6.1 Impacts of the Proposed WTE Plant on the recurrent budget for Solid Waste Management

According to published information in the local newspapers the tipping fees is reported to be in the order of USD37-39 per tonne and is quoted in US currency. Hence this represents an annual fee of 11.1-11.7MUSD. In local currency this amounts to MRU361-380M at today’s rate of exchange.

Solid waste collection, transfer and disposal fall under the responsibility of the Ministry of Local Government and it is interesting to analyse the provisions for these items under the recurrent budget of the Ministry18. Budget estimates for 2005/06 and 2006/07 are reproduced below.

GoM will still be responsible for the transport and delivery of solid wastes to the
proposed WTE Plant.

It is observed that the reported tipping fee to be paid yearly to the Promoters will increase more than 100 percent the present recurrent budget by for the solid waste operations (collection, transfer and disposal).

Furthermore given that Mare Chicose will still be operational to take the remaining waste generated as well as solid wastes in the event that the proposed WTE Plant is under reduced operation or stopped completely19, at most we can anticipate a reduction in cost of the operation of landfill site. But the savings from such operation will not be sufficient to finance the reported tipping fees.

Given the current budget deficit and constraints and the strategy of GoM to reduce
budget deficit, it is not unreasonable to anticipate that additional revenue will have to be raised to finance the tipping fees. Hence it is paramount that GoM provides clarifications on the manner it intends to finance the tipping fees.

6.2 Comparison of Financial Impact of the Solid Waste Projects on Public Finance

The direct impacts on public finance of the proposed WTE and the large scale Waste Recycling Projects are summarised below.

It is clear that both the waste paper recycling and the composting projects have no direct impact on public finance while eliminating about 100,00020 tonnes of MSW/year net.

It must be noted that under all solid waste projects: Compost, Waste Paper Recycling and the Proposed WTE Plant, Mare Chicose Landfill will have to remain operational. In the case of the Composting and Waste Paper Recycling Plants, rejects estimated at around 30% of throughputs will have to be land filled whereas in the case of the Proposed WTE Plant, solid wastes will have to be diverted to Mare Chicose Landfill in the event of prolonged downtime. Hence the cost of maintaining Mare Chicose operational is common to all three Projects.

In contrast the proposed WTE Plant has a direct impact on Public Finance at a cost of MRs361-380M subject to currency changes with respect to US Dollar. Furthermore as the sale price of electricity to CEB is not known, there is a risk of further costs if the electricity price is higher than the price of electricity that the CEB buys from the Independent Power Producers (IPP) as intimated in the local press. Only when this detail is known that the full cost to public finance can be ascertained.

It is a fact that a WTE Plant relies on the continued generation of waste to support its high building and operating costs. Aside from the huge capital costs, many WTE Plants are plagued by unexpected maintenance costs, unanticipated down-time. As indicated in their EIA report, in the event of prolonged downtime, the MSW will have to be diverted to Mare Chicose Landfill at a cost to public finance.

Furthermore the environmental, economic and social risks are considered very high for the proposed WTE Plant and the human costs of damaged health and the
environment due to the impacts of a MSW WTE Plant are impossible to measure.

6.3 Project Currency

It appears that the tipping fees and sale of electricity will be in US dollar. With the constant yearly depreciation of the Mauritian rupees towards the main foreign currency including the US dollar, it is feared that the tipping fees will be subjected to not only normal price adjustment but also to Mauritian currency depreciation. These aspects have not been assessed in this note.

As there will be no direct impact on Public Finance, currency depreciation is not an issue with either the Compost project or the Waste Paper Recycling.

Thus it is concluded that the economics of incineration do not stand up to scrutiny. A WTE Plant is formidably expensive. Using the reported tipping fees of USD37- 39/tonne of waste clearly show that the present recurrent budget for solid waste management in Mauritius will not even be sufficient to pay for the tipping fees.

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18 Source: www.gov.mu
19 In the EIA report section 3.11 deals with WTE Plant general maintenance (p3-24) and furthermore in the EIA study (p3-12) it is stated that in the event that MSW will have to be diverted to Mare Chicose in the event that the storage facility at the proposed WTE Plant is full.
20 Both the Compost and Waste Paper Recycling Plants will generate about 30% of wastes based on throughputs similar to the proposed WTE Plant.