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Submitted to: Cities Development Initiative for Asia Yongzhou Municipal Government Submitted by: AECOM Asia Company Limited AECOM Grand Central Plaza, Tower 2 138 Shatin Rural Committee Road, Shatin, Hong Kong Tel: +852 3922 9000 Fax: +852 3922 9797
PRE-FEASIBILITY STUDY OF INTEGRATED SOLID
WASTE MANAGEMENT PROJECT
YONGZHOU, PRC
FINAL REPORT
AECOM Asia Company Limited
March 2014
CP - 1
Pre-Feasibility Study of Integrated Solid Waste
Management Project in Yongzhou
ACKNOWLEDGEMENT
During the project implementation, the AECOM consulting team was greatly supported by
Yongzhou Municipal Government, Yongzhou Project Steering Committee, CDIA, Yongzhou
DRC, Urban Administration Bureau, Environmental Protection Bureau, and other relevant
government departments as well as Yongzhou City Construction Investment and
Development Co. Ltd. We sincerely appreciate the support and assistance of the above
agencies and people.
Particularly, we want to thank Mr. Adolf, Ms. Chloe Chen, and Ms. Reese Zou of CDIA;
Yongzhou Project Management Offices, Mr. Tang Wenqiang, Hu Benguo and Hu Wei from
the Center of Solid Waste and Water Supply (Yongzhou Urban Administration Bureau); Mr.
Hu Jianhui, Yu Xinxing, Ms. Li Xiaoping, and Ms. Wang Yang from Yongzhou City
Construction Investment and Development Co. Ltd. We also appreciate the logistical support
to the team provided by the Yongzhou City Project Management Office.
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Contents
PROJECT PROPOSAL ............................................................................................ 1
1. FOREWORD ................................................................................................... 12
2. PROJECT BACKGROUND ............................................................................. 13
2.1 Development Planning of Municipal Solid Waste Management in
Yongzhou ................................................................................................. 13
2.2 Project Components ................................................................................. 15
2.2.1 Solid Waste Collection and Transferring System ............................... 15
2.2.2 Abandoned Uncontrolled Landfill Pollution Control Project ................ 15
2.2.3 Kitchen Waste Treatment Project ...................................................... 16
2.2.4 Solid Waste Incineration Project ........................................................ 16
3. TECHNICAL ROUTE FOR INTEGRATED TREATMENT OF DOMESTIC
SOLID WASTE ................................................................................................ 18
3.1 Service Scope and Capacity ..................................................................... 18
3.1.1 Planned Service Area ........................................................................ 18
3.1.2 Service Population ............................................................................ 18
3.1.3 Forecast of Solid Waste Generation .................................................. 18
3.2 Collection and Transfer System ................................................................ 19
3.3 Closure of Abandoned Uncontrolled Landfills ............................................ 20
3.3.1 Uncontrolled Landfill Management Technology ................................. 20
3.3.2 Uncontrolled Landfill Management Solutions for Yongzhou ............... 21
3.4 Kitchen Waste Treatment .......................................................................... 22
3.4.1 Analysis of Kitchen Waste Treatment Proposal of Yongzhou ............ 22
3.5 Municipal Wastewater Sludge Treatment .................................................. 23
3.6 Municipal Domestic Solid Waste Incineration Project ................................ 24
3.7 Analysis of Integrated Management of Municipal Solid Wastes................. 26
3.7.1 Components of Integrated Treatment Project .................................... 26
3.7.2 Integrated Management Options ....................................................... 26
3.7.3 Centralized Treatment (Construct New Incinerator) Option Analysis . 27
3.7.4 Social and Environmental Risks and Recommendations ................... 29
4. PROJECT COST ESTIMATE AND ECONOMIC ANALYSIS .......................... 31
4.1 Project Components and Cost Estimate .................................................... 31
4.1.1 Domestic Solid Waste Collection and Transfer System ..................... 31
4.1.2 Closure of Abandoned Landfills ......................................................... 32
4.1.3 Kitchen Waste Treatment and Disposal ............................................. 32
4.1.4 Municipal WWTP Sludge Treatment and Disposal ............................ 32
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4.1.5 Domestic Solid Waste Incineration Treatment and Disposal .............. 33
4.1.6 Summary of Capital Investment and Operation Cost of Integrated
Solid Waste Management Facilities ................................................... 35
4.2 Initial Financing Plan ................................................................................. 36
4.2.1 Financing Plan and Operation Management ...................................... 36
4.2.2 Feasibility of Commercialization ........................................................ 39
4.2.3 The Project's Ability to Repay ............................................................ 40
5. Project Implementation Plan ......................................................................... 43
5.1 Project Structure ....................................................................................... 43
5.2 Legal Framework ...................................................................................... 43
5.3 Risks of BOT Projects and Their Control ................................................... 44
5.4 Project Preparation Works ........................................................................ 45
5.4.1 Organization Activities ....................................................................... 45
5.4.2 Procedure of Project Execution ......................................................... 46
5.4.3 Project Preparation and Tendering Schedule .................................... 46
6. ENVIRONMENTAL IMPACT ASSESSMENT .................................................. 47
6.1 Background and Needs ............................................................................ 47
6.2 Solid Waste Management Technologies Routes and Possible
Environmental Impact ............................................................................... 47
6.3 Environmental Impact Mitigation Measures Already Planned and
Proposed .................................................................................................. 47
6.4 Monitoring Plans and Requirements ......................................................... 47
6.5 Management Improvement ....................................................................... 48
7. PROJECT SOCIAL IMPACT ASSESSMENT ................................................. 52
7.1 Social Impact Analysis .............................................................................. 52
7.2 Stakeholder Analysis ................................................................................ 53
8. RECOMMENDATIONS TO THE NEXT FEASIBILITY STUDY ........................ 54
8.1 Technical Aspect ...................................................................................... 54
8.2 Social & Environmental Aspects ............................................................... 54
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List of Figures
Figure 2.1: Location of Tantang Landfill .............................................................................. 16
Figure 3.1: Service Scope of Domestic Solid Waste Treatment .......................................... 18
Figure 3.2: Flowchart of the Solid Waste Collection and Transportation System in
Yongzhou ............................................................................................................................ 20
Figure 3.3: Flowchart of Anaerobic Digestion Technology for Treatment of Kitchen
Waste ................................................................................................................................. 23
Figure 3.4: Overall Plan of Centralized Incineration Treatment ........................................... 28
Figure 3.5: Technical Flowchart of Centralized Treatment .................................................. 29
Figure 4.1: PPP Private Enterprise Partnership Financing Plan (PPP, BOT+Contract
Operation) ........................................................................................................................... 37
List of Tables
Table 3.1: Generation of Solid Waste in Yongzhou (tons/day) ............................................ 19
Table 3.2: Comparison of Original Site Closure and Relocation of Landfills ........................ 21
Table 3.3: Comparison of the Advantages and Disadvantages of the Various Sludge
Treatment Technologies ..................................................................................................... 24
Table 3.4: Solid Waste Incineration Technology Comparison .............................................. 25
Table 3.5: Comparison of Integrated Domestic Solid Wastes Treatment Options ................ 27
Table 4.1: Comparison of Original Site Closure and Relocation .......................................... 32
Table 4.2: Investment and Economic Comparisons of Sludge Drying Processes ................ 33
Table 4.3: Summary of Production and Operation Cost ...................................................... 34
Table 4.4: Summary of the estimated Capital Investment of the New Facilities ................... 35
Table 4.5: Summary of Operation Cost of Integrated Treatment Facilities ........................... 35
Table 4.9: PPP (BOT + Contract Operation) Financial Indicator .......................................... 38
Table 5.1: Project Preparation and Tendering Schedule ..................................................... 46
Table 6.1: Solid Waste Management Sub-Projects and Possible Negative Environmental
Impacts ............................................................................................................................... 49
Table 6.2: Positive Environmental Benefits of Solid Waste Technology Solution ................. 50
Table 6.3: Environmental Mitigation Measures and Proposed Measures ............................ 51
Table 7.1: Social Impact Analysis Matrix ............................................................................. 52
Table 7.2: Key Stakeholder Analysis Matrix ........................................................................ 53
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Appendix
Appendix 1: Socio-Economic Analysis
Appendix 2: Status of Domestic Solid Waste Treatment in Yongzhou
Appendix 3: The Volume of Solid Waste Generation and Solid Waste Composition
Appendix 4: Municipal Solid Waste Collection, Transfer Center and Affecting Factors
Appendix 5: Comparison and Cost Estimation of Different Landfill Closure Options
Appendix 6: Kitchen Waste Treatment Technology and Current Practices
Appendix 7: Project Examples of Different Anaerobic Digestion Technology
Appendix 8: Sludge Treatment Technologies
Appendix 9: Municipal Domestic Solid Waste Incineration Technology
Appendix 10: Analysis of Integrated Management of Municipal Solid Waste
Appendix 11: Economic Comparison of the Two Options for Solid Waste Incinerator and
Cement Kiln Treatment
Appendix 12: Economic Comparison of the Centralized and the Decentralized Disposal
Appendix 13: Financial Estimation for the Two PPP Programs
Appendix 14: Environmental Impact Assessment
Appendix 15: Advices to Environmental Impact Assessment
Appendix 16: Social Impact Assessment
Appendix 17: Social Field Investigation
Appendix 18: Capacity Building and Training
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Abbreviations Full Name
ADB Asian Development Bank
AP Affected Person
BOD Biological Oxygen Demand
BOT Build-Operate-Transfer
CB Construction Bureau
CDIA Cities Development Initiatives for Asia
CNY Chinese Yuan
COD Chemical Oxygen Demand
DG District Level Government
DFR Draft Final Report
DRC Development and Reform Commission
EIA Environmental Impact Assessment
EMAB Ethnic Minority Affairs Bureau
EMDF Ethnic Minorities Development Framework
EMDP Ethnic Minorities Development Plan
EMP Environmental Management Plan
EPB Environmental Protection Bureau
ESD Environmental Sanitation Department (a sub-unit of MMB)
ESMS Environmental Social Management System
ESRP Environment and Social Review Procedure
FA Financial Analysis
FAO Financial Assessment Opinion
FB Finance Bureau
FCUP Foreign Capital Utilization Plan
FI Financial Intermediaries
FIA Financial Impact Assessment
FSR Feasibility Study Report
FYP Five-Year Plan
GHG Greenhouse Gas
IFC International Finance Corporation
IP Indigenous People
IRR Internal Rate of Return
LA Land Acquisition
LDI Local Design Institute
LFF Loan fact-finding
MG Municipal Government
MMB City Management Bureau/Municipal Administration Bureau
MOH Ministry of Health
MOHURD Ministry of Housing and Urban-Rural Development
MOEP Ministry of Environmental Protection
MOF Ministry of Finance
MRM Management Review Meeting
MSW Municipal Solid Waste
MWR Ministry of Water Resources
NBS National Bureau of Statistics
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Abbreviations Full Name
NDRC National Development and Reform Commission
O&M Operation and Maintenance
PAM Project Administration Manual
PAH Project Affected Households
PAP Project Affected Persons
PIU Project Implementation Unit
PMO Project Management Office
PPP Public-Private Partnership
PPTA Program Preparatory Technical Assistance
PRC People’s Republic of China
PSP Private Sector Participation
RP Resettlement Plan
RRP Report and Recommendation of the President
SIA Social Impact Assessment
TA Technical Assistance
TSS Total Suspended Solid
TOR Terms of Reference
TOT Transfer-Operate-Transfer
UPB Urban Planning Bureau
WCB Water Conservancy Bureau.
WA Water Authority
WSC Water Supply Company
WWTP Wastewater Treatment Plants
YCCID Yongzhou City Construction, Investment and Development
Co. Ltd.
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PROJECT PROPOSAL
1. Project Background
On May 8, 2013, an agreement was officially signed between Cities Development Initiative
for Asia (CDIA) and AECOM Asia Co., Ltd. Under the agreement, AECOM is to provide
technical services for the Preliminary Feasibility Study of Hunan Yongzhou Integrated Solid
Waste Management Project. This assignment is financed by CDIA with the implementation
period of 7 months. According to the “Regulations for Protection of Xiang River in Hunan
Province” and the “12th Five-year Plan for Construction of Facilities for Proper Treatment of
Domestic Wastes in Hunan Province”, the Integrated Solid Waste Management Project in
Yongzhou has been included in the list of priority projects to be implemented by the
Yongzhou Municipal Government. The project aims to achieve integrated collection,
treatment and disposal of municipal solid waste in Yongzhou to achieve the objectives of
recycling, reduction and proper treatment of municipal solid waste, and enhancing the
sustainable development of Yongzhou City.
2. Project Scope
2.1 Current Facilities
Yongzhou has one existing solid waste treatment plant (i.e. Tantang Landfill), 32 garbage
transfer stations (including 20 in Lengshuitan District and 12 in Lingling District), and 21
garbage transportation trucks. The daily garbage transportation, treatment, and disposal
capacity is 600 tons / day, which is projected to expand to 1,000 tons/day by 2015 and 1,200
tons/day by 2020. The municipal solid waste collection, transportation, and treatment in
Yongzhou is mainly operated and managed by the Municipal Administration and Law
Enforcement Bureau of YMG (also known as the YZ City Solid Waste Center). The current
practice is that the municipal solid waste is collected and transported in carts or trucks to the
garbage transfer stations and then compressed, transported by container trucks or garbage
compression trucks to Tantang Landfill for disposal. Tantang landfill is a properly designed /
operated sanitary landfill without recycling facilities. Other than the current Tantang Landfill,
Yongzhou has two abandoned uncontrolled landfills: Shanglingqiao Landfill in Lengshuitan
District (closed in 2008) and Zhugemiao Landfill in Zhugemiao (closed in 2010).
The current practices of Yongzhou solid waste treatment have the following major issues:
Solid waste collection service coverage areas is not complete within existing urban
districts, causing water and ground pollution; the collection, transfer and transfer
station system is outdated, without leachate, odor collection and treatment facilities;
and the unsorted solid waste causes low levels of resource recovery.
The two abandoned uncontrolled landfills without proper capping, gas emission
collection, and leachate treatment system, causes serious pollution to the
surrounding environment with adverse impact to groundwater and Xiang River/Xiao
River water quality.
Yongzhou urban areas now produce 70 tons of kitchen waste per day (45 tons for
Lengshuitan District, 25 tons for Lingling District). Kitchen waste recycling is not well
managed as large amounts of kitchen waste flow to illegal sales channel, causing
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serious threats on food safety.
2.2 Project Components
This project proposal is designed based on the projected population and solid waste
generation for Year 2020. The Project will serve an urban population of 1,000,000 in the
urban center of Yongzhou (including 574,000 in Lengshuitan District, 306,000 in Lingling
District and 120,000 in the Middle New Eco-city) and a rural population of approximately
200,000 in the surrounding towns and townships within 30km from the urban area. Based on
government policies and the current status of solid waste treatment in Yongzhou, the
Integrated Solid Waste Management Project includes the following components:
Solid Waste Collection, Sorting and Transferring System: The system will have a
total capacity of 1,200 tons/day, including 570 tons/day from Lengshuitan District,
310 tons/day from Lingling District,120 tons/day from Middle New Eco-city, and 200
tons/day from the surrounding towns and townships.
Uncontrolled Abandoned Landfill Closures: Proper closures of the Shanglingqiao
Landfill in Lengshuitan District (800,000 m3 of domestic solid waste) and the
Zhugemiao Landfill in Lingling District (500,000 m3).
Kitchen Waste Collection and Treatment: The Project will have a total treatment
capacity of 120 tons/day, including 100 tons/day of kitchen refuse and 20 tons/day of
gutter oil.
Municipal Wastewater Sludge Treatment: Facility with capacity of 90 tons per day
(80% water content) to receive and treat sludge from the 6 municipal wastewater
treatment plants in the urban area.
Solid Waste Incineration Project: The Project will include a 700 tons/day municipal
solid waste incinerator facility with presorting, energy recovery, and minimization
system to be constructed in the existing Tantang landfill site area. The expected
ultimate capacity is 1050 tons/day to be implemented in two phases with phase one
capacity of 700 tons/day.
3. Technical Solutions
The municipal solid waste is collected and transported in carts and garbage trucks to the
garbage transfer stations and then compressed and transported in container trucks and
garbage compression trucks to Tantang Landfill for disposal. The two abandoned
uncontrolled landfills will be properly treated with in-situ site closure method. These will be
managed by Yongzhou government. While the existing solid waste is all collected and
disposed in Tantang landfill with proper leachate treatment facilities, the Project Proposal
takes into consideration minimizing adverse environmental impacts, effective transportation
routes, maximizing the use of existing landfill assets, and consolidating solid waste treatment
and disposal activities. The recommended solution is a centralized treatment system to be
adopted in this integrated solid waste management scheme, in which all the domestic solid
wastes, kitchen wastes, and municipal sludge of the urban areas are collected,transported,
and treated at Tantang Landfill for recycle, reduction, and resource recovery. All the
treatment facilities will be located at the existing Tantang landfill site area. This centralized
scheme including an incineration plant and solid waste sorting facilities to be built in Tantang
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so that all the domestic solid wastes transported to Tantang are sorted into combustibles
and non-combustibles. The combustibles are incinerated in the incinerator with green power
generation while the non-combustibles are disposed in the landfill; the kitchen wastes are
treated with anaerobic fermentation process with the residual used as fertilizers and biogas
generated from fermentation for power generation; the residual heat produced from
anaerobic fermentation as well as from the incineration facility will be used for thermal drying
of municipal sludge.
This scheme requires the construction of the following treatment facilities during Phase 1:
Current solid waste collection and transportation system need to be upgraded and
new facilities and services will be provided; the total investment is approximately
CNY100 millions (financed by Yongzhou government special fund);
One incineration plant with a capacity of 700 tons/day (2 units x 350 tons per day per
unit) and a capital cost of approximately CNY286 millions to be constructed at
Tantang;
One kitchen waste treatment plant with a capacity of 100 tons/day and a capital cost
of approximately CNY65 millions to be constructed at Tantang;
Thermal drying municipal sludge pretreatment system with a capacity of 90 tons/day
(with a water content of 80%) and a capital cost of approximately CNY30 millions;
An integrated / centralized treatment is preferred not only because of its lower operation
costs, but also for its advantages in comprehensive management. With the relevant
treatment facilities all located at Tantang Landfill, environmental impacts will be minimized
and energy / heat generated from kitchen waste and incineration plant can be fully utilized.
This fully manifests the advantages of beneficial reuse and treatment, as well as integrated
practices. . The proposed Tantang Centralized Treatment facility is expected to become an
eco-park with iconic demonstrative effects on the application of integrated solid waste
treatment approaches in China.
4. Estimated Capex, Opex and Project Financing
The centralized treatment approach includes the construction of a solid waste incineration
plant with a treatment capacity of 1,050 tons/day at Tantang Landfill with 25 to 30 years’
service duration. Based on the increasing solid waste production trend, the plant will be
constructed in two phases, with Phase I involving a treatment capacity of 700 tons/day, and
scheduled to operate and generate power in 2016. Financial analysis is evaluated based on
a treatment capacity of 700 tons/day (operating at 600 tons/day during initial stage). The
system will be designed with redundancies to accommodate future economic growth and
urbanization needs. Phase II is proposed with additional 350 tons/day (by adding the 3rd
train) in the future.
4.1 Capital cost
The estimated unit capital costs of sludge drying, incineration, and kitchen waste treatment
facilities to be constructed under this Project are CNY 330,000/ton, CNY 400,000/ton, and
CNY 650,000/ton respectively, excluding relevant project preparation fees, land acquisition,
site utilities and Environmental Impact Assessment preparatory fees.
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4.2 Operating cost
The estimated unit operating costs for sludge drying, solid waste incineration, and kitchen
waste treatment facilities are estimated at CNY 90/ton, CNY 111.6/ton, and CNY 178/ton
respectively. The average operating cost is about CNY 37/ton, which includes the projected
revenue of electricity sales from solid waste incineration. Further verification on above
estimate is to be conducted during next project Feasibility phase based on the system
design, equipment procured and associated operation, maintenance and system repair
needs.
4.3 Operating income
Income from solid waste incineration facility mainly includes electricity sales and solid waste
tipping / treatment fees. According to the incineration projects implemented in the cities with
similar level, the reasonable market range for solid waste treatment fees is between
CNY100/ton to CNY120/ton can be adopted and considered (assume CNY100/ton in
financial calculation).
5. Key Financial Indicators
5.1 Financial indicators
The key financial indicators of the Project include rate of return of internal investment (also
known as internal rate of return, IRR) and period of recovery of dynamic investment and net
present value (NPV). The initial result of internal rate of return (IRR) of the Project is 10.8%.
The financial data and key indicators are shown in the Tables 1 and 2.
5.2 Input-Output Analysis
According to the Yongzhou government policy and preliminary financial analysis of the PPP
scheme, with the total capital investment of CNY 381 million (50% capital investment and 50%
from bank loans with interest of 8%), Tantang Landfill contract operation plus BOT of new
facilities (BOT+O&M) can generate a higher IRR of 10.8% by taking account of the factors of
- future increase of treatment tariff, an assumed annual growth of 3%, an average yearly
price inflation of 3%, and the three-year tax exemption and three-year half reduction of
corporate income tax.
Table 1: PPP Financial Data
Key Assumption
Contract Period 25
WACC 10.0%
Capital Investment CNY381,000,000
Laon CNY190,500,000 (50%)
Bank Interest Rate 8% pa
Growth Rate of MSW 3%/year
Taxation First 3 years 0%
Year 4 to 6 12.50%
Remaining Year 25%
Profit and loss:
Income:
Treatment fee Revenue Treatment Initial Daily treatment
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amount (t/d)
treatment fee (CNY/t)
fee (CNY/d)
Tantang Landfill 600 100 60,000
Kitchen waste 100 200 20,000
Municipal sludge 90 200 18,000
MSW Incinerator 600 100 60,000
Total
158,000
Other Revenue
Treatment amount
(t/d) CNY/kWh
Daily power sale income
(CNY/d)
MSW incineration power generation
600 0.65 87,360
Expenditure:
Treatment amount
(t/d)
Operation cost
(CNY/t)
Daily expenditure
(CNY/d)
Tantang Landfill+leachate treatment
600 52 31,200
Kitchen waste 100 178 17,800
Sludge 90 90 8,100
MSW incinerator 600 111.6 66,960
Total
124,060
Note:
1. The ratio of capital investment bank loan: it is depends on the financial capability of the borrower, the
normal range is 70%-30%. In normal case, if the debt ratio is over 50%, then the bank may require to
set mortgage against the borrower’s assets and the right of fee collection of the project.
2. The interest rate: the current interest rate for infrastructure project is 6.5% to 8%pa.
Table 2: Key Financial Indicator Data (CNY)
含售电收入
Total Operating revenues 销售收入 3,948,233,815
Total costs (Opex) 运营费用 (2,359,071,455)
EBITDA 折旧摊销及息税前利润 1,589,162,360
EBIT 息税前利润 1,208,162,360
Net income 税后利润 838,397,736
Dividends 分配股利 763,301,912
CAPEX 资本支出 381,000,000
ROE 资本金回报率 11.3%
ROCE 已动用资本回报率 23.8%
IRR ( Free cash flow) 项目内部回报率 10.8%
NPV ( Free cash flow) at WACC
净现值 26,942,389
6. Project Execution
6.1 Operation and Management Structure: BOT + O&M
In order to achieve centralized treatment, it is necessary to integrate solid waste incineration,
kitchen waste treatment, municipal sludge treatment, and Tantang Landfill into an integrated
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treatment project. After detail discussions with Yongzhou government, this Project will be
operated and managed by means of PPP (public private partnership) scheme (contract O&M
of existing landfill facilities + BOT investment in new facilities), where Tantang Landfill is
operated and managed by a professional enterprise contracted by Yongzhou Municipality
while the enterprise provides cash to address the financial needs of all new facilities. By
such arrangements, the asset of Tantang Landfill is still remained to the government.
Figure 1: PPP Structure: BOT + O&M
As stipulated by the “Methods for Management of Concession Agreement of Municipal
Public Utilities” issued by the Ministry of Housing and Urban-Rural Development (MOHURD)
on March 19, 2004, solid waste treatment utilities may be operated under concession
agreements, typically for a period of 25 to 30 years.
This PPP scheme covers the proposed BOT arrangement of solid waste incineration, kitchen
waste treatment, municipal sludge treatment, and Contract Operation of Tantang Landfill.
The rights of construction and operation of the Project for a certain period of concession will
be given to an experienced investor (i.e. a project company), who is responsible for financing,
designing, procuring, constructing, and commissioning and operating all of the new
components of the Project within the period of BOT agreement. Upon the completion of the
new components, the Project will provide treatment and operation services to the
government according to the agreement while the government will pay solid waste treatment
/ tipping fees to the project company according to the agreement and assure that the
electricity generated from the solid waste incineration plant is purchased by the power
company. The investor to recover the project investment, operation and maintenance cost,
and obtain a reasonable return. Upon expiry of the BOT agreement, the investor will hand
over the ownership and right of operation of all invested project components to the
government.
6.2 Legal Framework
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Under the proposed BOT + O&M PPP scheme, the key legal documents involving the
Project will include, but not limited to, the following contracts and agreements, applicable
laws and standards, and the power generation preferential policies for the Project:
Delegated Management Agreement
BOT Contract Agreement
Concession Agreement of Landfill Contract Operation;
Contract of power purchase;
Agreement of grid connection and dispatching;
To assure the sustainability of the Project, the government shall take full account of the
following principles upon authorization of concession agreement:
“Take or Pay” Principle: This principle is an important means of credit security for
BOT and Contract O&M projects. During the operation period of this project, the
government or its authorized department to ensure solid wastes supply at the
minimum volume and receive solid waste treatment service, as well as pay solid
waste treatment / tipping fees to the investor (or Project Company) as stipulated in
the agreement. If the government or its authorized department fails to provide solid
wastes to the investor (or Project Company) at the agreed volume, the government
or its authorized department will still pay the agreed solid waste treatment fees.
Setting the “minimum (yearly) supply of solid waste” is a key approach to execute the
“Take or Pay” Principle.
Exclusivity: In order to abide by the “Take or Pay” Principle and “let all projects serve
their purposes”, the government usually develops a reasonable planning of solid
waste treatment facilities based on the actual circumstances to achieve the
exclusivity of solid waste incineration and treatment in a certain geographical area.
The exclusivity of BOT model is also reflected in the various rights of priority in
expansion of existing projects or construction of new treatment projects in the same
area.
Preferential policies: Solid waste incineration projects also receive a series of
preferential tax policies. For example, three-year exemption and three-year half
reduction of enterprise income tax are stipulated in the “Regulations of
Implementation of the ‘Enterprise Income Tax Law of the People’s Republic of
China’” (2007); domestic solid waste incineration projects are included in the
catalogue according to the “Notice on Publication of the Catalogue of Environmental
Protection, Energy and Water Saving Projects Enjoying Preferential Enterprise
Income Tax (Trial Version)” (Financial Tax [2009]166); solid waste incineration and
power generation projects also receive the preferential policies on exemption and
reduction of income tax and exemption of value-added tax according to the
stipulations of the “Notice on the Value-added Tax Policy for Comprehensive
Utilization of Resources and Other Products” (Financial Tax [2008]156).
Price adjustment formula: Since the power grid-connection price upon bid invitation is
an assumed parameter, the price adjustment formula for the solid waste treatment
fees should be linked with the actual grid-connection price. In addition, the operating
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costs should adjusted with the price index and adopt the progressive method instead
of a year-to-year adjustment.
Yongzhou has implemented the urban WWTPs adopting the BOT model, the government
has experiences in the implementation procedure and operation of the PPP model; therefore,
there will not be significant risks to the investors in terms of the adoption of this PPP scheme.
6.3 Risks of BOT Projects and Associated Project Control
(1) Risk Category
From the government’s perspective, the key risks to address are social and
environmental risks. The government will have to address increasing pressure in
terms of solid waste treatment needs if the selected investor does not have the
required capability to complete the project on time. Additionally, during the period of
operation and management, serious environmental pollution may result from failure
to follow the strict national environmental protection standards.
From the investor’s perspective, the key risks include technical risks (in terms of
construction and operation), solid waste supply risks (in terms of quantity and
quality), payment risks (concerning solid waste treatment fee and electricity fee), and
policy risks (e.g. more stringent national environmental protection standard and
changes of urban planning).
(2) Principle of Risk Sharing
The following principle of risk sharing will be adopted to enable the more competent party to
undertake the respective category of risks. For example:
The technical risks concerning the engineering design, operation, and maintenance
of the solid waste incineration plants and facilities should be undertaken by the
investors (or project companies) since they have more professional staff and
expertise than the government in addressing such risks;
The solid waste supply risks, payment risks, and policy risks should be undertaken
by the government or its authorized department who have certain abilities of
administrative coordination;
Unpredictable risks (e.g. force majeure) should be shared by the government and the
investor following the relevant stipulations of the Concession Agreement.
(3) Key Approaches of Risk Control
The following approaches and methods may be adopted for control of the above risks:
The project requirements that the government raises to the project investor including
the technical requirements of the incineration plant and the various treatment
facilities should be clearly specified in the bidding documents. In addition, the project
terms and conditions provided by the government should also be made available to
the investor for the purpose of risk appraisal and economic analysis;
The Concession Agreement should be included as part of the bidding documents to
clearly specify the responsibility, rights, and interests of the government and the
investor to avoid unnecessary disputes;
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Various performance assurance mechanisms should be established based on the
project requirements and its implementation stages, such as “bid security” for the
bidding period, “project completion security” for the construction period, “operation
security”, “payment security” for the operation period, and “hand-over security” for the
hand-over of the Project.
7. Project Preparation Works
7.1 Organization Activities
(1) The government authorizes the lead department to perform project planning based
on integrated approach and delegate the right of Concession Agreement on behalf
of the government;
(2) Surveys should be organized to identify the quality and quantity and future growth
of solid wastes;
(3) An experienced consultant should be recruited as the financial consultant and
investment / bidding agent of the Project;
(4) Market investigation should be conducted to identify potential investors and
technologies.
7.2 Procedure of Project Execution
(5) The government selects an investor for the Project through public bidding or by
other transparent means;
(6) The investor sets up a special project company based on the relevant
requirements of the bidding document;
(7) The government delegates an authorized representing department for the Project;
(8) The authorized government department signs and executes, on behalf of the
government, the Concession Agreement with the project company;
(9) The project company signs an agreement with YZ Government on solid waste
delivery with the solid waste suppliers;
(10) The project company signs an agreement of electricity sales with the electricity
authority;
(11) The project company signs agreements of project financing with the loan provider /
banks;
(12) The project company signs project implementation contracts with the design
institute, equipment suppliers, and construction and installation companies; in-
depth discussions will be conducted over the publications of project manager
associations.
7.3 Project Preparation and Tendering Schedule
The following table lists the time schedule during the project implementation period.
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Table 3: Project Preparation and Tendering Schedule
Implementation Stage
Implementation Actions Duration
Preparation Stage
The government delegates an authorized department and grant concessions for representing the government in the future;
Hire project consultants and tender agent;
Investigate potential investor and technology.
3-6 Months
Tender and financing Stage
Issue the tender notice;
Field investigation;
Evaluation of the bidders;
Contract negotiation;
Contract signing;
Establish special project company;
Financing from the financial institution.
6-8 Months
Design Stage Signing contract with design institutes,
equipment suppliers, engineering, installation companies, etc..
2-3 Months
8. Project Benefits
8.1 Benefits from Abandoned Uncontrolled Landfill Closure
(1) The landfill closure will reduce the surface water and groundwater contamination
caused by leachate. The annual reduction of COD, BOD5, ammonia, and SS amount
is projected to be 130 tons, 52 tons, 39 tons and 26 tons, respectively. The project
will improve the local agriculture and aquaculture production conditions. After
completion of the project, the nearby local farmers' income will increase by about 8%.
(2) The reduced landfill leachate contamination in surrounding soils will allow farmers
to grow high-value agricultural products.
(3) Annual emissions of landfill gases, H2S and NH3, to the atmospheric environment
will reduce by 0.527 tons and 2.722 tons, respectively.
(4) Improve the public health and sanitation conditions of surrounding communities.
Currently the residents living near the two landfills are mostly women, children,
and elderly (male labors are mostly migrant workers outside). The implementation
of this project will benefit the health conditions of the women, children, and elderly.
(5) The greening of landfill surface after closure will improve the ecological
environment in the surrounding areas.
8.2 Benefits from Kitchen Waste Treatment
(6) Reduce the illegal reuse of waste kitchen oil, improve public health. The timely
and effective recovery and management of kitchen waste can effectively control
mosquitoes breeds and rodent infestation, reducing disease transmission,
improving the health conditions.
(7) Fermentation of the kitchen waste will produce biogas, reducing the fossil fuel
usage. 1,058 tons of waste oil can be separated and recycled each year, while
reducing environmental pollution.
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(8) Individually sealed way of collection and transportation will improve the sanitation
conditions of the kitchen waste collection system and create a better health
conditions.
8.3 Benefits from Incineration Project
(9) Maximally reduce the solid waste quantity, which reduces the need for additional
landfill space and improves the conservation of land resources.
(10) Waste heat is fully utilized, which reduces the use of fossil fuels and carbon
emissions. (Carbon emissions of incineration process are 1/6 of that from landfill
disposal only).
(11) Solid Waste pathogens will be completely eliminated, reducing the negative
impact to environmental and public health.
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Pre-Feasibility Study of Integrated Solid Waste
Management Project in Yongzhou Chapter 1 Foreword
1. FOREWORD
According to the “Regulations for Protection of Xiang River in Hunan Province” and the “12th
Five-year Plan for Construction of Facilities for Proper Treatment of Domestic Wastes in
Hunan Province”, the Integrated Solid Waste Management Project in Yongzhou has been
included in the list of priority projects to be implemented by the Yongzhou Municipal
Government. This Consulting Service Project will review and provide feasible integrated
solid waste management components for Yongzhou PMO and the relevant government
departments, improve the status of solid waste management, promote the livelihood of
residents and the urban environment of Yongzhou, and enhance the overall development of
the urban area of Yongzhou.
This report is the Final Report for the technical service that the AECOM Consultants
provided for the Preliminary Feasibility Study of Integrated Solid Waste Management Project
in Yongzhou, Hunan Province. In this report, AECOM Consultants analyzed and evaluated
the solid waste collection and transfer system of Yongzhou as well as the technologies for
closure of abandoned uncontrolled landfills, kitchen waste treatment and disposal,
incineration and power generation and cement kiln incineration, and provided technical
routes for integrated solid waste management in Yongzhou. Meanwhile, the consultants also
analyzed the economic, financial, environmental, and social impacts of these technical
routes and provided optimized technical, investment, and financing solutions of the Project.
All currency units mentioned in this report is CNY.
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Pre-Feasibility Study of Integrated Solid Waste
Management Project in Yongzhou Chapter 2 Project Background
2. PROJECT BACKGROUND
On May 8, 2013, a service agreement was officially signed between Cities Development
Initiative for Asia (CDIA) and AECOM Asia Co., Ltd. Under the agreement, AECOM is to
provide technical services for the Preliminary Feasibility Study of Hunan Yongzhou
Integrated Solid Waste Management Project. Financed by CDIA, and with the
implementation period of 7 months, the project aims to achieve integrated collection and
treatment of municipal solid waste as well as rehabilitation and improvement of old landfill
sites in Yongzhou to help Yongzhou achieve the objectives of recycling, reduction, and
harmless treatment of municipal solid waste. Appendix 1 describes the details of the social
and economic analysis of Yongzhou City.
The municipal solid waste collection, transportation, and treatment in Yongzhou is mainly
operated and managed by the Municipal Administration and Law Enforcement Bureau of
YMG (also known as the Solid Waste Center). The current practice is that the municipal solid
waste is collected and transported in carts and garbage trucks to the garbage transfer
stations and then compressed and transported in container trucks and garbage compression
trucks to Tantang Landfill for disposal. This landfill is a sanitary landfill with proper treatment,
but no recycling facilities or reduction of solid wastes. Yongzhou has one existing solid waste
treatment plant (i.e. Tantang Landfill), 32 garbage transfer stations (including 20 in
Lengshuitan District and 12 in Lingling District), and 21 garbage transportation trucks. The
daily garbage transportation and treatment capacity is about 600 tons/day, which is
predicted to reach 1,000 tons/day by 2015 and 1,200 tons/day by 2020.
Apart from the Tantang Landfill, Yongzhou has two abandoned landfills: Shanglingqiao
Landfill in Lengshuitan District (closed in 2008) and Zhugemiao Landfill in Lingling District
(closed in 2010). Uncontrolled dumping of garbage at these two abandoned landfills affects
the surrounding resident’s living environments and caused serious air and water pollution to
the ground water and Xiang River due to the absence of a landfill gas migration control
system and leachate collection and treatment system.
In addition, the urban center of Yongzhou generates approximately 70 tons of kitchen waste
per day (including 45 tons from Lengshuitan District and 25 tons from Lingling District and
excluding household kitchen refuses). Without an effective kitchen waste recovery system,
the kitchen refuses remains uncontrolled and disorderly in Yongzhou, with massive volume
of kitchen refuse being collected by illegal channels and imposing a huge threat to the
environment.
2.1 Development Planning of Municipal Solid Waste Management in
Yongzhou
The key objectives proposed (for the period between 2011 and 2015) in the “12th National
Five-year Plan for Construction of Facilities for Proper Treatment of Domestic Wastes”
(State Council General Office Doc. No. [2012] 23) include:
All municipalities directly under the Central Government, the provincial capital cities,
and municipalities listed on the State Plan will achieve sanitary treatment of solid
waste; designated cities will achieve a treatment rate of more than 90% for municipal
solid waste; all counties will have the capacity for proper solid waste treatment and
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the county towns will achieve a treatment rate of more than 70%; the nation as a
whole will achieve an increase of 580,000 tons/day in the capacity of solid waste
collection and treatment.
The treatment capacity of municipal solid waste incineration facilities will account for
more than 35% and 48% of the total solid waste treatment capacity respectively for
the nation as a whole and the eastern seaboard areas;
Targets for solid waste sorting include 50% of the regional cities adopting preliminary
kitchen waste sorting and collection and each province (District or municipality)
having one municipal solid waste sorting demonstration plant in place;
Improve the MSW treatment and management system.
Based on the “12th National Five-year Plan” described above, the “Recommendations of the
People’s Government of Hunan Province on Strengthening the Work of Municipal Solid
Waste Treatment” (Xiang Government Document No. [2012] 21) was issued, requiring that,
by 2015, urban areas above the level of county towns in the province achieve a treatment
rate of more than 90% and that designated cities achieve a treatment rate of 100% for
domestic solid waste. Additionally, pilot projects of domestic solid waste sorting will be
implemented in more than 10 cities and counties; 50% of the districts will achieve proper
sorting, collection, transportation, and treatment of kitchen waste; and up to 30% of the
municipal solid waste will be recycled for beneficial use in the designated cities. By 2030,
100% of the municipal solid waste in the entire province will achieve treatment, and proper
sorting, collection and disposal of domestic solid waste will be implemented gradually to
extend to remote small towns, villages and the rural areas. Based on the current situation of
Yongzhou, the solid waste treatment and disposal rates have well exceeded requirements,
but the requirements of domestic solid waste collection, kitchen waste treatment, and urban
and rural integration included in the Master Plan have yet to be implemented.
The “Pollution Control Plan for Unsafe Uncontrolled Solid Waste Landfills in Xiang River
Watershed” aims to gradually address the problem of solid waste and heavy metal pollution
of Xiang River basin caused by the uncontrolled solid waste landfills within the watershed to
make sure that the uncontrolled solid waste landfill has a proper treatment rate of up to 100%
and reduces heavy metal pollution by 50% by the end of the planning cycle (2011 to 2018).
In accordance with the “12th Five-Year Plan for Construction of Facilities for Proper
Treatment of Domestic Wastes in Hunan Province”, 26 closed uncontrolled landfills were
identified as major pollution sources of the main trunk of Xiang River (including 2 Nos. of
abandoned uncontrolled landfills in Yongzhou, namely Zhugemiao Landfill in Lingling and
Shanglingqiao Landfill), which will be restored in the period from 2011 to 2015; and 33 non-
standard active landfills with less degree of pollution to the Xiang River watershed will be
managed in the longer-term period from 2016 to 2018 (including the Jindong Management
Zone Domestic Waste Landfill in Yongzhou).
Moreover, as planned in the “Action Plan of Constructing Municipal Wastewater and Solid
Waste Treatment and Water Supply Facilities in Hunan Province” (based on Yongzhou
Government General Office Doc. No. [2012] 114), the key objectives of construction and
reconstruction of solid waste treatment facilities are to increase the domestic solid waste
treatment, transfer, and transportation capacity of the whole municipality (including the main
urban districts the county-level cities and the county towns and the key designated towns)
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respectively by 680 tons/day, 1047 tons/day and 1720 tons/day and to achieve treatment
and disposal of 9.4 million tons of solid wastes between 2011 to 2015.
Meanwhile, the “Master Plan of Yongzhou Municipality (2001-2020)” also included a series
of environmental sanitation plans mainly including the provision of domestic solid waste
transfer stations, domestic solid waste treatment facilities, construction solid waste treatment
facilities, urban sanitation treatment facilities, urban public toilets, vehicle cleaning stations,
environmental sanitation parking lots, etc. These environmental sanitation plans will be
integrated with the kitchen waste management plan, non-standard landfill closure, and
domestic solid waste incineration plant to form a comprehensive plan for integrated solid
waste management in order to jointly improve the level of solid waste management and
facilitate urban environment and development in Yongzhou. This Integrated Solid Waste
Management Project in Yongzhou is an important project to assure that the ecological and
human living environments are properly protected through improvement during the economic
development of Yongzhou.
2.2 Project Components
According to the relevant government policies as well as the status of solid waste
management in Yongzhou (Appendix 2), the Integrated Solid Waste Management Project in
Yongzhou includes the following components:
Solid waste collection, sorting and transferring system;
Abandoned uncontrolled landfill pollution control project;
Kitchen waste treatment project;
Solid waste incineration project.
2.2.1 Solid Waste Collection and Transferring System
Yongzhou Municipality plans to construct a system for collection, sorting, and transfer of
domestic solid waste and extend its coverage to all towns and townships within a distance of
30 km from current city center boundary. This Project Component will be finalized after
completing the “Environmental Sanitation Special Plan in the Urban Center of Yongzhou”
(including the Planning for Urban and Rural Integration in Solid Waste Collection and
Treatment), the draft of which was finished in late 2013.
See Chapter 3 for detailed analysis of methods of domestic solid waste collection and
transportation.
2.2.2 Abandoned Uncontrolled Landfill Pollution Control Project
The draft FSR for the closure of the two abandoned uncontrolled landfills has been prepared.
The FSR recommends safe closure of these landfills and then reuse of the sites as
ecological land after landscaping. In the FSR, a landfill gas migration and emission control
system and a leachate treatment program were proposed. According to the FSR, the Project
will involve an estimated investment of CNY72 million. The consultants have analyzed the
landfill closure design. Technical features and solutions were reviewed and analyzed, and
economic viability of the different landfill closure alternatives were compared.
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Figure 2.1: Location of Tantang Landfill
2.2.3 Kitchen Waste Treatment Project
The draft FSR for the Kitchen Waste Centralized Treatment Project has been developed and
recommends the process of “collection with sorting + pretreatment + anaerobic digestion”.
The project site is proposed to be located within the existing Tantang Landfill. Grease oil
separated from the kitchen waste will be recycled and processed into biodiesel while the
waste will be fermented via anaerobic digestion to produce biogas used to heat the kitchen
waste treatment facility. The pretreated wastewater will be discharged into the leachate
equalization basin of Tantang Landfill and further treated by current leachate treatment
facilities in Tantang Landfill. This project will involve an estimated investment of CNY64
million.
According to the data collected and findings of site visits, the Kitchen Waste Centralized
Treatment Project will be included as one sub-component of the Integrated Solid Waste
Management Project of Yongzhou and have reviewed suitable kitchen waste treatment
methods, including environmental and social impacts assessment on the proposed scheme.
2.2.4 Solid Waste Incineration Project
Based on the “12th National Five-year Plan for Construction of Facilities for Proper Treatment
of Domestic Wastes”, the treatment capacity of municipal solid waste incineration facilities
will account for more than 35% of the total capacity for the nation as a whole. Yongzhou
Municipality plans to construct solid waste incineration treatment facilities to achieve the
proper treatment, reduction, and recycling of domestic solid wastes. This project component
is in the stage of planning review and proposal preparation.
The transportation
distance between
Zhugemiao and Tantang
is approximately 24 km.
The transportation
distance between
Shanglingqiao and
Tantang is approximately
18 km.
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For this solid waste incineration project component, the feasibility of different proposals were
analyzed and optimum proposal suitable to Yongzhou were provided based on the
composition of solid waste, current conditions, and financial and economic investment in
Yongzhou. The following related aspects have been investigated:
(1) The technical and financial advantages of the construction of new solid waste
incineration / power generation plant and the cement kiln incineration technology
alternative were analyzed and compared. The most suitable technical solution was
provided based on the results of analysis.
(2) Solid waste composition, heat value and relevant data, studies, and information of
solid waste in Yongzhou and other similar cities were collected to analyze the
economic feasibility of the incineration and power generation project.
(3) Studies were conducted to identify the local policies of solid waste treatment
subsidies in Yongzhou in order to determine the treatment capacity of the existing
cement plants (Yongzhou's current cement companies. or other enterprises).
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Chapter 3 Technical Route for Integrated
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3. TECHNICAL ROUTE FOR INTEGRATED TREATMENT OF
DOMESTIC SOLID WASTE
3.1 Service Scope and Capacity
3.1.1 Planned Service Area
The service area of this project includes the Lengshuitan District, the Middle New Eco-city
and Lingling District as well as the towns and townships within 30 km from the urban area
(including Shanglingqiao Town, Caishi Tang, Lanjiaoshan Town, Yitang Town, Zhushanqiao
Town, Gaoxishi Town administered by Lengshuitan District and Huangtianpu Town,
Fujiaqiao Town, Lingjiaotang Town, Youtingwei Tang, Jieluqiao Town and Shishanjiao
Township administered by Lingling District).
Figure 3.1: Service Scope of Domestic Solid Waste Treatment
3.1.2 Service Population
According to the “Master Urban Plan of Yongzhou (2001-2020)” (2010 Edition), it is
projected that, by 2015, the urban center of Yongzhou will have a population of 680,000
persons (including 390,700 for Lengshuitan District, 208,300 for Lingling District and 81,700
for the Middle New Town) while the surrounding towns and townships will have a population
of approximately 150,000. By 2020, the urban center of Yongzhou will have a population of
1,000,000 persons (including 574,000 for Lengshuitan District, 306,000 for Lingling District
and 120,000 for the Middle New Town) while the surrounding towns and townships will have
a population of approximately 200,000.
3.1.3 Forecast of Solid Waste Generation
Scope of the Integrated Solid Waste Management Planning of Yongzhou
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It is predicted that the urban area of Yongzhou and the surrounding towns and townships will
generate 680 tons and 150 tons of domestic solid waste per day respectively by 2015 and
1,000 tons and 200 tons per day by 2020. In this study, the scope of the project uses 2020
as the reference year.
Table 3.1: Generation of Solid Waste in Yongzhou (tons/day)
Area Lengshuitan
District
Lingling
District
Middle New
Town
Surrounding
towns and
townships
Total
Year 2015 390 210 80 150 830
Year 2020 570 310 120 200 1,200
This prediction of solid waste production in this study is based on the solid waste generated
from the 30 kilometers rural areas near the Yongzhou urban districts, therefore the collection
area and predicted solid waste amount is slightly different from the "Urban-Rural Plan of
Yongzhou Municipal Solid Waste Collection and Treatment (2013 - 2030) Draft", thus the
projected treatment facilities are also slightly different. However, the overall technology
routes and options will not be affected. Detailed analysis should be conducted in the next
feasibility study phase.
See Appendix 3 for the estimation of solid waste generation and the solid waste composition
in Yongzhou.
3.2 Collection and Transfer System
Based on the current situation of the domestic solid waste collection and transportation
system in Yongzhou, Yongzhou Municipality plans to construct a system for collection,
sorting, and compressed transfer stations of domestic solid wastes and extend its coverage
to all towns and townships within a distance of 30 km extended to current city boundary. The
process design of the domestic solid waste collection and transportation system of
Yongzhou is as follows:
Solid waste generated by pedestrians traveling along the arterial and secondary
urban roads are collected into the roadside garbage bins and then transported by the
street cleaners using man-powered carts to the solid waste transfer stations;
Domestic solid wastes generated in the commercial areas and residential areas in
the urban area are collected into the garbage bins and then transported by the
community street cleaners to the solid waste transfer stations;
Rural domestic solid wastes in towns and townships within a distance of 30 km from
the urban area will be collected and transported to the transfer stations in the towns
adopting a model of “household-sorting, village-collection, and town-transfer”.
Sorting of domestic solid wastes will be conducted prior to compression at the
transfer stations, with the reusable solid wastes classified for reuse (e.g. paper,
metal, glass, which will be transported to specialized recycle stations) and non-
reusable solid wastes compressed and transported by special trucks to the final
disposal sites.
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Chapter 3 Technical Route for Integrated
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Figure 3.2: Flowchart of the Solid Waste Collection and Transportation System in
Yongzhou
Results from the site visit shows that the existing solid waste transfer stations in Yongzhou
only conduct simple compression and have no leachate collection facilities or odor treatment
facilities. Therefore, upgrading and reconstruction of the stations are needed. In addition, the
existing solid waste transfer stations are not fully covered and collection and transfer
facilities are needed in some urban and rural areas.
Based on the above analysis, Yongzhou needs to reconstruct the existing 33 transfer
stations and construct 18 new transfer stations (including 6 urban ones and 12 rural ones)
and provide ten 10-t solid waste collections and transfer vehicles. At the solid waste transfer
stations, simple sorting, collection, and compression will be carried out. The domestic solid
waste will be transported to the solid waste treatment and disposal center (Tantang
Incineration plant) for further sorting and final disposal. The new transfer stations to be
constructed may include green, environment-friendly, and odor free facilities and integrated
with the urban landscaping design. In addition, a service center will be set up to handle the
citizens’ inquiries, advice, requests and complaints about environmental sanitation affairs
and a complaint hotline will be provided. The total investment for these facilities is estimated
to be CNY100 million.
Appendix 4 describes the municipal solid waste collection and transportation system
evaluation, assessment and recommendations.
3.3 Closure of Abandoned Uncontrolled Landfills
3.3.1 Uncontrolled Landfill Management Technology
The closure of uncontrolled landfills aims to reduce environmental pollution and rectify
potential safety problems. Methods for uncontrolled landfill closure include original site
closure, relocation and comprehensive utilization (landfill mining).
Original site closure means that the environmental improvement actions are taken at
the original site of the landfill to engineer in-situ pollution control followed by
implementing ecological restoration. The reclaimed land is normally used for
construction of parks and other ecological purposes. The landfill gas and leachate
need long-term operation to assure the environmental conditions after the landfill
closure.
With the relocation method, the solid waste at the original site will be relocated to a
sanitary landfill for treatment. The reclaimed land will be reused for development of
commercial facilities or as municipal public utilities to realize the added value of land.
Small collection
truck
Solid waste transfer
vehicle
Solid
waste
Tre
atm
ent
Pla
nt
Solid
waste
Tra
nsfe
r
Sta
tion
Solid wastes generated
by pedestrians along
arterial and secondary
urban roads
Domestic solid wastes in
commercial and residential areas
Solid waste
collection bin
Garbage bin
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Chapter 3 Technical Route for Integrated
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In the landfill mining or comprehensive utilization method, materials contained in the
landfills are sorted and recycled by means of excavation, screening, magnetic
selection and sorting while the usable soils and inert materials are backfilled. This
method involves relatively large investment despite the benefits of reclaimed land.
3.3.2 Uncontrolled Landfill Management Solutions for Yongzhou
Based on Yongzhou's current situation and initial cost considerations, and according to the
draft FSR for the Uncontrolled Landfill Closure and Management Project in Yongzhou, the
original (in-situe) site closure technology is selected and the landfill dam, seepage control
systems, leachate interception/collection/treatment system, landfill gas emission control
system, separate storm water and sewage drainage systems, closure and coverage systems
and groundwater cut-off piling and treatment facilities will be constructed. The total
investment is approximately CNY72 million.
Two options for the uncontrolled landfill management were analyzed: original site closure
and relocation method. The selection of methods mainly depends on the landfill capacity, the
master urban plan and the land use value and should also consider the actual situation of
the two existing abandoned landfills and the ease of implementation of the management
solutions. Table 3.2 is a comparison of the landfill management solutions.
Table 3.2: Comparison of Original Site Closure and Relocation of Landfills
Option Original Site Closure Relocation
Description Closure of landfill and utilization of final site
Excavation, transportation and hygiene landfill
Technical Evaluation
Conventional technology, practical and reliable
Simple technology, requiring a place to accept the solid waste
Construction Cycle
Short Moderate
Ultimate land use Vegetation and landscaping Clean land
Social, Economic and Environmental Benefits
Significant improvements of landfill environment and good social and environmental benefits
Relocation of solid waste and its pollution and risks of pollution in secondary transportation
Existing Problems
Risks of secondary pollution from the landfill, collection and treatment of biogas and leachate, long-term operation
Transportation and risks of secondary pollution, occupation of the capacity of Tantang Landfill
Compatibility with planning
Conservation or landscaping forests may be constructed based on the planning.
Land is reused and will not conflict with the planning.
Original site closure enjoys considerable advantages in initial investment and
comprehensive economic benefits, but has considerable pressure in terms of the reliability of
the treatment effect and risks of environmental pollution. In addition, the following technical
concerns remain:
The vertical seepage control technology has specific geotechnical requirements for
the landfill site, detailed hydrological and geological ground conditions with high
water impermeability and low water yield property on groundwater cut-off wall
installation must be carefully designed and constructed;
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The groundwater within a certain range in the downstream may not be well protected;
The biogas collection and leachate treatment facility needs to operate for a long
period of time;
Proper and continuous collection and treatment of leachate is required (for
approximately 20 years or more);
Long term continuous operations are needed for the treatment facilities.
Further justification must be conducted on the basis of detailed hydro geological and
engineering geological surveys; detailed analysis and technical confirmation will be needed
for full cost and daily operation management and environmental monitoring under the project,
and the necessity of further impact mitigation mechanism need to be determined.
From the perspective of long-term environmental protection and Xiang River’s water quality,
the relocation technology is recommended provided that the municipal finance department is
able to provide adequate funding support. See Appendix 5 for a detailed comparison of the
technical and economic analysis for both original site closure and relocation options.
3.4 Kitchen Waste Treatment
3.4.1 Analysis of Kitchen Waste Treatment Proposal of Yongzhou
Anaerobic digestion is a proven and reliable technology for treatment of organic kitchen
waste and will be applied in this project with total investment of approximately CNY65 million.
As recommended in the FSR, this technology is suitable for Yongzhou, on this basis, and
from the perspective of integrated management, the reuse of the surplus residual heat
generated will be included in the integrated treatment system. Although kitchen waste in the
PRC has high moisture content, grease and salts, the project design and operation
experiences overseas reveal that the impacts caused by these factors may be adapted to
the situation in the PRC through adjustment of the proposed process design. Figure 3.3
shows the key process of kitchen waste collection, pre-treatment and anaerobic digestion
technology.
According to the Draft FSR for the Uncontrolled Landfill Closure and Management Project in
Yongzhou, the kitchen waste production capacity in Yongzhou is as follows:
• Short term (by 2015): The total treatment capacity will be 70 t/day, including 50 t/day
of swill and 20 t/day of swill oil.
• Long term (by 2020): The total treatment capacity will be 120 t/day, including 100
t/day of swill and 20 t/day of swill oil.
More treatment technologies for kitchen waste and the current treatment status are
described in Appendix 6; some project examples of different anaerobic digestion
technologies are listed in Appendix 7.
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Figure 3.3: Flowchart of Anaerobic Digestion Technology for Treatment of Kitchen
Waste
3.5 Municipal Wastewater Sludge Treatment
This project will incorporate the municipal sludge treatment project in the overall scope, and
use the thermal drying technology for the integrated treatment. The investment is about CNY
30 million. Based on the analysis in table 3.3 and appendix 8, thermal drying technology is
mature, can greatly reduce the water content and volume, its drying heat required can be
provided by the heat generation of biogas, so the co-processing with domestic waste and
kitchen waste is an ideal selection for Yongzhou.
According to data provided by Yongzhou Urban Management Bureau and the Master Plan of
Yongzhou, the scope of sludge treatment services covers 6 WWTPs, including Xiahexian
WWTP (existing), Xiangjiating WWTP (existing), Qiyang County WWTP (existing), Dong’an
County WWTP (existing) and Middle New Ecocity WWTP (planned) and Qiyang County
Jiangnan WWTP (planned). It is predicted that the design wastewater treatment capacity will
reach 300,000 CMD (cubic meter per day) and 540,000 CMD respectively by 2015 and 2020.
At present, Yongzhou generates 90 tons of municipal sludge each day (with a moisture
content of 80%), which is disposed at Tantang Landfill. Due to the large volume of sludge
and high moisture content, the safety of the landfill has been threatened and the government
needs to take new treatment and disposal options for replacement soon.
Kitchen waste
Hogwash oil
Fluid Measure
Storage Tank
Exhaust gas treatment
Squeezer
Bio-fuel
Hogwash oil treatment area
Storage Biodiesel
Swill
Fluid Measure
Separation and Storage
Steaming, Liquid-solid separation
Liquid-oil separation area
Gas Boiler
Exhaust gas treatment
Wastewater treatment
Storage (solid)
Anaerobic digestion/
landfill
Storage (Liquid)
Biodiesel Discharge
Wastewater / sludge
Recycle
Gas treatment
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Chapter 3 Technical Route for Integrated
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Table 3.3: Comparison of the Advantages and Disadvantages of the Various Sludge
Treatment Technologies
Technology Key Advantages Key Disadvantages
Comprehensive
farmland
utilization
Improvement of soil structure,
provision of fertilization and trace
elements needed for plant growth,
increase of soil fertility and
facilitation of crop growth
Potential risk of heavy metal pollution and
soil hardening caused by high polymer
coagulant. Volume of fertilization
application is obviously different in the off
season and the peak season. The
channels of fertilizer distribution are
difficult to assure and the price advantages
are not significant. As a result, such
fertilizer is only applicable to low-grade
crops.
Incineration
and utilization
With the moisture content reduced
to 0%, the volume of sludge can be
rapidly and significantly reduced.
The incineration products can be
used as raw materials of new
products and for recovery of thermal
energy.
Complex and unstable, the operation
process will generate smoke, with a high
cost of capital construction and operation
that is 2 to 4 times higher than that of other
technologies.
Low
temperature
pyrogenic
decomposition
and utilization
Advanced treatment, reduction and
reuse are completely achieved and
oil and gas may be extracted
through dry distillation.
Both the process and the equipment need
further improvement and the technology as
a whole is still in a stage of
experimentation and discussion.
Thermal drying
The moisture content and volume
can be significantly reduced to
facilitate subsequent incineration or
landfill.
The technology is proven, but requires
huge consumption of energy and may
need access to an available thermal
source.
Utilization in
construction
materials
Reduced occupation of land and
consumption of natural resources,
facilitating recycling of resources
and producing significant social and
economic benefits
Strict requirements are raised on the
preliminary treatment processes such as
odor removal and disinfection and
sterilization due to close human contact.
Consideration is needed of brick making
technology and brick distribution channels.
Landfill
Proven technology, rich
experiences, non-standard operation
and management, cost-effective and
energy-saving, resulting in small
investment, big capacity and fast
effect
Large land occupation and stringent
requirements on sludge dewatering, landfill
impermeable layer and landfill operation
3.6 Municipal Domestic Solid Waste Incineration Project
As Yongzhou solid waste has the characteristics such as low sorting level, low thermal value,
high water / moisture content and high ash content. The mechanical grate incinerator
technology is relatively mature, reliable and operation is convenient; it is also adaptable to
different types of waste, easy to operate with mature air pollution control system, and is
economical, and there are already many domestic operation cases. Therefore, Yongzhou
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Chapter 3 Technical Route for Integrated
Treatment of Domestic Solid Waste
government agreed to adopt the mechanical grate incineration technology, the investment is
approximately CNY240 million.
There are mainly four types of domestic solid waste incineration furnaces that are
extensively adopted both locally in PRC as well as internationally in developed countries, i.e.
mechanical grate incinerator, fluidize bed incinerator, pyrolysis incinerator and rotary kiln
incinerator. Over the recent years, the technology of integrated cement kiln co-incineration
with domestic solid waste treatment also has experienced good development. Different
Incineration treatment technologies are presented in Appendix 9.
Table 3.4: Solid Waste Incineration Technology Comparison
Items Mechanical
Grate Incinerator
Fluidize Bed Incinerator
Pyrolysis Incinerator
Rotary kiln incinerator
Incinerator features
Grate area is larger, the
volume of the furnace is larger
Grate is fixed. grate area and furnace volume is smaller
Mostly vertical fixed grate, two
combustion chambers
No grate, waste is moved along with the rotation of the furnace
Pre-treatment Not necessary Necessary Necessary when
thermal value is low Not necessary
Equipment area Large Small Medium Medium
Clinker ignition loss
Easy to meet standards
Can meet standards under
continuous combustion
Difficult to meet standards
Difficult to meet standards
Retention time Relatively long Short Very long Long
Excess air ratio Large Medium Small Large
Max treatment amount
1200t/d 500t/d 200 t/d 500t/d
Air supply Easy to adjust Relatively easy to
adjust Difficult to adjust Difficult to adjust
Adaptability to water content
Can adapt to different
humidity by adjusting the drying section
Temperature fluctuates with
change of waste water content
By adjusting the retention time to
adapt the humidity of garbage
By adjusting the rotating speed to
adapt the humidity of
garbage
Adaptability to waste
inhomogeneity
Through the grate moving to
reach homogenization
Heavy waste in the bottom, difficult for
complete combustion
Difficult to reach homogenization,
difficult to burn out chunks of waste
Chunks of waste is difficult to
burn out due to insufficient air
supply
Flue gas dust content
Relatively low High Relatively low High
Combustion Medium
Not necessary Quartz sand is
needed Not necessary Not necessary
Combustion conditions control
Relatively easy Difficult Difficult Difficult
Operation cost Low Low Relatively high Relatively high
Flue gas treatment
Relatively easy Difficult Relatively difficult Relatively easy
Maintenance Less More Less Less
Application More Less Little More for
industrial waste
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Chapter 3 Technical Route for Integrated
Treatment of Domestic Solid Waste
Items Mechanical
Grate Incinerator
Fluidize Bed Incinerator
Pyrolysis Incinerator
Rotary kiln incinerator
Comprehensive evaluation
Strong adaptability, less
failure, better treatment
performance and
environmental effect, lower
cost
Require pre-treatment and high failure rates, need
add additional combustion
medium, environmental compliance is
difficult to reach.
Clinker ignition loss is high, and
environmental compliance is
difficult to reach
Requires a higher thermal value of waste (2500kcal/kg
above), and has higher operating
costs
3.7 Analysis of Integrated Management of Municipal Solid Wastes
3.7.1 Components of Integrated Treatment Project
Based on the above analysis, the Integrated Solid Waste Management Project in Yongzhou
mainly includes the following four waste types (as projected according to the volume of
generation in 2020):
Domestic solid waste generated by the city on a daily basis: 570 t/d for Lengshuitan
District, 310 t/d for Lingling District, 125 t/d for the Middle New Town and 200 t/d for
the surrounding towns and townships, with a total of 1,200 t/d.
Kitchen waste generated by the city on a daily basis: 100 t/d for kitchen waste and 20
t/d for swill oil, with a total of 120 t/d.
Solid waste already disposed at the uncontrolled landfills: including 800,000 m3 at
Lengshuitan District Shanglingqiao Uncontrolled Landfill and 500,000 m3 at Lingling
District Zhugemiao Uncontrolled Landfill.
In addition, the municipal sludge generated by the municipal WWTP can be incorporated into
the scope of the Integrated Solid Waste Management Project and the municipal sludge
generation amount in the urban center is 90 t/d with a water content of 80%.
3.7.2 Integrated Management Options
Based on the current status of the domestic solid waste treatment facilities in Yongzhou and
in association with the aforesaid technical routes of municipal solid waste treatment, the
following two options of integrated treatment of domestic solid waste, kitchen waste and
municipal sludge were summarized, with consideration of the management and economic
perspectives: Option 1: Centralized Treatment (Incinerator); Option 2: Decentralized
Treatment (Cement Kiln). Based on the existing project experience and operational practices
in the PRC, the centralized treatment process (Option 1) is a more proven technology, and
Yongzhou government agrees to adopt the centralized treatment route.
Through technically analyzing these two options (Appendix 10), Option 1 will construct a new
incineration plant in Tantang, which has advantages in the utilization rate of existing facilities
and comprehensive management. Option 2 has advantages in terms of energy consumption
during operation, cost of operation and beneficial use. There are a relatively large number of
projects as well as case studies of domestic solid waste incineration and power generation in
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Chapter 3 Technical Route for Integrated
Treatment of Domestic Solid Waste
the PRC for reference. However, although more successful cases are available overseas,
integrated cement kiln treatment of domestic solid wastes remains in the pilot stage in the
PRC and the operation efficiency and technology reliabilities are still to be validated. If option
2 is adopted, technical and commercial risks may arise. Table 3.5 compared these two
options in different perspectives.
Table 3.5: Comparison of Integrated Domestic Solid Wastes Treatment Options
Item Option 1
(Incinerator)
Option 2 (Cement
Kiln)
Feasibility Feasible Feasible
Technical reliability More application,
Reliable Less application, Relatively reliable
Land occupation Land area is
relatively large Land area is
relatively small
Cost of transportation Longer transport
distant Shorter transport
distance
Utilization rate of existing
facilities
Original landfill can be used for residual and incombustibles
Original facilities is basically useless
Energy consumption in
operation
Need to add new operation energy,
larger
Use original energy, smaller
Comprehensive
management Centralized Decentralized
Environmental impacts of
the operation process Larger Smaller
Secondary pollution Likely to cause air
pollution
Likely to cause air pollution, original
protection facility can be used
Reduction performance Relatively good Good
Harmless treatment
performance Good Good
Resource application
performance Good Relatively good
3.7.3 Centralized Treatment (Construct New Incinerator) Option Analysis
Since the existing domestic solid waste landfill and leachate treatment station are both
located at Tantang and considering the effective utilization of the newly constructed Tantang
Domestic Solid Waste Landfill, this option plans to place all the associated treatment
facilities at Tantang for effective management as well as good practices on environmental
protection.
The proposal includes that a new incineration and power generation plant and solid waste
sorting facilities will be constructed at Tantang. All the domestic solid wastes will be
transported to Tantang before sorting and the sorted combustibles will enter the incinerator
for incineration and power generation while the remaining parts will be disposal in the landfill;
the kitchen waste will adopt the anaerobic digestion process and the biomass as generated
will be used as fertilizers for beneficial reuse while the biogas generated in digestion will be
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used for power generation. The residual heat will be used for thermal drying and integrated
treatment of municipal sludge before landfill disposal.
With this option, a 1,050 t/day solid waste incinerator is needed at Tantang Landfill with a
service life of 25 to 30 years. Based on the increase of solid waste production, the project
will be constructed in two phases. In Phase 1, the design treatment capacity of 700 t/day,
(two units, 350 t/day per unit), will be constructed and put into operation in 2016. Financial
calculation and analysis is based on a daily treatment capacity of 600 t/d. There is a certain
amount of surplus in the system in order to accommodate future economic growth and
urbanization. In addition, when one unit is performing routine annual maintenance, another
unit will be ensured with normal operation, so that the operation is more flexible.
Based on the solid waste characteristics, the incinerator will generate 280 kWh power per
ton of waste processed. Considering that the caloric value of the solid waste is not stable,
and the system reliability, the power generated is calculated at a rate of 80% - power
generation capacity is 224 kWh/ton.
In this option, the following treatment facilities need to be constructed (in two phases, with
the following facilities belonging to Phase I):
One 700 t/d (2 set X 350 t/d) solid waste incineration and power generation plant will
be constructed at Tantang involving an investment of approximately CNY240 million;
One 100 t/d kitchen waste treatment plant will be constructed involving an investment
of approximately CNY65 million;
One thermal drying municipal sludge pretreatment system will be constructed involving an
investment of approximately CNY 30 million.
Figure 3.4: Overall Plan of Centralized Incineration Treatment
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Chapter 3 Technical Route for Integrated
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Figure 3.5: Technical Flowchart of Centralized Treatment
3.7.4 Social and Environmental Risks and Recommendations
The project will inevitably cause some negative effects to certain stakeholders. These
negative impacts would cause environmental and social risks to the construction and
operation of the project. If not controlled properly, these negative effects may degenerate
into a social conflict under certain circumstances. Table 3.6 presents suggestions in
response to the possible negative effects in the next feasibility study process.
Table 3.6: Environmental and Social Risks of the Project and Recommendations
Adverse environmental and social
impacts Recommendations
A – Domestic solid waste collection, sorting and transportation
(1) Construction of new transfer station could incur resistance by local residents.
S1: Environmental awareness education, careful siting and design optimization S2: Stakeholder participation, information disclosure S3: Setting up grievance redress
90 t
200 t
430 t
570 t Domestic solid wastes in
Lengshuitan District
Domestic solid wastes in Lingling District and Middle
New Town
So
rting
at la
nd
fill
New
Incin
era
tor
Municipal Sludge Thermal Drying
Tantang
Landfill
Furnace
Ash
Landfill
Kitchen waste
An
aero
bic
Dig
estio
n
Simple Landfill
On-site Landfill of Inorganic Matters
Domestic solid wastes in
Surrounding Towns and Townships
Biogas Slurry
Compostin
Biogas Power
Generation
700 t (+350 t
Phase II)
Residual Heat
100 t+20 t Phase II
Relocation
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system project channels for the Project
(2) Possibly resulting in loss of income for some rag pickers
S4: Providing APs with additional jobs generated by the project
(3) Collection of solid waste treatment fee will possibly increase cost of living for residents, in particular the vulnerable groups.
S4: Providing APs with additional jobs generated by the project
B – Abandoned landfill closure and pollution control project
(1) Impacts on ground water and soil environment after closure
S1: Environmental awareness education, careful siting and design optimization
(2) Affecting the income of rag pickers S4: Providing APs with additional jobs generated by the project
C – Kitchen wastes treatment and disposal project
(1) Increasing the environmental risks of Tantang Landfill, likely to threaten health of local residents, in particular the vulnerable groups
S4: Providing APs with additional jobs generated by the project
(2) Increasing the burden on catering businesses and bringing income losses. Economic interests decide behavior consciousness. Consequently, these businesses will possibly not actively participate in the recovery system of kitchen wastes.
S1: Environmental awareness education, careful siting and design optimization S7: Setting up kitchen wastes inspection, supervision and punishment and reward system
(3) Source of income of individual kitchen wastes collectors is cut off and their income affected.
S4: Providing APs with additional jobs generated by the project
D – Domestic solid waste incineration and treatment project
(1) Concerns about dioxin may incur public resistance against refuse incineration and power generation plant and even “Not-In-My-Back-Yard” effect.
S1: Environmental awareness education, careful siting and design optimization S2: Stakeholder participation, information disclosure S5: Conducting social stability assessment as a part of EIA
(2) Impacts of LAR S6: Public participation and developing LAR plan
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4. PROJECT COST ESTIMATE AND ECONOMIC ANALYSIS
4.1 Project Components and Cost Estimate
4.1.1 Domestic Solid Waste Collection and Transfer System
Yongzhou produces approximately 650 tons of domestic solid waste per day, which are
collected and transported by sanitation workers with hand carts to the refuse transfer
stations, where the solid waste is compressed and transported with large trucks to the
landfills for sanitary disposal. The urban center of Yongzhou now has 100 environmental
sanitation vehicles (including 62 for Lengshuitan District, 9 for Tantang Landfill and 29 for
Lingling District).
Considering the objectives specified by Yongzhou in “Provisional methods for quality
inspection and appraisal of environmental sanitation operations in the urban center of
Yongzhou”, “Regulations on inspection, appraisal and patrol of environmental sanitation in
the urban center” and “Quality standards for environmental sanitation operations in the urban
center of Yongzhou”, for the purpose of properly implementing the urban center
environmental sanitation work, the following components will be adopted in the solid waste
collection and transferring system improvements with estimated total investment of CNY100
million, which will be funded by Yongzhou government through special fund.
(1) Appraisal, patrol and complaint hotlines
2 patrol teams to be set up in Lingling District and Lengshuitan District, respectively
comprising of 1 person each from the Municipal Solid Waste Disposal and Water
Supply and Drainage Affairs Center as well as the Patriotic Health Campaign
Committee Office and Environmental Sanitation Bureau (Department) of each district,
with each team provided with 1 patrol vehicle. Therefore, 2 patrol vehicles will be
purchased with a total cost of CNY600,000.
A service center will be set up to handle the citizens’ inquiries, advice, requests and
complaints about environmental sanitation affairs and a complaint hotline will be
provided. The supporting facilities are estimated to involve an investment of
CNY1,000,000 and the staff needed will be assigned from the existing staff.
(2) Street cleaning
The urban center of Yongzhou now has a 1,652-person street cleaning team
responsible for cleaning of key streets and alleys. For enhancing the operation
efficiency and cost reduction, 2 motorized street cleaners be purchased mainly to
clean the main roads and the guardrails in the median.
The 2 motorized street cleaners to be purchased are estimated to involve an
investment of CNY1,400,000.
(3) Refuse collection and transportation
10 large transfer vehicles with a capacity of 10 tons / each and compression and
leachate collection devices will be purchased, involving an estimated investment of
CNY10,000,000;
33 refuse transfer stations will be upgraded and odor removal and treatment facilities
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and roller gate will be added, each involving an investment of CNY1,000,000, totally
CNY33,000,000.
18 new transfer stations (including 6 in the urban area and 12 in the rural area) will
be constructed, with the standardized transfer stations in the urban area and the rural
transfer stations respectively involving an investment of CNY5,000,000 and
2,000,000 each, totally involving an investment of CNY54,000,000.
4.1.2 Closure of Abandoned Landfills
Based on the technical analysis of the landfill components described in chapter 3, the site
closure option is estimated with initial investment of CNY72 million, which includes landfill
capping, leachate collection treatment and associated improvement features. This option
has advantages in technical feasibility, initial investment and overall economic benefits.
Yongzhou government decided to adopt this in-situ original site closure scheme. However,
from the perspectives of treatment effectiveness and environmental pollution risks, the
relocation options have considerable advantages (Option 1 landfill mining includes screening
and comprehensive utilization while Option 2 is direct relocation). According to Yongzhou
DRC, they are currently applying for the national special fund for the landfill closure project.
Table 4.1: Comparison of Original Site Closure and Relocation
Item
Original Site
Closure
(CNY10000)
Relocation
(CNY10000) Comparison
Option 1 Option 2
Capital
investment 7200 16000 8560
Original site closure involves a smaller investment.
Construction period
3 years 2 years 2 years Relocation has a shorter construction period.
Cost of operation
6200 1 0 0
Relocation involves no cost of operation.
Environmental risks
Persistently existing
Completely removed
Completely removed
Relocation has lower risks.
Note: 1. See Appendix 5; 4400(leachate treatment fee) + 1800(environmental monitoring fee); assume operates 30 years;
4.1.3 Kitchen Waste Treatment and Disposal
The Project involves a daily treatment capacity of 100 tons kitchen waste and is sited at
Tantang Comprehensive Solid Waste Treatment Plant using the “sorting and collection +
pretreatment + anaerobic fermentation” process. The total investment is estimated to be
CNY65 million with the average unit operation cost of CNY178 per ton of waste treated.
Existing case studies in the PRC show that anaerobic digestion process as proposed is one
of the feasible technologies and can accommodate the production capacity and generate the
expected economic benefits. In this comprehensive management proposal, the reuse of the
biogas generated from anaerobic digestion will be used as a heat source or power source to
provide energy needed for the sludge drying system to decrease the treatment cost.
4.1.4 Municipal WWTP Sludge Treatment and Disposal
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With a daily sludge treatment capacity of 90 tons, the treatment system is suggested to be
co-located in Tantang Solid Waste Landfill with the thermal process to be adopted for sludge
drying based on proposed process, this sludge component required an estimated investment
of CNY30 million.
Table 4.2 summarized the various technologies that can be considered in the drying process
with associated capital cost estimate. These viable technologies shall be further considered
in next Feasibility Study phase and the preliminary capital investment for all three
technologies is in the similar range. Biogas generated from anaerobic digestion of kitchen
waste component will be used to generate heat and power for the sludge drying process.
With the integrated approach, the operation cost can be reduced to CNY 90/ton which is
much effective than the current stand-alone sludge drying facilities in the market.
Table 4.2: Investment and Economic Comparisons of Sludge Drying Processes
Process Type Cost of
investment (CNY 10000)
Cost of
operation 1
(CNY/ton)
Product
moisture
content
Land occupation
(Workshop area)
Belt sludge drying system 3000 145 Dryness
adjustable 20x15=300 m
2
Low temperature sludge
carbonization 2794 120
Below 30%
30x18=540 m2
(Other sites:
25x8=200 m2)
Low temperature vacuum
dewatering and drying 2940
2 140 40% 10x24=240 m
2
Notes: 1. Calculated at a moisture content of 80%; 2. Excluding civil works and equipment installation and other costs.
4.1.5 Domestic Solid Waste Incineration Treatment and Disposal
Currently, all the domestic solid waste from Yongzhou urban area was delivered to Tantang
Solid Waste Landfill for disposal. This landfill has a land area of approximately 1,000 mu with
a daily capacity of 860 tons and a service life of 30 years. Based on the current status of
solid waste and the population development plan of Yongzhou, it is estimated that the daily
domestic solid waste quality will reach 1,000 tons and 1,200 tons by 2015 and 2020.
For Incineration scheme, the consultants proposed two options: (1) Construction of New
Incinerators (centralized scheme); and (2) Cement Kiln Incineration (decentralized scheme).
Through detail technical analysis, and considering the advantages of investment, economic
benefits, operation risks, etc., option (1) is selected (economic comparison for these two
options is found in Appendix 11).
Construction of new incinerators- Investment and operation cost estimation
The capital cost is estimated according to the recent and ongoing solid waste incineration
and power generation plant projects in Jiangsu and Guangdong provinces. The contents of
estimation include: the cost of a 700 t/d new incinerator to be built, cost of plant equipment
and devices imported from overseas, key production equipment made in the PRC, power
generation system, auxiliary production and service facilities, water supply and drainage
facilities, industrial buildings and installation works. The cost of automatic control system is
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based on foreign equipment procurement including transportation fee, insurance and cost of
installation works. The prices of local PRC equipment are calculated based on the national
mechanical and electrical product prices and adjusted with reference to the actual prices
recently published by the industry. The installation works are calculated based on the
different indicators for machinery, electrical appliances and automatic control systems. The
costs mainly include the prices of installation, materials, pipes, electric wires, electric cables,
insulation and painting and also include the indirect expenses, profit, temporary facility,
business tax and city maintenance building tax calculated according to the respective
requirements.
Capital Cost
The capital cost includes the cost of foreign investment (imported equipment) and local PRC
equipment. The plant plans will require 25,000 m2 land with the estimated construction cost
of CNY210 million with the total project capital cost of CNY286 million.
Economic Analysis
Equipment and capital depreciation cost: Amortized in a period of 25 years, the
capital works with total investment of CNY286 million. The design treatment capacity
is 700 tons/day (actual treatment capacity is 600 tons/day based on Yongzhou’s
current situation) and operating 330 days per year. See Table 4.3 for a summary of
the total production and operation cost.
Treatment of leachate: The leachate treatment system of the existing Tantang Landfill
still has surplus capacity, thus requiring no further investment.
Table 4.3: Summary of Production and Operation Cost
S.N. Item Amount
(CNY10,000/year)
1
Consumption of chemicals (Including quick lime, active carbon and air pollution control system
etc.) 780
2 Auxiliary fuel, production water, etc. 320
3 Fly ash and slag landfill fee 60
4 Annual maintenance fee (including routine maintenance and major repair fund)
720
5 Salary and welfare 330
Total 2210
Assumed 330 operating days per year, the calculated unit operation cost is
CNY111.61/ton/day
Economic Return
Revenue from solid waste power generation: Based on the solid waste
characteristics, the incinerator will generate 280 kWh power per ton of waste
processed. Considering that the caloric value of the solid waste is not stable, and the
system reliability, the power generated is calculated at a rate of 80% - power
generation capacity is 224 kWh/ton. Assuming that the on-grid power price is
CNY0.65 per kWh (according to the Notice by the NDRC on improving policies on the
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solid waste incineration and power generation price” NDRC Price Document [2012]
801), the revenue from power generation per ton of solid waste is CNY145.6/ton.
Considering part of the power generation is used in the incineration plant itself, the
total revenue of the power generation for a year is about CNY 23,680,800
(CNY119.6/ton •day).
After deducting the investment of the incineration equipment (if calculated at 25 years
back, without considering the return of investment, finance costs, tax and other
factors), the balance will be reached between the power generation revenue and
operation costs, and there is a slight surplus from the revenue of power generation.
If revenue from solid waste power generation not meeting the cost recovery, then
Yongzhou need to consider the amount and percentage of government subsidy for
solid waste treatment fee / tariff and implement the solid waste collection disposal fee
soon as possible to ensure financial sustainability in supporting this project, including
attracting potential qualified investors into this project.
4.1.6 Summary of Capital Investment and Operation Cost of Integrated Solid Waste
Management Facilities
The Integrated Solid Waste Management Facilities meant to integrate the treatment of MSW
incineration, kitchen waste and the sludge treatment together at Tantang Landfill. Table 4.4
and 4.5 summarize the capital investment and the operation costs are as follow:
Table 4.4: Summary of the estimated Capital Investment of the New Facilities
Project Investment (CNY)
Incineration facility 286 million 1
Leachate treatment 0 2
Anaerobic fermentation of kitchen wastes 65 million
Sludge drying 30 million
Estimation of investment cost (CNY million) (incineration + kitchen waste + sludge)
381 million
Note: 1. New incinerator with a daily capacity of 700 t/day. 2. The leachate treatment system of the existing Tantang Landfill still has surplus capacity, thus
requiring no further investment.
Table 4.5: Summary of Operation Cost of Integrated Treatment Facilities
Daily Operation Cost
(CNY/day) Yearly Operation
Cost (‘0000CNY/year)
MSW incineration 66,9661
2,2106
Landfill + Leachate treatment 30,8522 1,126
7
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Anaerobic digestion of kitchen wastes 17,8003 650
7
Sludge drying 8,1004 295
7
Ash transportation cost
(CNY1.00/ton/km, round trip) 0
5 0
Note: 1. (CNY111.61/ton x 600 t/day); CNY111.61/ton is unit operation cost, 2. (CNY43.92/ton x 600 t/day)+(CNY30/m3 x 150 m3/d); 3. (CNY178/ton x 100 t/day); 4. (CNY90/ton x 90 t/day); 5. Incinerated ash will be disposed to Tantang landfill site; 6. The annual operation days of the incineration shall be 330 days. 7. The annual operation days of the landfill, kitchen waste and the sludge treatment shall be 365days.
The centralized treatment option is proposed and adopted, the revenue from sales of
electricity generated through refuse incineration will offsets portion the operation cost of the
incinerator. This scheme also has advantages of streamlined management operations – by
integrating all relevant treatment facilities in one place; co-location with existing Tantang
landfill with minimize environmental impacts; integrated benefits on power and heating
generated from sludge, kitchen waste and incinerator.
4.2 Initial Financing Plan
Based on functional requirements and separate institutional management, the integrated
solid waste management scheme are separated into (a) the collection and transfer system
management under the sanitation department and (b) the treatment system to be funded
and operated by the government or the private enterprise for long term effective operation.
a) The Yong Zhou city government Sanitation Department is responsible for invest
and operate for the refuse collection, transfer and transportation system;
b) The enterprise of a private company or joint venture with the government is
responsible for invest and operate the municipal solid waste incineration, kitchen
waste and the sludge treatment at Tantang Landfill is as the integrated treatment
facilities. Division of municipal administration and treatment facility operation
functional responsibilities are proposed, the sanitation department will be able to
focus on municipal administration and supervision while the various integrated
treatment facilities will be operated by the respective enterprises. The functional
approach will not only benefiting the supervision work of the sanitation
department, but also streamlining the operation framework of the treatment
facilities with best use of resources and promoting the operation and
management efficiency.
4.2.1 Financing Plan and Operation Management
(1) Government responsible for procurement and operation management
Closure of two abandoned landfills
At present, the two abandoned landfills have been closed and are planned as eco-parks.
With significant public benefits, the YZ government plans to apply for a national fund to
support the project investment including long term O&M expanses.
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Urban environmental sanitation, solid waste collection and transfer
The urban environmental sanitation, including street cleaning, refuse collection and
transportation and operation and management of Tantang Landfill should preferably be
implemented in association with the municipal administration policies and on the basis of
tariff collection. The municipal finance should be utilized for procurement while Yongzhou
Municipal Administration and Law Enforcement Bureau (Municipal Solid Waste Center)
continue to be responsible for the operation and management of the new investment
components.
(2) Public-Private Partnership (PPP) in Financing and Operation and Management
Combining the refuse incineration, kitchen waste disposal, municipal sludge treatment and
Tantang Landfill into one integrated treatment project, Yongzhou can arrange the project to
be financed and constructed by the private enterprises; the following option may be
considered preliminarily:
BOT for new facilities plus contract operation of Tantang landfill
A professional company is engaged by Yongzhou for contract operation and management of
Tantang Landfill while the company perform BOT scheme on various new facilities. The
assets of Tantang Landfill are retained by the government department.
Figure 4.1: PPP Private Enterprise Partnership Financing Plan (PPP, BOT+Contract
Operation)
Note: Project management company: responsible for investment, financing and construction and operation and management of the Project; Sector supervision authority: Yongzhou Municipal Administration and Law Enforcement Bureau; Operation Company: joint venture between the special purpose vehicle and Yongzhou Tantang Solid Waste Treatment Co., Ltd. (responsible for operation and management).
Based on the suggested initial treatment fees (MSW incineration, kitchen waste and the
sludge treatment are the CNY100/t , CNY200/t and CNY200/t respectively) presented in
Table 4.6 for proposed PPP scheme, with the total investment of CNY381 million (50%
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capital investment and 50% of bank loans with interest of 8%), the preliminary estimated
project IRR (internal rate of revenue) is about 10.8 %, .Financial analysis data is in Table 4.6
and 4.7. In considering the project economic feasibility and institutional business structure,
the Private Enterprise plan is recommended to apply. Detailed PPP options and financial
analysis are in Appendix 13.
Table 4.6. PPP (BOT + Contract Operation) Financial Data
Key Assumption
Contract Period 25
WACC 10.0%
Capital Investment CNY381,000,000
Loan (50%) CNY190,500,000
Bank Interest Rate 8% pa
Growth Rate of MSW 3%/year
Taxation First 3 years 0%
Year 4 to 6 12.50%
Remaining Year 25%
Profit and loss:
Income:
Treatment fee Revenue
Treatment amount
(t/d)
Initial treatment fee (CNYt)
Daily treatment fee (CNYd)
Tantang Landfill 600 100 60,000
Kitchen waste 100 200 20,000
Municipal sludge 90 200 18,000
MSW Incinerator 600 100 60,000
Total
158,000
Other Revenue
Treatment amount
(t/d) CNY/kWh
Daily power sale income
(CNY/d)
MSW incineration power generation
600 0.65 87,360
Expenditure:
Treatment amount
(t/d)
Operation cost (CNYt)
Daily expenditure
(CNY/d)
Tantang Landfill+leachate treatment
600 52 31,200
Kitchen waste 100 178 17,800
Sludge 90 90 8,100
MSW incinerator 600 111.6 66,960
Total
124,060
Note:
1. The ratio of capital investment bank loan: it is depends on the financial capability of the borrower, the
normal range is 70%-30%. In normal case, if the debt ratio is over 50%, then the bank may require to
set mortgage against the borrower’s assets and the right of fee collection of the project.
2. The interest rate: the current interest rate for infrastructure project is 6.5% to 8%pa.
Table 4.6: PPP (BOT + Contract Operation) Financial Indicator
含售电收入
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Total Operating revenues
销售收入 3,948,233,815
Total costs (Opex) 运营费用 (2,359,071,455)
EBITDA 折旧摊销及息税前利
润 1,589,162,360
EBIT 息税前利润 1,208,162,360
Net income 税后利润 838,397,736
Dividends 分配股利 763,301,912
CAPEX 资本支出 381,000,000
ROE 资本金回报率 11.3%
ROCE 已动用资本回报率 23.8%
IRR ( Free cash flow) 项目内部回报率 10.8%
NPV ( Free cash flow) at WACC
净现值 26,942,389
4.2.2 Feasibility of Commercialization
Waste incineration with power generation has relatively stable incoming revenue, outgoing
operation cost, and enjoys certain tax incentives, which give investors stable and reasonable
returns. The feasibility of project commercialization shall also taking into consideration on
the market, operation and legal procedures.
(1) Market players
There are about 40-50 investors active in waste incineration power generation market in the
PRC, the market players include the Shanghai Environment Group, Beijing Golden State,
Tianjin Taida, Chongqing Sanfeng, Veolia, Xiamen Chuangguan, Shenzhen Energy,
Wenzhou Weiming, Chinese environmental protection company, China Everbright
International, Tsinghua Tongfang, Green Power, Shanghai Pudong Development Group,
Beijing China Science General Energy & Environment Co. Ltd., Jinjiang Group, Japan Ebara.
These enterprises are divided into three categories:
Government-led enterprises: The incinerator plant project is funded and constructed
by the local government, the enterprise served as a platform for the project.
Operations-oriented professional investment enterprises: These types of enterprises
introduce other technologies, focusing on the construction and operation of WTE
projects in the BOT model. These enterprises are mainly in operations and
management, such as Veolia Environmental Services (China) Co., Ltd., Golden State
Environmental Corporation, Beijing Sound Environmental Protection Group Limited,
Canadian resources (000826), China Everbright International Limited (00257.hk) and
so on.
Project investment-oriented enterprises: Based on technology developed , providing
services for the incinerator projects from construction to operation and management.
This type of enterprises mainly focuses on engineering construction.
(2) Operating Mode
On March 19, 2004, the Ministry of Housing and Rural-Urban Development (MOHURD)
issued the "Municipal Utility Concession Management Approach", specifying the concession
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waste management model. The incinerator project has a large investment at initial stage,
relatively low operating costs, mainly adopting BOT (build - operate - transfer) and BOO
(build - own - operate) modes, the concession period is generally 25-30 years.
(3) Key Legal Documents
"Municipal Solid Waste Concession Agreement", "Power purchase agreement", “Grid
connection and scheduling agreement" are the most important three protocols for the
construction and operation of the waste incineration power project.
Municipal Solid Waste Concession Agreement:
As the waste industry has the nature of exclusivity, for a city, unless the waste production
greatly exceeds the processing capacity of the existing waste treatment plant, it is
impossible to build another treatment plant to handle incremental solid waste. If the original
treatment plants meet discharge standards stipulated in the contract, the original project
company is given priority to build a new WTE plant. Therefore, to obtain the concession of a
city’s solid waste treatment means a long-term monopoly of the city’s waste disposal
services. Therefore, increasing market share in the solid waste incineration power
generation industry has very important significance. Concession Agreement is the most
important legal authority in the incineration power generation projects, which is signed by the
operating companies and the local government or its authorized department. The main
contents include: concession period; service area, service time, quantity and quality; waste
subsidized prices, the price adjustment method, time and mode of payment. For the supply
of the daily waste, the concession contract generally use take or pay provisions. The actual
amount of the solid waste treatment amount is proved and certified by the local sanitation
department.
Power Purchase Agreement:
Under normal circumstances, the Price Bureau will approve the preferential tariffs of the
WTE projects; the agreement is signed by the operation company and the power grid
company.
Grid Connection and Scheduling Agreement:
This agreement is the grid of electricity and network protocols signed by operating company
and Power Grid Company. According to the "Reference National Development and Reform
Commission on improving waste incineration power price policy notice, NDRC Price [2012]
801", all electricity generate from waste to energy facilities will be fully connected online. In
considering the power generation from WTE projects is relatively small compared to
conventional power generation, the grid connection is relatively easy.
4.2.3 The Project's Ability to Repay
(1) The government is responsible for procurement, operation and management.
Currently Yongzhou city solid waste collection and transfer services are operated and
managed by the sanitation department, including street cleaning, solid waste collection and
transfer, the expenditure has been effectively supported by the government. The sanitation
department continuously improves the efficiency of solid waste service, increasing social and
economic indirect benefits to the public.
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(2) Public-Private Partnership (PPP)
The main sources of income for waste incinerator project include MSW subsidies, power
tariffs, etc., among which the taxes of power tariffs will be refunded upon collection based on
relevant policy, the tax of solid waste subsidy will be exempted. In these revenue items, the
solid waste subsidy income, power tariff and tax incentives are the core sources of income.
1) Solid Waste Subsidies: While the top priority of incinerator BOT projects is solid waste
treatment, the power generation income is not sufficient to maintain operations of the project.
Therefore, the project should receive subsidies. This subsidy should be paid by the local
government to the project company, the government use administrative means to collect
garbage fees from the solid waste producers, and the insufficient part should be
supplemented through government budget. According to project estimation, the daily waste
processing capacity in Yongzhou is about 600 tons, and if the power tariff is 0.65 yuan/KWh,
the solid waste treatment fee will be 100 yuan/ton to allow the project to break even in about
9 years; the treatment fee will be confirmed after audited by the price bureau and then
approved by public hearing and municipality. Currently the solid waste treatment subsidy
amount across the country is closely related to the cost of the incineration equipment
(currently more than 200 yuan / ton in Shanghai).
2) Tax incentives: "Implementation Regulations of the PRC Enterprise Income Tax Law"
(2007) provides that enterprises engaged in projects which meet the qualifications of
environmental protection, energy and water conservation projects, from the first legal income
tax year to third year enjoy an exemption from corporate income tax, the 4th to 6th year only
need to pay half of the corporate income tax. On December 31, 2009, the Ministry of
Finance, State Administration of Taxation, the State Development and Reform Commission
jointly issued" Announcement on Environmental Protection, Energy and Water Conservation
projects CIT preferential [trial] notice" (Financial [2009] No. 166) explicitly listed MSW
incineration project in the catalogs. According to the "Comprehensive utilization of resources,
and other products VAT policy notice" (Financial [2008] No. 156) states that "the sale of the
following self-production goods implement the VAT refund upon collection policies,"
including the "production of electricity or heat using solid waste as fuel. The term solid waste
refers to urban garbage, crop straw, bark residues, wastewater sludge, and medical
garbage." According to the above provisions, waste incinerator WTE projects enjoy the tax
exemption and VAT-free preferential policies.
3) Security of solid waste supply. The consultants and Yongzhou government have
discussed and confirmed the amount of the solid waste generated (see 3.1.3), and agreed
the centralized treatment scheme. This assures the projection of solid waste supply.
In contractually, Yangzhou government and the operator are necessary to have consent for
the treated amount of solid waste by signing the "take or pay agreement" (see Chapter 5.2)
through the landfill O&M contract & BOT contracts as well as the concession agreement to
assure that during contract period, the government or its authorized agencies must to supply
the committed quantity of the solid waste as well as pay for treatment fees to operator (the
project company) in accordance with the agreement; If the Government or its authorized
agencies fails to supply the committed quantity of solid waste, they also has to pay the
treatment fee as agreed. Set the "minimum (yearly) supply of solid waste" is the key
measure of "take or pay agreement" principle.
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4) Input-output analysis: Overall, the power tariff of the incinerator plant accounted for 55%
of the total income, and waste disposal fee accounted for about 45%, internal rate of return
account for 8-12%, the payback period is 8-12 years. Assuming the total service time is 25
years, which means its stable earning period will be up to 25 years.
According to relevant assumption and policies in Table 4.7, the consultant team provided the
financial calculations for the above two PPP plans (see Appendix 13). Considering the future
price increases in the financial model, assuming 5% annual growth, meanwhile taking into
account the average price inflation of 3% each year, corporate income tax exemption for first
3 years and reduction by 50% in the next 3 year, and other factors, though the income
before tax is not that high, it still can achieve a positive net present value. In other words, to
take Tantang landfill contract operation + BOT new facilities plan (Sole-proprietorship
Financing Plan) has a higher internal rate of return.
In addition, Yongzhou city has implemented BOT model for the wastewater treatment plants,
the government has certain procedures and operational experience on the implementation of
PPP model, the project's ability to repay the investors does not have significant risks.
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5. Project Implementation Plan
5.1 Project Structure
In order to achieve centralized treatment, it is necessary to integrate solid waste incineration,
kitchen waste treatment, municipal sludge treatment and Tantang Landfill into an integrated
treatment project. Having discussed with Yongzhou PMO, the Project may be operated and
managed by means of private enterprise investment (mandatory O&M of existing facilities +
investment in new facilities), where Tantang Landfill is operated and managed by a
professional enterprise mandated by Yongzhou Municipality while the enterprise provides
cash to address the financial needs of all new investments. By such means, the assets of
Tantang Landfill remain to the government in case of future financing plans.
As required by the “Methods for Management of Concession Operation of Municipal Public
Utilities” issued by the MOHURD on March 19, 2004, solid waste treatment utilities may be
operated in concession for a period of 25 to 30 years.
This Project covers the concession operation of solid waste incineration, kitchen waste
treatment, municipal sludge treatment and Tantang Landfill, which means that the
government may authorize the competent department to delegate, by means of concession
operation. The rights of construction and operation of the Project for a certain period of time
will be given to a professional investor (i.e. a project company), which is responsible for
financing, designing, procuring, constructing and commissioning and operation of all the new
components of the Project within the period of concession operation. Upon the completion of
the new components, the Project will provide treatment and operation services to the
government according to the agreement while the government will pay solid waste treatment
fee to the project company according to the agreement and assure that the residual
electricity of the solid waste incineration and power generation plant is sold on the power
grid so as to allow the investor to recover the cost of project investment, operation and
maintenance and obtain a reasonable return; upon the expiry of the concession operation,
the investor will hand over the ownership and right of operation of all project components to
the government free of charge according to the agreement.
5.2 Legal Framework
If the proposed BOT + O&M PPP scheme is adopted, the key legal documents involving the
Project will include, but not limited to, the following contracts and agreements, applicable
laws and standards, and the power generation preferential policies for the Project:
Concession Agreement
BOT Contract Agreement
Agreement of Landfill Contract Operation;
Contract of power purchase;
Agreement of grid connection and dispatching;
To assure the sustainability of the Project, the government shall take full account of the
following principles upon authorization of concession agreement:
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“Take or Pay” Principle: This principle is an important means of credit security for
BOT and Contract O&M projects. During the operation period of this project, the
government or its authorized department to ensure solid wastes supply at the
minimum volume and receive solid waste treatment service, as well as pay solid
waste treatment / tipping fees to the investor (or Project Company) as stipulated in
the agreement. If the government or its authorized department fails to provide solid
wastes to the investor (or Project Company) at the agreed volume, the government
or its authorized department will still pay the agreed solid waste treatment fees.
Setting the “minimum (yearly) supply of solid waste” is a key approach to execute the
“Take or Pay” Principle.
Exclusivity: In order to abide by the “Take or Pay” Principle and “let all projects serve
their purposes”, the government usually develops a reasonable planning of solid
waste treatment facilities based on the actual circumstances to achieve the
exclusivity of solid waste incineration and treatment in a certain geographical area.
The exclusivity of BOT model is also reflected in the various rights of priority in
expansion of existing projects or construction of new treatment projects in the same
area.
Preferential policies: Solid waste incineration projects also receive a series of
preferential tax policies. For example, three-year exemption and three-year half
reduction of enterprise income tax are stipulated in the “Regulations of
Implementation of the ‘Enterprise Income Tax Law of the People’s Republic of
China’” (2007); domestic solid waste incineration projects are included in the
catalogue according to the “Notice on Publication of the Catalogue of Environmental
Protection, Energy and Water Saving Projects Enjoying Preferential Enterprise
Income Tax (Trial Version)” (Financial Tax [2009]166); solid waste incineration and
power generation projects also receive the preferential policies on exemption and
reduction of income tax and exemption of value-added tax according to the
stipulations of the “Notice on the Value-added Tax Policy for Comprehensive
Utilization of Resources and Other Products” (Financial Tax [2008]156).
Price adjustment formula: Since the power grid-connection price upon bid invitation is
an assumed parameter, the price adjustment formula for the solid waste treatment
fees should be linked with the actual grid-connection price. In addition, the operating
costs should adjusted with the price index and adopt the progressive method instead
of a year-to-year adjustment.
Since Yongzhou has implemented the urban WWTPs using the BOT model, the government
has experiences in the implementation procedure and operation of the PPP model; therefore,
there will not be significant risks to the investors in terms of the adoption of this PPP scheme.
5.3 Risks of BOT Projects and Their Control
(1) Risk Category
From the government’s perspective, the key risks to address are social and
environmental risks. The government will have to address increasing pressure in
terms of solid waste treatment needs if the selected investor does not have the
required capability to complete the project on time. Additionally, during the period of
operation and management, serious environmental pollution may result from failure
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to follow the strict national environmental protection standards.
From the investor’s perspective, the key risks include technical risks (in terms of
construction and operation), solid waste supply risks (in terms of quantity and
quality), payment risks (concerning solid waste treatment fee and electricity fee), and
policy risks (e.g. more stringent national environmental protection standard and
changes of urban planning).
(2) Principle of Risk Sharing
The following principle of risk sharing will be adopted to enable the more competent party to
undertake the respective category of risks. For example:
The technical risks concerning the engineering design, operation, and maintenance
of the solid waste incineration plants and facilities should be undertaken by the
investors (or project companies) since they have more professional staff and
expertise than the government in addressing such risks;
The solid waste supply risks, payment risks, and policy risks should be undertaken
by the government or its authorized department who have certain abilities of
administrative coordination;
Unpredictable risks (e.g. force majeure) should be shared by the government and the
investor following the relevant stipulations of the Concession Agreement.
(3) Key Approaches of Risk Control
The following approaches and methods may be adopted for control of the above risks:
The project requirements that the government raises to the project investor including
the technical requirements of the incineration plant and the various treatment
facilities should be clearly specified in the bidding documents. In addition, the project
terms and conditions provided by the government should also be made available to
the investor for the purpose of risk appraisal and economic analysis;
The Concession Agreement should be included as part of the bidding documents to
clearly specify the responsibility, rights, and interests of the government and the
investor to avoid unnecessary disputes;
Various performance assurance mechanisms should be established based on the
project requirements and its implementation stages, such as “bid security” for the
bidding period, “project completion security” for the construction period, “operation
security”, “payment security” for the operation period, and “hand-over security” for the
hand-over of the Project.
5.4 Project Preparation Works
5.4.1 Organization Activities
(1) The government authorizes the lead department to perform project planning based
on integrated approach and delegate the right of Concession Agreement on behalf
of the government;
(2) Surveys should be organized to identify the quality and quantity and future growth
of solid wastes;
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(3) An experienced consultant should be recruited as the financial consultant and
investment / bidding agent of the Project;
(4) Market sounding should be conducted to identify potential investors and
technologies.
5.4.2 Procedure of Project Execution
(1) The government selects an investor for the Project through public bidding or by
other means;
(2) The investor sets up a special project company based on the relevant
requirements of the bidding document;
(3) The government delegates an authorized department for the Project;
(4) The authorized government department signs and performs, on behalf of the
government, the Concession Agreement with the project company;
(5) The project company signs an agreement of solid waste delivery with the solid
waste suppliers;
(6) The project company signs an agreement of electricity sales with the electricity
authority;
(7) The project company signs agreements of project financing with the loan banks;
(8) The project company signs project implementation contracts with the design
institute, equipment suppliers and construction and installation companies; in-
depth discussions will be conducted over the publications of project manager
associations.
5.4.3 Project Preparation and Tendering Schedule
The following table lists the time schedule during the project preparation period.
Table 5.1: Project Preparation and Tendering Schedule
Implementation Stage
Implementation Actions Duration
Preparation Stage
The government delegates an authorized department and grant concessions for representing the government in the future;
Hire the consultants as the project financing consultants and tender agent;
Investigate the potential investor and technology.
3-6 Months
Tender and Financing Stage
Issue the tender notice;
Field investigation;
Evaluation of the bidders;
Contract negotiation.
Contract signing;
Establish special project company;
Financing from the financial institution.
6-8 Months
Design Stage Signing contract with design institutes,
equipment suppliers, engineering and installation companies, etc..
2-3 Months
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6. ENVIRONMENTAL IMPACT ASSESSMENT
6.1 Background and Needs
The current scope of Yongzhou integrated solid waste management project includes the
treatment of municipal solid waste, kitchen waste and wastewater sludge. The total kitchen
waste produced from Yongzhou downtown hotels and restaurants is about 70 tons per day.
In the urban area of Yongzhou city, there is no kitchen waste recycling system; therefore the
kitchen waste collection and its flow direction have not been controlled. The wastewater
sludge in Yongzhou (80% moisture content) is currently transported to the existing sanitary
landfill for disposal. The 80% moisture content does not meet the requirements of mixed
landfill, which will increase the landfill leachate and landfill gas generation, resulting in the
operating costs to increase.
6.2 Solid Waste Management Technologies Routes and Possible
Environmental Impact
For the current problems in waste management, taking into account the technical capabilities,
expenditure, management ability and socio-economic conditions of Yongzhou city, the
current proposed solid waste management plan include: 1) Conduct landfill closure plan to
the two abandoned landfills. 2) Kitchen waste fermentation - biogas utilization scheme. 3)
Wastewater sludge to be disposed in Tantang after thermal drying treatment; 4) Combustible
materials from the municipal solid waste will be treated following sorting – incineration –
landfill route, the incombustible materials is transported to Tantang landfill for disposal
directly.
The consultant team analyzed the possible negative environmental impacts during the
construction and operation period based on the proposed technical plan. See Table 6.1 for
the detail analyze.
The positive environmental benefits of the project are summarized in Table 6.2.
6.3 Environmental Impact Mitigation Measures Already Planned and
Proposed
Currently, the environmental impact assessment reports for the kitchen waste management
project and the landfill closure project have already been completed. The two EIA reports
provide a preliminary analysis on the environmental impact during the construction and
operation period, and also provide some mitigation measures. The mitigation measures that
need to consider are listed in Table 6.3.
6.4 Monitoring Plans and Requirements
For the municipal solid waste, kitchen waste, and wastewater sludge, there is no routine
monitoring for these sectors, registration measures arrangements and requirements existed
yet. Therefore, the solid waste composition and biomass, thermal value, moisture and oil
content, heavy metals and other harmful substances in the waste are still not clear. Even
though some sample testing were done before the planning and treatment project, it was not
adequate. So for the Yongzhou solid waste management projects, monitoring requirements
include two aspects: First, the necessary monitoring requirement of the daily management;
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and the other is the monitoring plan and requirements during project construction and
operation period.
6.5 Management Improvement
Although Yongzhou city government has already begun planning the municipal solid waste
management projects, however, the daily management of municipal solid waste is still very
weak. For the comprehensive management, the following aspects need to be considered:
Policies and Regulations Implementation: the implementation of the national and local
(including Yongzhou) management regulations and policies.
Comprehensive Consideration: The general considerations are mainly reflected in two
aspects: on one hand, the comprehensive management of collection and transportation
systems; on the other hand, for the treatment and disposal of different types of solid waste
(municipal solid waste, kitchen waste, wastewater sludge etc.), an integrated planning is
needed based on the local conditions and requirements, including different technologies,
scales, comprehensive utilization, cycling production and so on.
Financial Capacity Strengthen and Sustainability: the comprehensive utilization of solid
waste should be considered, increasing the financial benefits (lower the costs and financial
expense). In addition, the solid waste treatment fees, as well as the government financial
support should be included in the financial plan for comprehensive consideration.
Realization of Environmental and Poverty Alleviation Objectives: once the project is
finished, it will reduce the environmental pollution and hazards, promote and maintain the
environmental objectives. At the same time, this project will reduce health problems, in
particular reducing the likelihood of infectious diseases, which have a positive effect on
poverty reduction.
Strengthening of Public Participation: strengthening the public participation is of great
importance to the solid waste management project in Yongzhou. Information disclosure is
the basis for public participation. Without the disclosure of information, it is difficult to make
effective participation of the public, which will result in difficulties to have a wide and in-depth
public negotiation. Project owners and environmental management department has the
responsibility to create conditions to facilitate public participation.
Establishment of Grievance Redress Mechanism for Environmental Impacts: the
purpose of the mechanism is to understand the environmental impact concerns and
grievances from the affected people, seeking a better solution, and to ensure the affected
people to play a supervisory role throughout the project preparation and implementation
process. The design of the grievance redress mechanism needs to consider the possible
risks and levels of impacts of the project.
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Management Project in Yongzhou Chapter 6 Environmental Impact Assessment
Table 6.1: Solid Waste Management Sub-Projects and Possible Negative Environmental Impacts
Sub-projects Possible Impact during Construction Period Possible Impact during Operating Period
Abandoned Uncontrolled landfill closure
Construction dust and construction machinery vehicle exhaust; wastewater and noise production; construction and living waste generated during the period; vegetation damage and soil erosion effects
Landfill gas effects; landfill leachate contamination;
Anaerobic fermentation of kitchen waste
Construction site dust; wastewater and sewage production during construction period; noise production from transport vehicles and construction machinery and equipment; waste muck produced during this period
Sewage and wastewater; noise from boiler room, belt conveyors, crushers, pumps and other equipment; operation waste and living garbage
Solid waste incinerator treatment in Tantang landfill
Construction site dust; wastewater and sewage production during construction period; noise production from transport vehicles and construction machinery and equipment; waste muck produced during this period
Leachate from solid waste storage; the noise production from the sorting and transportation system and other equipment; odor effects; atmospheric pollutants from incineration; leachate effects to the groundwater quality,
Sanitary landfill Construction site dust; wastewater and sewage production during construction period; noise production from transport vehicles and construction machinery and equipment; waste muck produced during this period
Landfill gas and solid waste leachate effects; odor effects; noise; leachate effects to groundwater; landfill soil effects to land and ecological environment.
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Pre-Feasibility Study of Integrated Solid Waste
Management Project in Yongzhou Chapter 6 Environmental Impact Assessment
Table 6.2: Positive Environmental Benefits of Solid Waste Technology Solution
Sub-project Positive Environmental Benefits
Abandoned Uncontrolled
Landfills Closure
(1) After the closure of the landfill, the leachate pollution to the surface water and groundwater will be
reduced. The annual amount emissions reduction of COD, BOD5, ammonia, SS will be 130 tons,
52 tons, 39 tons and 26 tons, respectively.
(2) Reduce the leachate pollution to the surrounding soil.
(3) Reduce the negative impact from the landfill gas, with annual emission reduction of 0.527 tons
H2S and 2.722 tons NH3.
(4) Improve the sanitation and public health conditions of the surrounding communities.
(5) After landfill closure, the surface will be greened which will improve the ecological environment of
the surrounding areas.
Anaerobic fermentation of
kitchen waste
(1) Reduce the illegal use of waste oil, improve public health.
(2) Fermentation will produce biogas, reducing the use of fossil fuels. 1058 tons of oil can be
separated each year, and used resourcefully, while reducing environmental pollution.
(3) Solid waste is collected and transported in a closed condition, improving the sanitation condition
of the solid waste collection.
Solid waste incinerator
treatment in Tantang landfill
(1) Maximizing the reduction of solid waste, reducing the occupation of landfill space, and improving
the conservation of land resources.
(2) Thermal value of solid waste can be taken full advantage of, the amount of fossil fuels and carbon
emissions will be reduced (carbon emissions from incineration + heat utilization are 1/6 of that
from landfill disposal).
(3) Household waste pathogens will be completely eliminated, reducing the adverse effects on the
environment and public health.
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Pre-Feasibility Study of Integrated Solid Waste
Management Project in Yongzhou Chapter 6 Environmental Impact Assessment
Table 6.3: Environmental Mitigation Measures and Proposed Measures
Sub-projects Construction Period Operation Period Proposed measures for improvements
Abandoned landfill closure
Dust control; sewage collection and treatment; noise prevention; water and soil conservation.
Landfill gas collection and treatment measures; leachate pollution control measures; groundwater pollution prevention measures
Detailed analysis for soil volume and soil sites; leachate treatment monitoring; improve the environmental management and monitoring plan; supplement security incident contingency plans (contingency plan)
Anaerobic fermentation
of kitchen waste
Dust control; sewage
collection and
treatment; noise
prevention.
Dust control; noise
canceling; spills control
measures; leachate
pollution control
measures
Supplement methane leakage protection measures,
environmental emergency plan, environmental management
and monitoring plan; increase monitoring, evaluation
indicators (factors)
Solid waste incinerator treatment in Tantang landfill
Proposed mitigation measures: the impact of garbage collection system; burning atmospheric pollution mitigation; odor pollution control; wastewater pollution control; solid waste disposal; noise impact control.
For detailed environmental impact assessment, please see Appendix 14; for recommendations to the existing EIA, please see Appendix 15.
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Pre-Feasibility Study of Integrated Solid Waste
Management Project in Yongzhou Chapter 7 Project Social Impact Assessment
7. PROJECT SOCIAL IMPACT ASSESSMENT
7.1 Social Impact Analysis
Implementation of the project will provide more income-generating opportunities to local
residents, promote the health of women, children and the elderly, and effectively improve the
local ecological environment. At the same time, it may lead to some adverse social impacts,
resulting in the loss of interests of some certain groups. Through the analysis of the social
impact of each subproject, the social impact analysis matrix is shown in Table 7.1.
Table 7.1: Social Impact Analysis Matrix
Project component
Social impact analysis
Positive impacts Adverse impacts
Domestic solid waste collection, sorting and transportation system project
(1) Benefiting more people and
effectively improving local ecological
environment
(2) Significantly reducing solid waste
removal and disposal fee, simplifying
solid waste treatment technology and
promoting solid waste treatment
efficiency
(3) Promoting resource recycling
(4) Improving the health condition of
women, children and the elderly
(1) Construction of new transfer station
could incur resistance by local
residents.
(2) Possibly resulting in loss of income
for some rag pickers
(3) Collection of solid waste treatment
fee will possibly increase cost of living
for residents, in particular the
vulnerable groups.
Domestic solid waste incineration and treatment project
(1) Promoting socioeconomic
development in the region and
improving environmental quality
(2) Contributing to improvement of
living conditions and public health
(1) Concerns about dioxin may incur
public resistance against solid waste
incineration and power generation
plant and even “Not-In-My-Back-Yard”
effect.
(2) Impacts of LAR
(3) Likely to affect health of local
residents
Abandoned landfill closure and pollution control project
(1) Improving and standardizing
environmental sanitation facilities in the
area
(2) Facilitating the settlement of
outstanding pollution problems in the
region
(3) Improving living environment and
health condition of local residents
(4) Improving agricultural production
conditions of local residents
(5) Bringing more opportunities of
revenue generation for local residents
(1) Affecting the income of rag pickers
Kitchen waste treatment and disposal project
(1) Fundamentally addressing
environmental pollution caused by
kitchen waste in Yongzhou urban
center and effectively controlling the
impacts of kitchen waste on ecological
environment and significantly
improving urban environment
(2) Realizing beneficial use of kitchen
wastes and benefiting local residents
(1) Increasing the environmental risks
of Tantang Landfill, likely to threaten
health of local residents, in particular
the vulnerable groups
(2) Increasing the burden on catering
businesses and bringing income losses
(3) Source of income of individual
kitchen waste collectors is cut off and
their income affected.
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Pre-Feasibility Study of Integrated Solid Waste
Management Project in Yongzhou Chapter 7 Project Social Impact Assessment
7.2 Stakeholder Analysis
The main stakeholders of this Project include Yongzhou Municipal Government, the Urban
Investment, Construction and Development Corporation, other government departments of
Yongzhou, town and township governments, residential committees in the Project Area,
residents in the beneficiary areas and affected residents. Different stakeholders’ needs from
the project vary. To better understand of the stakeholders’ needs and interests, as well as
their impact to the project, a special analysis was carried out as shown in Table 7.2. In the
next step of the feasibility study process, further communication and consultation should be
made with these stakeholders, and public participation results should be incorporated into
the design optimization.
Table 7.2: Key Stakeholder Analysis Matrix
Stakeholder
Role in
the
Project
Function
Attitude
toward the
Project
Impacts
on the
Project
YMG Indirect
beneficiary
Steering,
coordinating Supportive Big
Subproject owner Indirect
beneficiary
Organizing,
implementing Supportive Big
Other government departments Indirect
beneficiary
Coordinating,
supporting Average Big
Cities Development Initiative in
Asia (CDIA) and AECOM
Indirect
beneficiary
Providing
consulting and
assistance
Supportive Moderate
Town and township
governments and community
committees
Indirect
beneficiary Coordination Positive Big
Residents in beneficiary areas Direct
beneficiary Beneficiary Supportive Small
Residents affected by LAR
Direct
interests
affected
Affected but also
beneficiary Uncertain Big
Persons affected by income
and employment (rag pickers,
kitchen waste collectors)
Direct
interests
affected
Affected but also
beneficiary Uncertain small
Details social impact assessment is in Appendix 16; related social field investigation is
summarized in Appendix 17.
54 | P a g e
Pre-Feasibility Study of Integrated Solid Waste
Management Project in Yongzhou Chapter 8 Recommendations to the Next
Feasibility Study
8. RECOMMENDATIONS TO THE NEXT FEASIBILITY STUDY
8.1 Technical Aspect
For municipal waste incineration project, the related departments should initiate the
preparation of "Feasibility Study Report of Municipal Waste Incineration Power Generation
Project ", through on-site determination of thermal value of waste and other basic data to
further demonstrate the feasibility of waste incineration power generation projects. Yongzhou
government also need to issues policies and documents related to municipal waste subsidy
and grid-connect power generation subsidy.
For the abandoned landfill closure project, the consultant team proposed to further compare
of the two options in next stage of feasibility study, supplement the detailed hydrogeological
and geotechnical data of the landfill area; demonstrate the feasibility of in situ landfill closure,
while discussing the necessity of relocation options, as well as the trace of the waste and the
land use value after landfill relocation.
For sludge treatment project, after the sludge component, thermal value and other basic
information are determined, the feasibility of integrated treatment and co-processing of
wastewater sludge with municipal waste or kitchen waste need to be demonstrated in detail.
8.2 Social & Environmental Aspects
Except for the recommendations listed in table 3.5, more aspects on kitchen waste need to
be addressed in the following stages. Based on the "Solid Waste Pollution Prevention Law in
PRC", "City Appearance and Environmental Sanitation Regulations" and other laws and
regulations, combined with the city’s actual situation, Yongzhou government should develop
some appropriate measures, the approach should cover at least the following elements:
Identify the city's administrative departments of kitchen waste management, and the
responsibilities of food safety, environmental protection, industry and commerce, food
and drug supervision, quality supervision, public health, animal husbandry,
agriculture, finance, pricing and other departments in the kitchen waste management
projects;
Subsidies and tariff system, as well as reward systems;
Kitchen waste generating units, collection and transportation units, disposal units and
ledger system, inspection system;
Information disclosure system, including: the type and quantity of kitchen waste
generated, collection and transportation, disposal services permit, kitchen waste
treatment situations, waste resource utilization of edible oils and fats, as well as the
illegal cases of kitchen waste generation, collection and transportation units;
Penalties and reporting systems.