other informal sector recyclers, since they are in contradiction to the idea of the modern and the ordered. A former Chairperson of the NDMC expressed the imagined city succinctly when he remarked, “I want our streets to look like Singapore.”

The following sections analyze the impact of privatization on the various levels of the informal sector.

Wastepickers

Many of the workers are not wastepickers, but other informal sector workers or wage labourers. This indicates a gradual displacement of the wastepickers from their work. It also indicates an artificially increasing competition for a limited resource. By itself, this fall out is clearly an undesirable one.

But there are several other ways by which the means of privatization is breaking down the waste picking system.

A recent survey showed that in such sites where a wastepicker was on duty, it was often to the exclusion of all other wastepickers. Usually, most wastepickers move from bin to bin at peak hours along a fixed territorial route which is shared by other wastepickers. Alternatively, a few wastepickers take over dhalaos, from where they mine the waste as it is thrown in. This is then their monopoly. Wastepickers find several ways to both collaborate and compete through unwritten codes of conduct and community and peer pressure. As a result, a complex and evolving system of resource sharing comes into play, resulting in one of the highest rates of recycling in the world. This informal system therefore plays out not as the tragedy of the commons but remarkably, the opposite of it.

By breaking the existing system and replacing it with ‘bin guides,’ waste is no longer able to be shared amongst a vast community of the poor. It is instead monopolized via an individual. Moreover, by hiring persons who are inherently entrepreneurial, the incentive to seek out waste to segregate and sell is killed, as a new debilitating dependency is fostered. Many such people are stuck, because refusing an underpaying job may result in job loss or a lost opportunity to leverage better terms of work.

The poor typically harness their social capital to get through difficult times. Systems such as the one described above are likely to break up this social capital because they rupture the basis on acting like a community and instead, seek to create a new ‘professional’ individual outside this system. This considerably weakens the individual and the community, which is seen to provide valuable services where the state/government fails or is unable to.

The model above is indicative of the many problems with this form of privatization. The system of contracting to the lowest bidder has a ripple effect at the dhalao level, where underpayment to workers becomes the only economically viable form of functioning. Sub-contracting places priorities on cleanliness, but does not lay safety standards for workers. Moreover, it continues to operate along the same degraded quality of work, involving standing in waste, and exposes the worker to the same hazards as previously.

In some areas, a quid pro quo system appears to have been established. A site visit to a small dhalao in Delhi’s elite Gulmohar Park Area suggested that in smaller and more discreetly located bins, a wastepicker may access the waste in return for helping with loading the compactors. In other parts of Delhi, municipal workers were seen at the bin sites supervising wastepickers who were loading waste into receptacles installed for the purpose. A discussion with the workers indicated that their role was both unclear at that point as well as in transition. In the meantime, they were still responsible for overseeing the waste handling by the private operator. Given that on site cleanliness was linked with efficient supervision, the officials continue to use existing linkages of coercion to carry out the task at hand.

The ownership of space-the dhalaos and bins-has also negatively impacted wastepickers. Earlier, they would segregate their waste in these dhalaos, as the only available space to undertake such work. Now, DWM  does not allow this and has therefore taken away the only ‘work space’ available to such persons. The decision to take away public spaces and make such assets available exclusively to a single private player therefore disincentivizes recycling.

A newer trend is that of DWM beginning to make rightful claims on the recyclable waste. A clash between the black letter legal owners and the customary legal owners is inevitable. Recent documentation shows that the contractors usually intimidate, abuse, harass and even beat wastepickers who attempt to ‘break into’ a newly privatized space to carry out their work. In a more recent series of events, wastepickers who were simultaneously engaged in collecting waste from the doorstep to access the recyclables also found themselves disallowed from entering bins for segregation and even disposal of waste that is depleted of it recyclables.

It would therefore seem that by not explicitly defining the rights and role of the wastepickers, and by not clearly identifying them as legitimate players in the process of waste management, they are perceived as a category without rights.

Junk Dealers 

In the recycling hierarchy, junk dealers buy waste from the waste picker and itinerant buyers, further segregate it and sell it ahead to specialized dealers or directly to reprocessing factories. In this, they are dependant on the materials flow from the wastepickers.

The previous section showed that privatization, as it is unfolding in Delhi, has begun to fracture the wastepickers’ work and access to recyclables. This clearly impacts the junk dealers as well. According to DWM officials, their own short term plan is to sell the waste directly to the reprocessing factories. In the medium term, they hope to recycle it themselves.

Unless they begin to expand and compete for other, alternative sources of waste, junk dealers are likely to be badly hit by privatization, as they cannot even be hired, unlike some of the wastepickers.

Reprocessors

Reprocessors are unlikely to be impacted by privatization significantly, as they will receive most of  the waste they require. Even recycling operations will not absorb the entire amount generated. Much of it is likely to be in an aggregated form, from a single source, thereby making it only marginally harder for them to negotiate prices. Within this group, the smaller,  semi-legal or ‘illegal’ factories may face greater uncertainty about supplies and the sector will require to upgrade itself.

It is clear that the current form of privatization is fracturing the informal recycling sector. Waste, which was till now a public good, handled by the government as part of its public duty, has been transferred to the private sector. There has been no public discussion about giving off public assets in this case.  Moreover, along with this, the dhalaos, which were similar to common public spaces in that they were manned on behalf of the public by government agencies, have been privatized and the waste contained therein fenced off. The ramifications of this have been described in this section  already, but further include:

An lowering of incentives to pick out the lowest grade recyclables. Once ownership is removed, wastepickers as employee will no longer feel compelled to mine the waste of its least lucrative recyclables. This will result in more residual recyclables reaching the landfill and an increase, not decrease in the space required for landfills in a city. The cost of new landfills is mounting, with an estimate budgetary requirement of $ 2 billion in the next 10 years. An associated concern with reduced recycling rates is the problem of sustainable use of resources. Currently, wastepickers are estimated to pick up between 15% to 59% of the total waste generated in Delhi. This waste is segregated into several categories along the chain, before it is accepted by any reprocessor. The schedule set for the private operator, on the other hand, demands 20% segregation only in the 8th year of operation. Prior to that, and even during this period, the operator is paid by the weight that is delivered at the landfill. This creates a disincentive to segregated. Seen in the light of Article 5.15, giving the operator rights over the recyclables, the contract ‘creates competing interests between the private operator and the wastepicker.

ABOUT WIH RESOURCE GROUP
WIH Resource Group is a global leader and provider of comprehensive waste management, recycling, transportation/logistical and business solutions, specializing in, among other services, waste management operational performance assessments, transportation / logistics, alternative fuels use, solid waste planning, waste and recycling market studies, business development, business valuations, due diligence and Mergers and Acquistions (M&A) transactional support and environmental services. 

WIH Resource Group’s experience includes the oversight of operations, maintenance, finance, human resources, business development, sales, safety and environmental compliance while maintaining responsibility for multi-million dollar publicly and privately held assets including: a variety of collection operations, Sub-title D and hazardous and Class II landfills, transfer stations, intermodal facilities, recycling centers, buyback centers, material recovery facilities, vehicle and container maintenance operations, call centers and payment processing operations.
Based in Phoenix, Arizona, the company serves both private companies and public sector Agency clients throughout North America and internationally.  To learn more about WIH Resource Group, Inc. visit http://www.wihrg.com and http://www.wihresourcegroup.com

For Additional information on WIH Resource Group, Inc. contact:
Bob Wallace, Principal & VP of Client Solutions
WIH Resource Group – Waste Management, Recycling and Logistical Solutions
Email: admin@wihrg.com Phone: 480-241-9994 begin_of_the_skype_highlighting              480-241-9994      end_of_the_skype_highlighting  Website: http://www.wihrg.com
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ABOUT WIH RESOURCE GROUP

WIH Resource Group is a global leader and provider of comprehensive waste management, recycling, transportation/logistical and business solutions, specializing in, among other services, waste management operational performance assessments, transportation / logistics, alternative fuel use, solid waste planning, waste and recycling market studies, business development and environmental services.  Based in Phoenix, the company serves both private and public sector clients throughout North America and globally.  Our customers include both public agencies and private sector businesses customers throughout North America. To learn more visit http://www.wihrg.com and http://www.wihresourcegroup.com

About the WIH Resource Group’s Principal Bob Wallace, Principal and Vice President of Client Solutions, WIH Resource Group, Inc. (WIH) and Waste Savings, Inc. (WSI), former Boardmember SWANA ~ State of Arizona Chapter (Solid Waste Association of North America), APWA (American Public Works) ~ National Solid Waste Rate Setting Advisory Committee and Member of WASTEC (Waste Equipment Technology Association) NSWMA ~ Phoenix, Arizona USA. (bwallace@wihresourcegroup.com).

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