Common Environmental Infrastructure – Its Evolution and Future

[Prasad Madhav Modak]

“Environmental infrastructure” is a general term that refers to infrastructure facilities as well as public services that are essential for protection, conservation and enhancement of the environment. Environmental infrastructure reduces risks to the humans and ecosystems and improves quality of life.

Environmental infrastructure that is developed for the common interests of a targeted group of users is referred to as “Common Environment Infrastructure” (CEI).

Urban infrastructure such as water supply; sewage collection and treatment; collection, treatment and disposal of solid wastes and provision of public toilets are examples of Urban CEI. This infrastructure is built using resources from the Urban Local Bodies (ULBs), State or Central Government in the form of grants or schemes or more recently partnering with the private sector. The public that is benefited through CEI is charged through tariffs and taxes. The charges are often subsidized and are differential (e.g. different for domestic, commercial and industrial uses)

There are CEIs for the industries as well. Common Effluent Treatment Plants (CETPs)  are examples of CEI for industrial clusters/estates.

The concept of CETPs emerged from a workshop led by Professor Niloy Choudhari, then Chairman of the Central Pollution Control Board in 1977 held in Jabalpur, Madhya Pradesh, India. CETPs were conceived to help Small and Medium Enterprises (SMEs) to connect their effluents to a central effluent treatment plant and contribute financially to its construction and operation.

The proceedings of this workshop provide the concept and rationale for CETPs. I still hold a copy of the proceedings. Only few will have this copy. The CETP and its operationalization is India’s contribution to the World. Countries like Vietnam, Thailand, China, Brazil etc. adopted CETPs, much based on India’s experience.

In 1987, i.e. 10 years later after Prof Choudhari’s  workshop, a group of seven entrepreneurs owning and operating small and medium chemical and pharma industries came forward to promote Jeedimetla Effluent Treatment Limited (JETL). A CETPs was set up on the outskirts of Hyderabad following “Polluter to Pay Principle”. The treatment facility was commissioned in April, 1989 at cost of Rs. 4.6 million to treat 350 m3/day of effluent using Activated Sludge Process.

Today there are nearly 200 CETPs operating in India. In their promotion, following aspects were considered

1. Institutional – To establish CETP, a company had to be formed under the Companies Act by the interested polluters for parties. SMEs had to be the major stakeholders or the beneficiaries, especially if subsidies were to be enjoyed.
2. Financial – The CETPs were subsidized by the State (initially by the State Government and later in some cases by the State Pollution Control Boards (SPCBs) and also by the Center (using initially the Central Loan Scheme and later through a grant from Ministry of Environment & Forests (MoEF) using the IDA funds from the World Bank (under the projects Industrial Pollution Control (IPC) and Industrial Pollution Prevention (IPP). The early financial structuring for capital contribution was as follows.

25% State subsidy, 25% Central subsidy (both provided as reimbursement), 20% Equity from the participating industries and 30% Loan (provided by Industrial Development Bank of India (IDBI) through IBRD money made available by the World Bank.

Now the financial structuring is different. The contributions are 25% Central subsidy, 25% by the State and 50% by the member industries. For CETPs involving primary / secondary / tertiary treatment, central financial assistance would be to the tune of 50% of maximum Rs.15 million / MLD capacity, subject to a ceiling of Rs. 150 million  per CETP. For CETPs involving primary / secondary / tertiary treatment and Zero Liquid Discharge (ZLD) treatment, financial assistance would be provided by GOI to the tune of 50% of maximum Rs. 45 million / MLD capacity, subject to a ceiling of Central assistance of Rs. 200 million  per CETP.

1. Technical – The design of the CETPs had to be vetted to enjoy the subsidy. This was done by the National Environmental Engineering and Research Institute (NEERI). MoEF specified the effluent standards.

Figure 1: Typical Institutional Framework for CETP as CEI

I spent around 8 years on CETPs as a Consultant to the World Bank under IPC and IPP projects. In this period, I had opportunities to interact with SPCBs, MoEF, Private sector and Industry Associations.

Each CETP company had their own method of sharing the 20% equity. Further, they used their own formula for computing the charges to be paid (to meet the operational costs) including repayment of the loan. The formula for charging typically considered effluent flow and effluent characteristics such Chemical Oxygen Demand (COD). In addition, each polluter was required to do certain minimum pre-treatment (e.g. neutralization). Additional costs included costs of managing effluent conveyance e.g. through a piped underground network or fleet of tankers.

Although essential, CETPs require today the Environmental Clearance (EC). MoEF has produced elaborate guidelines for this purpose.  EC for CETPs takes substantial time. Unfortunately, no one considers the “cost of delayed action” on the environment in the interim period i.e. in the absence of CETP!

There is a lot of unevenness across CETP companies today. There is no “national regulator” who controls and provides rationale for equity contributions (addressing the procedures for late entry and early exits) and importantly the basis of charging schemes. There is also no mechanism of “trading effluent loads” to encourage the effluent load reduction. Industries who reduce effluent load to the CETPs are generally discouraged as this leads to reduction in the revenue to the CETP.    I will highly recommend that readers to this post refer to the presentations made at a national conference in New Delhi on CETPs in 2014. I wish there was an active association of CETP companies at the national level to continue such dialogues.

There have been several reports on the performance evaluation of the CETPs by Central Pollution Control Board (CPCB), agencies like NEERI and Environmental NGOs. All these studies by different institutions indicate a high degree of non-compliance. Dealing with non-compliance of CETP could mean en-mass closure – that can have ramifications on the production and employment in the member industries. I had recommended that CETPs should be given operational subsidies over 5 years based on performance rather than one time capital grants. This recommendation was well received but not followed.

Some of the reasons for non-compliance at CETPs include lack of proper pre-treatment, extreme variability in the flow and composition of the influents, poor treatment design and operation and deficits in the cash flow due to inadequate collection of effluent charges. Many believe that the root cause of the problem is however lack of ownership.  When infrastructure is common, there is hiding of the identity. So, who cares? You simply pass the buck or blame each other.  Its more of an attitudinal or cultural issue – isn’t it? You badly need an iconic leader and a facilitator who motivates the CETP members and get them committed for the COMMON CAUSE. We do have such good stories to tell.

Today the CETP concept is expanded to address collective management of other residues e.g. hazardous waste and biomedical waste. CEIs that will manage E-waste will soon follow. CEI for management and recycling of Construction & Demolition (C&D) wastes are already established in Delhi. My organization Environmental Management Centre LLP recently drafted national guidelines for establishing CEI for C&D waste for GIZ.

CETPs are however gradually evolving to more sophisticated reuse and recovery systems (refer to Figure 2) and not just limit to compliance. CETPs are now being recognized as part of a more holistic treatment-recovery-reuse solutioncomprising of add-ons such a By-Product Recovery Facility (e.g. common chromium recovery in CETPs for tanneries, common solvent recoveries and common heat & power units), a water recycling facility (like operated at CETPs in Tirupur in India). CETPs are often expanded to include a Hazardous Waste Treatment, Storage and Disposal Facility that can have a potential of recovery and recycling. It is important that any future funding of CETPs follows this holistic treatment-recovery-reuse solution, rather than restricting only to compliance. The Zero Liquid Discharge (ZLD) directive from SPCBs has been a driver in this direction. Sure, there will be motivation for Compliance, moment there are reverse operations (like water recycling) and clear financial returns.  

 

Figure 2: Gradual Evolution of CETPs from Standalone to More Sophisticated Reuse and Recovery Systems

As CEIs will spread to address specific waste streams like plastic, waste oil and metal scrap; there will be transformation of the informal sector. This sector that has major linkages will play a vital role if skilled and supported by micro-finance schemes and mentoring provided by the formal sector.  Waste to Energy is already a major CEI across the world.

Experience has shown that CEIs work best through PPP with lead taken by the private sector operator.  In such cases, Government provides concession or guarantees and does not invest. We should soon see more such CEIs in India. Example are Material Recovery Facilities (MRFs) located in the industrial estates that are bided out. These MRFs essentially become gateway of Circular Economy by ensuring least leakage of material and energy flows outside the boundaries of the industrial estate. I wish the Industrial Development Corporations build MRF for every Industrial Estate as a part of the CEI apart from CETPs.  

I spoke top my Professor Friend about the evolution and future of CEI in India.  I also expressed my displeasure on the poor leadership of MoEF&CC in this sector and its lack of vision.

Professor lit his cigar and smiled at me. “Dr Modak, I agree with your concerns but you are still thinking conventionally”. He said

Haven’t you thought of CEI in the form of Common Environmental Monitoring Systems invested by private sector in cities and industrial areas? How about commonly designed and operated Environmental Information Centers that help in raising awareness, assist in decision making and help conduct scrutiny or independent evaluation? Disaster Management Centers around Industrial Estates is another example that can be considered as CEI.

I thought Professor was right. So much innovation is possible and experiences to share!

I realized we badly need a brainstorming on this subject at the national level. We must look into the Future of CEIs. Perhaps Mr. Hardik Shah, PS to the Hon Minister should consider holding such a meeting. He comes from the State of Gujarat that has maximum number of CETPs and Common Hazardous Waste Treatment & Disposal Facilities in the country,

You know my views now but I do hope Mr Hardik Shah is reading my blogs!