waste concern turning a problem into a resource

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This case was prepared by Jordan Mitchell, Research Assistant, under the supervision of Professor

Johanna Mair, and in collaboration with the Schwab Foundation for Social Entrepreneurship, asthe basis for class discussion rather than to illustrate either effective or ineffective handling of anadministrative situation. October 2006.This case study has been written with the financial support of EABIS.

Copyright 2006, IESE. To order copies or request permission to reproduce materials, call IESEPUBLISHING 34 932 534 200, send a fax to 34 932 534 343, or write Juan de Als, 43 - 08034Barcelona, Spain, or [email protected] part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet,or transmitted in any form or by any means - electronic, mechanical, photocopying, recording, orotherwise - without the permission of IESE.

Last edited: 7/31/071

anagement

SCHWAB FOUNDATION FOR SOCI LENTREPRENEURSHIP

DG-1502-E

0-306-064

CASE STUDY SERIES ON SOCIAL ENTREPRENEURSHIP

Waste Concern: Turning a Problem into aResource

Waste is merely raw material in the wrong place,

journalist Frederick A. Talbot, Millions from Waste, 1920.

In late September 2005, co-founders of Waste Concern, Iftekhar Enayetullah

and Abu Hasnat Md. Maqsood Sinha, were looking at a pile of waste at the

Matuail landfill site on the outskirts of Dhaka, Bangladesh. For ten years,

Waste Concern had followed a decentralized composting model whereby

each composting site was a small-scale operation processing three tons of

organic waste per day. However, the Matuail site was different from past

models as it would be a dual-purpose operation consisting of a gas recovery

site and a 700-ton per day composting plant. Under the United Nations

Clean Development Mechanism (CDM), the project would be eligible to earn

tradable certificates for US$11 per ton of reduced methane gas, making it

the first in the world to garner credits through composting waste.1

While Enayetullah and Sinha were elated at the recent approval from

the United Nations to build the site, they still had to overcome one key

hurdle getting approval from the Dhaka City Corporation (DCC) for access

to the land and waste. Enayetullah and Sinha believed there were three

alternatives: 1) follow through with the original plan whereby DCC would

1MOU signed by Waste Concern and WWR, www.wasteconcern.org, September 2004, Accessed December 28, 2005.

IES176

This document is authorized for use byTim Chai, from 8/27/2013 to 12/20/2013, in the course:

MGMT 209: 001 Political and Social Environment of Management - Markovits (Fall 2013), University of Pennsylvania.

Any unauthorized use or reproduction of this document is strictly prohibited.


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2 IESE Business School-University of Navarra

DG-1502-E Waste Concern: Turning a Problem into a Resource

supply both the land and waste; 2) purchase the land for the composting site and rely

on the DCC for a waste supply; or, 3) purchase the land and take on the responsibility

of waste collection themselves. While each option had its benefits and drawbacks,

Enayetullah and Sinha were weighing up the financial, social and environmental

aspects. A number of questions were at the fore: How could they benefit fromtransferring the learning between small-scale and large-scale operations? How should

they organize themselves to best support the new initiative? How could they manage

the relationship with the DCC, their international partners, and the citizens of Dhaka?

Bangladesh

Located between India and Burma, Bangladesh had a land area of 144,000 square

kilometers and a population of over 144 million people.2The country had the ninth

largest population in the world with one of the highest population densities at

1,000 people per square kilometer. Population in urban areas such as the nations

capital, Dhaka, exceeded 18,000 people per square kilometer in some areas. The city

was home to 11.3 million people, making it the eleventh largest city in the world.

Dhaka was expected to grow to 21.1 million people by 2015.3 It was estimated that

approximately 25 percent of the countrys population lived in an urban area. This was

expected to increase to 40 percent within 20 years.

Total GDP was estimated at U$299.9 billion and GDP per capita was ranked 175 thout

of 232 countries.4Approximately half of the population lived below the poverty line.

Observers cited the central impediments to growth as: extreme monsoons and cyclones

creating climatic instability, poor transportation and communication infrastructure,

insufficient energy sources and inefficient government. See Exhibit 1 for a map and

more facts about the country.

Agriculture in Bangladesh

63 percent of the labor force was employed in the agricultural sector compared to

11 percent in industry and 26 percent in services. The primary agricultural products

were rice, jute, tea, wheat, sugarcane, potatoes, tobacco, spices and fruit.

Only 17 percent of the countrys soil was suitable for growing crops. Soil fertility was

not only affected by improper waste management, but also through the use of

4 million tons of chemical fertilizer per year, which hardened the soil and dried the

moisture from the earth. Soil fertility was critical to the governments plan to increasecrop output to ensure foodstuffs for the countrys growing population.

2CIA World Factbook, Bangladesh, www.cia.gov/cia/publications/factbook/geos, Accessed February 1, 2006.

3 Saarc Workshop on Solid Waste Management, Country Paper Bangladesh, Department of Environment, Waste Concern, October

2004, p. 3.

4CIA World Factbook, Bangladesh, www.cia.gov/cia/publications/factbook/geos, Accessed February 1, 2006.

This document is authorized for use byTim Chai, from 8/27/2013 to 12/20/2013, in the course:MGMT 209: 001 Political and Social Environment of Management - Markovits (Fall 2013), University of Pennsylvania.



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3IESE Business School-University of Navarra

DG-1502-EWaste Concern: Turning a Problem into a Resource

Waste Management in Bangladeshs Capital Dhaka

The government-run Dhaka City Corporation (DCC) was responsible for all local

governmental policy and management within the Dhaka metropolitan area, which

covered 360 square kilometers and included six million residents of Dhaka megacitys

11.3 million. Each day, these six million residents generated about 3,500 tons of waste.5

This compared to over 17,000 tons per day of waste generated throughout the country.6

In Dhaka, approximately 70 to 80 percent of the waste was organic and the remainder

was paper, plastic, glass and other man-made materials.

Nationally, the country did not have a consistent waste recycling program and waste was

disposed of in nearly any area on the streets, in pits, in front of peoples homes or in

the best case, in large cement containers. Large deposits of waste exposed the population

to over 40 diseases.7It created insufferable odor and seeped into the land affecting soil

fertility and ground water. During the monsoon season, waste was carried by extreme

floods into the city. Mosquitoes and flies reproduced in waste and carried diseases to

humans and other animals. In addition to the extreme health hazards, the physical mass

of waste caused traffic problems on roads. Large deposits of waste also emitted harmful

greenhouse gases (GHG) 8 into the atmosphere. It was estimated that Dhaka had an

emission potential of 0.76 million tons of CO2 gas per year.9See Exhibit 2for photos of

Dhakas waste challenges.

Waste Collection

The DCC was responsible for collecting all solid waste. However, due to its human,

technological and financial resources, the DCC collected only 37 percent of all solid

waste, even though it spent 50 percent of its operating budget on solid waste

management. All waste collected by the DCC was piled into trucks and disposed of in

low-lying areas outside of the city district. Observers believed that the collection

process was inefficient given that the waste was handled four to five times before

being disposed of. The cost of collecting one ton of waste by the DCC was estimated at

670 BDT (US$11.26). The cost of the entire waste management process (from collection

through to landfill operation) by the DCC was estimated at 2,045 BDT (US$38) per ton.

The price of collecting waste was exacerbated by many dwellers habits of leaving their

waste in front of their homes instead of taking it to designated concrete containers for

pickup.

In addition to the DCC, individuals known as Tokais or informal waste collectors,

sought plastic, glass or paper and attempted to sell the waste to recycling factories for

cash. Approximately 120,000 people were involved in informal waste collection and

5Community based decentralized composting in Dhaka, Presentation by Waste Concern, Dhaka, September 13-17, 2004, slide 6.

6Ibid., slide 5.

7Ibid.

8Greenhouse gases included carbon dioxide, methane, nitrous oxide, hydroflurocarbons, perfluorocarbons and sulfur hexafluoride. They

prevented heat from escaping from the atmosphere and thus contributed to a greenhouse effect by warming the earths surface.

9Enayetullah et al, 2004.




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collected about 15 percent of the inorganic waste. Also, small companies had begun

offering services for house-to-house collection in exchange for money, which was

more prevalent in affluent areas of the city.

Waste Disposal

The Matuail landfill was the only official dumping site in the DCC district, which

would be completely exhausted by the end of 2006. With strains on the land due to

overpopulation, it was unlikely that another official dumping site would be opened.

This led the DCC and other waste collectors to dump residuals in any available area.

History of Waste Concern

While conducting postgraduate research in early 1994, A. H. Md. Maqsood Sinha and

Iftekhar Enayetullah had the idea of launching a non-governmental (NGO) researchorganization aimed at improving the environment by encouraging waste recycling in

Bangladesh. Sinha, an architect and urban planner, met Enayetullah, a professional

civil engineer and urban planner, while both were postgraduate students. As part of

their postgraduate research, Enayetullah and Sinha set up a model of waste

management whereby solid waste was collected and composted. The compost would

then be used as a substitute for chemical fertilizer. The pair believed that the concept

could be put into practice and sought support from different governmental agencies

offering consultancy services for free. However, governmental officials did not support

the project and Enayetullah and Sinha decided to establish their own NGO in 1995 in

order to launch the first pilot project. The aim of the organization was to promote the

idea of converting waste into a resource. The first project was directed at: developinga low-cost technique for [the] composting of municipal solid waste. 10 Enayetullah

commented:

In 1994, we tried hard to convince different government agencies to initiate the

project by offering free consultancy services but they were all skeptical We believe

that waste should be considered as a resource, rather than just a problem and it can

be managed in a decentralized manner with public-private-community partnership.

Thats why in 1995, we took the alternative course of demonstration of our model

to convince different social groups.11

Besides the skepticism in the government, Sinha and Enayetullah faced other barriers.

They did not have access to appropriate waste treatment technology nor did they haveany land to launch their pilot project. The lack of knowledge of waste recycling

combined with no official policy or framework further complicated their attempts to

get the project off the ground. The pair sought seed money and financing, but were

unsuccessful for one year in garnering support. Eventually, they convinced the Lions

10Christian Zurbrgg; Drescher, Silke; Rytz, Isabelle; Sinha, A.H.Md. Maqsood; and Enayetullah, Iftekhar, Decentralised composting in

Bangladesh, a win-win situation for all stakeholders, El Sevier, June 16, 2004.

11Presentation by Waste Concern, Dhaka, September 13-17, 2004, slides 13-14.




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Club Dhaka North to donate 1,000 square meters of land in the area of Mirpur for a

three-month period. Sinha reflected, The Lions Club was very hesitant to give us land,

because they were very afraid of creating a lot of odor.

After getting the project operational in less than three months, Sinha and Enayetullah

demonstrated that the odor from the site was not problematic. The Lions Club gave

them permission to continue housing the project on Lions Club land. They used

the project as a demonstration site and showed it extensively to individuals from

government, private companies and the community. Sinha and Enayetullah estimated

that the Mirpur project alone reduced the cost of the DCC by $15,085 annually.12This

represented an 80 percent reduction in per ton management costs for waste for the

DCC in the project area of Waste Concern.

In 2000, Sinha and Enayetullah set up a for-profit consultancy arm of Waste Concern,

allowing them to generate revenues to fund Waste Concerns not-for-profit research

and development division. As of the fall of 2005, this dual structure was still in place.

See Exhibit 3for the pairs CVs.

The Waste Concern Model of Decentralized Composting

Waste Concerns model integrated house-to-house waste collection, composting and

marketing the compost as a fertilizer. The operation revolved around a small-scale,

decentralized composting plant each plant was set up to process three tons of waste

per day.

Depending on the income level, households paid BDT 10 to 20 (US$0.17 to US$0.34) to

Waste Concern per month. Waste was collected by one to three Waste Concernemployees who rode on rickshaws with 1.18 cubic meter capacity. Each rickshaw

served between 300 and 400 households and the revenue from households paid for the

salaries of the collectors. For each three-ton plant, there were 20 workers: nine workers

for house-to-house collection and eleven people at the plant, including the plant

manager.

After the waste was collected, the rickshaw driver and collectors took the waste to the

composting site. All waste was sorted and all recyclable products like glass, plastic and

metals were separated and stored in a separate area. Three tons of organic waste

yielded 750 kg of compost per day. The process of converting organic waste to saleable

compost took 55 days: 40 days to produce the compost and 15 days for the compost to

mature.

Waste Concern used the Indonesian Composting Method all waste was piled in large

heaps on top of a wooden structure and was turned every four to five days. The waste

piles were under a covered shed, which protected the compost workers from the sun

and rain. In order to turn solid waste to compost a temperature of between 55 and

65 degrees Celsius was optimum. Workers used long bamboo sticks to turn over the

12Christian Zurbrgg; Drescher, Silke; Rytz, Isabelle; Sinha, A.H.Md. Maqsood; and Enayetullah, Iftekhar, Decentralised composting in

Bangladesh, a win-win situation for all stakeholders, El Sevier, June 16, 2004.




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waste. Workers also watered the waste heaps, which gave the bacteria a new food

source.13Exhibit 4shows the process and pictures of the operation.

Once the compost had matured, it was sold to MAP Agro for BDT 2.5 (US$0.04) per kg.

MAP Agro then enriched the compost and sold it through its parent companys

(ALPHA Agro) extensive distribution network at prices from BDT 6 (US$0.10) to BDT

12 (US$0.20).

Revenues were split at 30 percent from house-to-house collection and 70 percent

through the saleof composted materials.14Waste Concerns operating costs comprised

raw materials used in composting, the salaries of the workers (both the waste collectors

and the plant staff) and utilities. Each three-ton plant brought in total revenues of

approximately BDT 741,000 (US$12,449) and spent approximately BDT 551,200

(US$9,260) per year. All surpluses were used to fund compost testing at the

governments laboratory (US$2,500 per year). The remainder was invested back into

the site to maintain the building and supply uniforms for the workers.

The fixed costs for establishing a new three-ton plant were BDT 1,008,000 (US$16,934).

This included: the construction costs of the sorting platform, the composting shed with

drainage, an office, a toilet and a storage area for the recovered recyclable products.

Waste Concern relied solely on the donation of land from third parties and did not

include the value of land in its fixed costs. Each plant offered a payback in 23 months.

Exhibit 5shows the key revenues and costs of a three-ton plant.

The Replication of the Decentralized Small-Scale Model

In 1997, the Regional Urban Development Office-South Asia agreed to offer support

and further test the model by scaling up the activity of Waste Concern in Dhaka.Ayear later, the Ministry of Environment and Forest of the Government of Bangladesh

under the Sustainable Environmental Management Program supported by the United

Nations Development Program (UNDP) requested that Waste Concern roll out the

model to five communities within Dhaka. The DCC and Public Works Department

however did not come forth with land, which led Sinha and Enayetullah to more

demonstrations. Finally, the DCC and Public Works provided suitable land plots. Sinha

talked about the obstacles:

The single biggest obstacle for the model of community based decentralized

composting project was availability of land in the city for such facilities. Public-

private-community partnership and the concept of the 4 Rs (reduce, reuse, recycleand recovery of waste) were absent in Bangladesh before our intervention.15

In 1999, Waste Concern began talking to the countrys pre-eminent fertilizer supplier,

MAP Agro (a sister concern of ALPHA Agro), to purchase the organic fertilizer being

13A.H.Md. Maqsood Sinha and Enayetullah, Iftekhar, Community Based Decentralized Composting, Urban Management Programme

for Asia and the Pacific, 1999, pp. 8-9.

14Lisa Hiller, Cash for Trash in Bangladesh, Choices, August 2002, p. 12.

15A.H.Md. Maqsood Sinha and Enayetullah, Iftekhar, Teams Entry to the Fast 50 Social Entrepreneurs, Fast Company, 2002.




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produced at Waste Concerns composting plants. Initially, MAP Agro was uncertain

that local farmers would adopt organic fertilizer as part of their growing techniques.

Waste Concern convinced MAP Agro by comparing the superior quality of crops grown

with organic fertilizer in place of chemical fertilizer. Eventually, MAP Agro agreed to

purchase all of Waste Concerns organic compost output and was the first in thecountry to begin marketing organic compost.

In 2000, Waste Concern successfully rolled out the decentralized model to five

communities in Dhaka city. With greater visibility, representatives from other

Bangladeshi cities approached Waste Concern to see if the same concept could be

rolled out to more sites. Enayetullah stated:

We thought originally that we would be able to roll out the decentralized model

and replicate it ourselves to other sites. But, it was not possible to do from a

manpower perspective. If we had tried to do it all ourselves, it would have resulted

in major delays in implementing it. With these types of projects the major barrier is

the financing. We realized that if we could get the financing then we could supplythe technology.

In looking for financing, Waste Concern approached several international banks and

other international organizations. However, Waste Concern was unable to secure funds.

International banks were concerned that the organization in its not-for-profit structure

would not be able to pay back the bank loan. Development organizations supported

similar projects but for piloting purposes only. This led Waste Concern to look for other

sources of funding. After several presentations from Waste Concern and multiple levels

of approval, the Department of Public Health Engineering of the Government of

Bangladesh secured funding from UNICEF and replicated the Waste Concern model

in

14

locations in 2002.16 In 2004, another 20 sites were approved to be implementedthroughout Bangladesh. All projects were organized as a three-way partnership: Waste

Concern supplied the technology and know-how; the Bangladeshi government, UNICEF,

CIDA (Canadian International Development Agency), and SDC (Sustainable Development

Commission) funded the initiative; and, the private sector marketed the final composted

fertilizer.

Sinha and Enayetullah dedicated 50 percent of their time to research and development

activities under the not-for-profit arm of Waste Concern. The other 50 percent was

directed at the for-profit waste consultancy. Enayetullah stated: We use the

consultancy to generate revenues to fund the not-for-profit research and development

arm.

By 2005, the government of Bangladesh actively encouraged farmers to increase their

utilization of organic compost. Compost was cheaper than chemical fertilizer and most

agreed that it produced superior crops. The acceptance of organic fertilizer encouraged

three other companies to include organic fertilizers as part of their product portfolios.

As of 2005, MAP Agro was the market leader followed by Northern Agro, Faruk

Fertilizer and Fuvid Agro Ltd. Enayetullah stated: The demand for organic fertilizer is

16Community based decentralized composting in Dhaka, Presentation by Waste Concern, Dhaka, September 13-17, 2004, slide 70.




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growing and theres currently a problem with supply. Now, with four companies all

offering organic fertilizers, this is good for fair competition.

Waste Concerns model was recognized internationally as an efficient and cost-

effective way of using waste. The model was being replicated in Vietnam and Sri

Lanka. It was also lauded for providing employment for unskilled laborers. Sinha and

Enayetullah were honored by becoming Ashoka Fellows in 2000, and won numerous

awards such as the United Nations Poverty Eradication Award in 2002, the Fast

Company Champions of Innovation in 2002, the Technology for Humanity from the

U.S. Tech Museum in 2003, and Outstanding Social Entrepreneurs from the Schwab

Foundation of Switzerland in 2003.

CDM Proposal for Landfill Gas Extraction Site at Matuail, Dhaka

Throughout 2003, Sinha and Enayetullah had the idea of increasing the scale of the

three-ton composting plant. As Enayetullah stated:

Small is beautiful, but you need to have scale. The small-scale decentralized three-

ton composting plant is great for small and medium sized cities. However, in Dhaka,

its probably best to have a larger centralized composting site. And, with a larger

site, you have a real opportunity with tradable certificates. Without trading

certificates, the opportunity of creating a centralized 700-ton per day composting

site would not be feasible. Also, with large centralized sites, you can transfer the

learning to smaller decentralized locations.

Waste Concern submitted a proposal to the United Nations, which would allow the

organization to earn tradable certificates called Certified Emission Reductions (CERs).Under the program known as the Clean Development Mechanism (CDM), nations were

able to buy and sell CERs to hit their specific Kyoto Protocol emission reduction targets. 17

Sinha and Enayetullahs idea was to use the existing landfill site in Matuail an area

seven kilometers from Dhaka to recover methane gas from the 5-metre high landfill

pile. They also wanted to use the land to build a large-scale centralized composting

plant.

In 2004, the Waste Concern team began conversations with the Dutch company World

Wide Recycling BV (WWR) to jointly develop the landfill gas recovery site. WWR was

a for-profit company that acted as an investor and operator by partnering with private

and public enterprises in the creation of decentralized recycling centers. (See Exhibit 6

for more information). In September 2004, WWR and Waste Concern signed a

memorandum of understanding to form a special purpose company and put forward

aproposal for consideration by the United Nations CDM Executive Board. WWR would

provide all of the financing and Waste Concern would supply the local knowledge and

technology and seek Bangladeshi government approval. Both parties would engineer

17The Kyoto Protocol is an international agreement that called for 39 developed countries to reduce greenhouse gases by 5.2 percent

over 1990 levels. CERs were one mechanism developed by the Kyoto Protocol.




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the site and make the landfill site operational. The organizations would be able to sell

the CERs for US$11 per ton of reduced methane gas.

During 2005, both organizations met extensively with United Nations representatives,

foreign and local government officials, academics, engineers, waste experts, electricity

operators and local residents. In making their presentations to various stakeholders, the

team presented the following benefits:

Environmental capture 50 percent of the landfill gas emitted from the

Matuail waste disposal site, which would reduce greenhouse gases and reduce

the risk of onsite fires;

Economic foreign capital inflow from WWR and potentially other sources;

and,

Social improved health conditions due to the reduction of gases and the

creation of jobs for local residents.18

On September 17, 2005, the landfill gas recovery project and the composting plant

were accepted by the United Nations CDM initiative.

Operations

The site would have two main areas: the landfill gas recovery area and the composting

area.

Landfill Gas Recovery In the landfill recovery zone, methane gas emitted naturally

from the decomposing landfill, would be captured and turned into electricity through a

gas-powered engine. The electricity would then be used by local power utilities. Theteams planned to reshape the current landfill and introduce proper land filling

techniques with daily cover of waste as well as leachate collection and treatment

facility to reduce ground water pollution. These actions were aimed at extending the

sites lifetime to 2021. The site would require extraction equipment including vertical

wells, piping, a condensate separator and compressors. The gas utilization equipment

included a flare, dedicated gas-engines, an electric generator and an electric grid

connection.19

In the first seven-year crediting period, WWR and Waste Concern predicted that the

project would recover 50 percent of the methane gas. This would allow them to convert

566,000 tons of CO2 equivalents (methane gas) from the landfill gas recovery projectalone). 20 The site would have an electricity production capacity of three to six

megawatts (MW). In the first year, the site would produce 6,625 MW hours increasing

to over 16,000 MW hours by 2010. Exhibit 7 shows a diagram and more details of

theproject.

18Clean Development Mechanism Project Design Document Form, UNFCCC, unfccc.org, Version 2, July 1, 2004, Accessed January 22,

2006, pp. 2-3.

19Ibid., pp. 5-6.

20Ibid., p. 2.




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Composting The composting plant would also be designed to reduce methane gas by

avoiding waste landfilling and performing aerobic composting. Waste Concern and

WWR developed a new methodology to calculate the reduction of methane emission by

composting which was approved by the UNFCCC (United Nations Framework

Convention on Climate Change). The compost would be turned into organic fertilizerand made available for sale to the countrys four fertilizer companies. The composting

plant was significantly different to Waste Concerns small-scale plants. Whereas Waste

Concerns smaller plants processed three tons of solid waste per day, the proposed site

at Matuail would process 700 tons of solid waste per day. It was estimated that

624,813 tons of CO2 equivalents would be reduced by composting 700 tons/day of

solid waste in the composting plant.

Finances

The total investment to get the project operational was US$10 million. Approximately

US$4.9 million was for the establishment of the composting area and US $3.5 millionfor the gas extraction and electricity generation portion of the project. Using a

12percent discount rate to reflect commercial lending fees in Bangladesh, the team

had calculated that the gas extraction portion of the site would create a negative net

present value of US$-4.2 million over 15 years without CERs. However, with CERs, the

project would produce a positive net present value. Under this scenario, revenues

would be generated from the sale of electricity only.

WWR would contribute the financing for both projects. Both sides were seeking

additional funding in the form of a grant or long-term loan from the Netherlands

Development Finance Company (FMO), which was a special bank set up in 1970 by the

Dutch government for the purpose of assisting developing countries. FMO carefullyscrutinized projects to ensure they fell under strict guidelines such as public-private

involvement, corporate governance, environmental details and social policies. The FMO

offered a grant to a maximum of 45 percent of the project on a maximum project cost

of 45million (US$54 million).21

Seeking Approval from the DCC and Potential Options

Even though Waste Concern had been given the green light by the CDM Board of the

Government of Bangladesh in 2004 (see Exhibit 8 for a copy of the approval letter),

they were still waiting for approval from the municipal DCC. The DCC owned and

operated the Matuail landfill site. Enayetullah commented:

We were authorized to go ahead with the project from the national government,

but then the municipality did not give their authorization. They were a little

concerned that they were handing over control of the landfill site to us. That was

the point where we said, maybe we can separate the landfill site from the

21Clean Development Mechanism Project Design Document Form, UNFCCC, unfccc.org, Version 2, July 1, 2004, Accessed January 22,

2006, p. 6.




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composting activity and change our approach. Its not necessary to keep the

landfill and composting site together. We would just have to think of another plan.

Enayetullah and Sinha had made the decision to continue seeking approval from the

DCC for the landfill recovery site since they needed an established landfill site with a

minimum of five to eight meters of waste in order to capture sufficient gas.

The major question was what should be done with the composting site. Enayetullah

and Sinha believed there were three central options:

1. Continue with the original plan whereby DCC would supply the land and the

waste for the composting site;

2. Waste Concern would purchase the land for the composting site and the DCC

would supply the waste; or,

3. Waste Concern would purchase the land for the composting site and look after

the collection of waste.

Option 1: DCC to Supply the Land and Waste

Under this option, the DCC would supply both the land and waste for the composting

site. WWR and Waste Concern would be responsible for designing, constructing and

operating the site. The fixed cost of constructing the composting site was estimated at

US$4.9 million and annual operating costs were projected to be US$1.22 million.

Revenues from the sale of compost were predicted to be US$3.11 million per year and

the sale of tradable certificates would bring in US$560,000 per year. In exchange for

using the DCCs land and waste, Waste Concern would pay a 20 percent royalty fee on

the overall revenues of the composting site per year.

Enayetullah and Sinha predicted a delay to the project of seven to twelve months

before receiving approval from the DCC. In addition, Enayetullah and Sinha were

uncertain of changes to the contract in the future.

Option 2: Purchase the Land for Composting and DCC to Supply the Waste

The second option was to purchase a plot of land for the composting site but use the

waste collected by the DCC. Enayetullah and Sinha estimated that the cost of a suitable

piece of land would be US$514,000. The fixed cost of constructing the site, the annual

operating costs and all revenues would be the same as in the first option. WasteConcern would pay 10 percent of all the revenues to the DCC in exchange for

supplying thewaste.

Option 3: Purchase the Land and Collect the Waste

Under the third option, Waste Concern would collect the waste directly from

individuals at pre-determined quantities, qualities and in accordance with a pick-up

schedule. Owning the land and collecting the waste would alleviate any royalty




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payments to the DCC. Enayetullah and Sinha estimated waste collection would cost an

additional US$780,000 per year beyond the annual operating costs of $1.22 million for

the site. All other fixed costs and revenues would be the same as the other options.

The Decision

Enayetullah and Sinha thought about what had been achieved in ten years. Their list of

achievements was long through their efforts of setting up numerous decentralized

composting sites, they had successfully achieved one of their key goals of turning

waste into a resource. This, in turn, had improved soil quality, created employment,

enhanced social standards, reduced sickness and disease, attracted international

acclaim, spurred foreign investment and saved money for government bodies like the

DCC and the Bangladesh Ministry of Environment.

Now they were embarking on a major project that involved several international

stakeholders and millions of U.S. dollars of investment. They had severalconsiderations: Which option for the centralized composting site would be the best for

the future of Waste Concern? How could learning be exchanged between the

centralized and decentralized composting models? What structure would be the most

appropriate for Waste Concern? How should Waste Concern include all of the

stakeholders in the impending change?




13/22



Exhibit 1 Information About Bangladesh

People Industry

Population 144,319,628 Agricultural products Rice, jute, tea, wheat, sugarcane, potatoes, tobaccoAge structure Industries Cotton textiles, jute, garments, tea processing, newsprint,

0-14 years old 33.1% cement, chemical fertilizer, light engineering, sugar 15-64 years old 63.5%+65 years old 3.4% Industrial product growth rate 6.7%

Median age 21.87 Electricity production 17.42 billion kWhPopulation growth % 2.1% Oil production 6,825 bbl/day

Oil consumption 84,000 bbl/dayEconomic Natural gas - p roduction 9.9 billion cu mGDP 299.9 billionGDP growth rate 5.2% Current account balance -591 millionGDP/capita 2100 Exports $9.372 billionGDP by sector Exports partners US 22.4%, Germany 14.5%, UK 11.2%, France 6.9%,

Agriculture 20.5% Imports partners Italy 4%, India 15.1%, China 12.5%, Singapore 7.5%,Industry 26.7% Kuwait 5.5%, Japan 5.3%, Hong Kong 4.5%Services 52.8% Currency Taka (BDT)

Inflation 6.7% F/X rate to US$ 64.26Unemployment 2.5% F/X rate to euroPublic debt as % of GDP 46.1%

in US$ except where otherwise noted.

Source: CIA World Fact Book, www.cia.gov, Accessed 1 February 2006.

People Industry

Population 144,319,628 Agricultural products Rice, jute, tea, wheat, sugarcane, potatoes, tobaccoAge structure Industries Cotton textiles, jute, garments, tea processing, newsprint,

0-14 years old 33.1% cement, chemical fertilizer, light engineering, sugar 15-64 years old 63.5%+65 years old 3.4% Industrial product growth rate 6.7%

Median age 21.87 Electricity production 17.42 billion kWhPopulation growth % 2.1% Oil production 6,825 bbl/day

Oil consumption 84,000 bbl/dayEconomic Natural gas - p roduction 9.9 billion cu mGDP 299.9 billionGDP growth rate 5.2% Current account balance -591 millionGDP/capita 2100 Exports $9.372 billionGDP by sector Exports partners US 22.4%, Germany 14.5%, UK 11.2%, France 6.9%,

Agriculture 20.5% Imports partners Italy 4%, India 15.1%, China 12.5%, Singapore 7.5%,Industry 26.7% Kuwait 5.5%, Japan 5.3%, Hong Kong 4.5%Services 52.8% Currency Taka (BDT)

Inflation 6.7% F/X rate to US$ 64.26Unemployment 2.5% F/X rate to euroPublic debt as % of GDP 46.1%

in US$ except where otherwise noted.

Source: CIA World Fact Book, www.cia.gov, Accessed 1 February 2006.




14/22



Exhibit 2 Photos of Dhakas Waste Problem

Source: Company documents.




15/22



Exhibit 3 CVs of Co-Founders

IFTEKHAR ENAYETULLAH

Date of Birth: August 18, 1967

Education

Masters Degree in Urban and Regional Planning with specialization in urban waste and

environmental management from Bangladesh University of Engineering and Technology

(BUET), Dhaka.

Experience

Co-founder and Director of Waste Concern conceptualized, designed andimplemented the community-based decentralized composting model, using public-

private-community partnerships approach

Member of the Institution of Engineers Bangladesh (IEB), Bangladesh Institute of

Planners (BIP) and Building Partnership Development for Water and Sanitation

of

United Kingdom

Founding member of WasteNet in Bangladesh

Editor of a quarterly newsletter on waste management and recycling in Bangladesh

Served as a Member of the Expert Committee on Clinical Waste Management

constituted by the Government of Bangladesh

More than forty publications to his credit, including scientific papers, articles, factsheets, manuals, reports, recycling and urban environmental management

A professional civil engineer and urban planner by training

Awards and Recognition

Outstanding Social Entrepreneur by the Schwab Foundation of Switzerland for the

year

2003

Tech Museum Awards 2003. Selected as Tech Laureate by the Tech Museum of USA for

developing technology benefiting humanity

Outstanding Engineers Award 2003 from the Institution of Engineers, Bangladesh

(IEB). Professional Excellence Award 2003 as an engineer from the Daily Star a prominent

newspaper of Bangladesh

United Nations Poverty Eradication Award 2002 from entire Asia and the Pacific region

Fast Company magazines first ever Fast 50 fifty champions of innovation for the

year 2002

Elected as an Ashoka Fellow in Ashoka Innovators for the Public of USA in 2000





16/22



Exhibit 3 (continued)

ABU HASNAT MD. MAQSOOD SINHA

Date of Birth: April 4, 1963

Education

Masters Degree in Urban and Regional Planning with specialization in environment, urban

waste management and recycling from Asian Institute of Technology (AIT), Bangkok, Thailand

Experience

Co-founder and Director of Waste Concern conceptualized, designed and

implemented the community-based decentralized composting model, using public-

private-community partnerships approach

Member of the Institution of Engineers Bangladesh (IEB), Bangladesh Institute of

Planners (BIP) and Building Partnership Development for Water and Sanitation of

United Kingdom

Founding member of WasteNet in Bangladesh

Editor of a quarterly newsletter on waste management and recycling in Bangladesh

Member of the Local Consultative Group (LCG), an environmental subgroup in the field

of waste and solid waste management and environment

Served as a Member of the Expert Committee on Clinical Waste Management

constituted by the Government of Bangladesh

More than forty publications to his credit, including scientific papers, articles, fact

sheets, manuals, reports, recycling and urban environmental management

An urban planner and architect by profession

Awards and Recognition

Outstanding Social Entrepreneur by the Schwab Foundation of Switzerland for the

year2003

Tech Museum Awards 2003. Selected as Tech Laureate by the Tech Museum of USA for

developing technology benefiting humanity.

Outstanding Engineers Award 2003 from the Institution of Engineers, Bangladesh (IEB). Professional Excellence Award 2003 as an engineer from the Daily Star a prominent

newspaper of Bangladesh

United Nations Poverty Eradication Award 2002 from entire Asia and the Pacific region

Fast Company magazines first ever Fast 50 fifty champions of innovation for the

year 2002

Elected as an Ashoka Fellow in Ashoka Innovators for the Public of USA in 2000





17/22



Exhibit 4 Composting Process


Waste Collection

Composting

Sawdust / Bokashi

Water

ScreeningResidue

Recyclables 6%

Rejects 14%

Local

Market

Transport

to

Dumpsite

Private Sectordistributes

compost to the

farmers

Sorting

Piling

Composting

Maturing

Screening

Bagging

Selling

Composting

Additives

Marketing




18/22



Exhibit 4 (continued)

Digital Representation of Decentralized Composting Site

Collection Sorting Piling

Composting Composting (Turning) Bagging





19/22



Exhibit 5 Revenues and Costs of a Composting Plant


Annual Financials of a Typical 3-ton Plant

BDT US$F/X Rate 59.524

Revenue from House-to-House Collection 141,000 2,369Revenue from Sale of Compost 600,000 10,080

Total Revenue 741,000 12,449

Total CostsRaw Materials 96,000 1,613

SalariesWaste Collectors Salaries 141,000 2,369

Composting Plant Workers Salaries 132,000 2,218Plant Manager 78,000 1,310

Total Salaries 351,000 5,897

Electricity, Water and Maintenance 104,220 1,751

Total Costs 551,220 9,260

Total Surplus/(Deficit) 189,780 3,188

Major Assumptions for 3 ton/Day Plant

Land Required / Plant (Katha) 7

Fixed Cost / Plant * 1,008,000 16,934Operating Cost / Plant ** 300,000 5,040Total Laborers for Composting Only/ Plant *** 4Total Labourers (Including Collectors) 20Compost Produced (Daily) (kg) 750Expected Revenue from Sale of Compost **** 600,000 10,080Pay Back Period (Months) 23

* Without Land Cost/Rent.** Operating Cost Excludes Cost-Neutral Collectors and Raw Material Costs.*** Laborers Required for Composting Purpose Only.**** From 1 Ton of Organic Waste 250 kg of Fine Compost Can Be Produced.

Annual Financials of a Typical 3-ton Plant

BDT US$F/X Rate 59.524

Revenue from House-to-House Collection 141,000 2,369Revenue from Sale of Compost 600,000 10,080

Total Revenue 741,000 12,449

Total CostsRaw Materials 96,000 1,613

SalariesWaste Collectors Salaries 141,000 2,369

Composting Plant Workers Salaries 132,000 2,218Plant Manager 78,000 1,310

Total Salaries 351,000 5,897

Electricity, Water and Maintenance 104,220 1,751

Total Costs 551,220 9,260

Total Surplus/(Deficit) 189,780 3,188

Major Assumptions for 3 ton/Day Plant

Land Required / Plant (Katha) 7

Fixed Cost / Plant * 1,008,000 16,934Operating Cost / Plant ** 300,000 5,040Total Laborers for Composting Only/ Plant *** 4Total Labourers (Including Collectors) 20Compost Produced (Daily) (kg) 750Expected Revenue from Sale of Compost **** 600,000 10,080Pay Back Period (Months) 23

* Without Land Cost/Rent.** Operating Cost Excludes Cost-Neutral Collectors and Raw Material Costs.*** Laborers Required for Composting Purpose Only.**** From 1 Ton of Organic Waste 250 kg of Fine Compost Can Be Produced.




20/22



Exhibit 6 Information on World Wide Recycling BV (WWR) - Excerpts from Brochure

World Wide Recycling BV (WWR) is a company that aims to introduce the Recycling CentreConcept worldwide, with an emphasis on Latin America, South-east Asia and former Eastern

Europe. The company is owned by Mr. Jan Boone, founder and main shareholder of VAR BV.

Conditions for Success

WWR is convinced that a Public Private Partnership is the most suitable model for operating a

recycling centre. After all, waste treatment is a public task that can executed more efficiently

and at lower cost in cooperation with private entities. There are many definitions of a PPP. The

one that fits the WWR concept best is:

an institutional relationship between the public sector and members of the private-for-profit

and/or the private-not-for-profit sector, in which the various public and private actorsparticipate in defining the objectives, the methods and the implementation of an agreement of

cooperation.

Investor and Operator

WWRs objective is to participate as an investor as well as an operator. Through the use of its

resources, WWR can financially engineer projects, thus underlining its commitment. At the

same time, WWR can warrant the performance of the operation by acting as an operator in

theproject.

The Recycling Centre Concept

The Principle

A recycling centre is a landfill in combination with several recycling installations, each tuned

to recover a specific fraction of the incoming waste. Various separate installations can be

applied, depending on specific needs and circumstances. In developing a recycling centre, a

modular approach is obvious: with reference to local circumstances the recycling centre may

start with a single installation, after which the concept may be developed in full over a period

of years.

The Set-up: Decentralized

WWR strongly advocates a decentralized set-up, with recycling centres located close to waste

producing sources. In this set-up transportation of waste is being minimized. The Recycling

Centre Concept warrants a working method that keeps the inconvenience of smell, visual

distraction and attracted animals to a minimum. For the implementation of new projects, high

standards will be applied. A new recycling centre can easily be built near an existing landfill,

extending its lifetime and improving the environmental and social situation.

Source: World Wide Recycling, www.wwrgroup.com, PDF Brochure, Accessed. February 6, 2006.




21/22



Exhibit 7 Diagram of Landfill Area

Source: Project Design Document Form, Proposal to CDM, p. 14.

Details of CDM Project

Emission reductions in first crediting period

Year

2006 6625 4185

2007 13976 8829

2008 14723 9301

2009 15492 9787

2010 16284 10287

Proposal to CDM, p. 31.

Net electricity delivered to

grid by combusting

extracted methane in gasengines

CERs (net) related to

prevented electricity

generation in the grid(elsewhere)

MWh tons (1000 kg)

Waste production(households,Industry, etc.)

Waste collection,sorting,transportation

Landfill

Landfill gasproduction

Flaring

Electricityproduction

On site useof electricity

Electricityfrom grid

ElectricityTo grid

End useBoundary limit

Waste production(households,Industry, etc.)

Waste collection,sorting,transportation

Landfill

Landfill gasproduction

Flaring

Electricityproduction

On site useof electricity

Electricityfrom grid

ElectricityTo grid

End useBoundary limit




22/22


Exhibit 8 Letter of Approval from the Government of Bangladesh


waste concern turning a problem into a resource

Documents