Evaluating Investment Opportunities in the MSWM Market in ... · stock) are not considered to be an investment. James S. Sagner, “Capital budgeting: Problems and new approaches,”

Evaluating Investment Opportunities in the Municipal Solid Waste Management

Market in India – A Case Study

A thesis submitted to the Bucerius/WHU Master of Law and Business Program in partial fulfillment of the requirements for the award of the

Master of Law and Business (“MLB”) Degree

Benjamin Borngräber

July 22, 2011

14,529 words (excluding footnotes) Supervisor 1: Prof. Dr. Utz Schäffer

Supervisor 2: Dipl. Wi.-Ing. Tobias Zimmermann

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Table of Contents

List of Figures ................................... ................................................................................... II

List of Tables..................................... .................................................................................. III

List of Appendices ................................ .............................................................................. IV

List of Abbreviations ............................. ............................................................................. IX

1 Introduction ...................................... .............................................................................. 1

2 Foundations of Investment Evaluation .............. ........................................................... 2

2.1 Basics of Investment Theory .................................................................................. 2

2.2 The understanding of Risk ...................................................................................... 6

2.3 A practical approach of combining capital budgeting methods and risk ................ 11

2.4 Conclusion ........................................................................................................... 16

3 Analysis of the Indian Municipal Solid Waste Manage ment Market ......................... 17

3.1 India at a Glance .................................................................................................. 17

3.2 Understanding the legal waste management framework ...................................... 21

3.3 Analysis of the Municipal Solid Waste Management (MSWM) market .................. 24

3.4 Conclusion ........................................................................................................... 31

4 Case Study: An Investment in MSWM treatment in Indi a .......................................... 32

4.1 Description of the Investment Opportunity ............................................................ 32

4.2 Configuration of the project’s cash in- and outflow elements ................................ 36

4.3 Identification of risks and combination with cashflow elements ........................... 42

4.4 Computation and Evaluation of the Investment Opportunity ................................. 46

5 Conclusion and Outlook ............................ .................................................................. 50

Appendices ........................................ ................................................................................ 52

Bibliography ...................................... ............................................................................... 101

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List of Figures

Figure 1: Categories of risks. ................................................................................................. 7

Figure 2: Types of analyses for risk- potentials. ................................................................... 11

Figure 3: Example structure of a cashflow tree- diagram. .................................................. 14

Figure 4: Example probability-IRR diagram. ......................................................................... 15

Figure 5: Development of GDP and FDI in India. ................................................................. 19

Figure 6: Compliance with the Municipal Solid Wastes ............................................................ (Management and Handling) Rules 2000. ............................................................. 22

Figure 7: Impressions of open municipal solid waste dumping in India. ............................... 28

Figure 8: Map of India and the Location of Aligarh. .............................................................. 33

Figure 9: First cashflow tree- diagram. ............................................................................... 36

Figure 10: Cash- flow tree- diagram for the sample project. ................................................. 41

Figure 11: Sample computation of input and output flows. ................................................... 44

Figure 12: Probability distribution of the three highlighted investment methods. ................... 49

Figure 13: Combination of the project cashflow and risks. ................................................. 72

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List of Tables

Table 1: Example range and probability distribution of a product’s selling price. .................. 15

Table 2: The Four Steps of Schedule I. ................................................................................ 22

Table 3: Sources and Types of Municipal Solid Wastes. ...................................................... 25

Table 4: MSW generation, proportion of compostables and recyclables ................................. of the TOP 20 cities in India. .................................................................................. 26

Table 5: Computation of MBT input from MSW collection. ................................................... 39

Table 6: Sample computation of Fuel Costs using Monte Carlo simulation. ......................... 46

Table 7: Cash- Flow Statement for the Sample Project MBT Plant in Aligarh. ...................... 47

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List of Appendices

Appendix 1: Municipal Solid Waste (Management and Handling) Rules 2000 ..................... 53

Appendix 2: Cash- flow Computation of the Sample Project ................................................ 72

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List of Abbreviations

AMC Aligarh Municipal Corporation

BOT Build, Operate, Transfer

CAPEX Capital Expenditure

CAPM Capital Asset Pricing Model

CDM Clean Development Mechanism

CER Certified Emission Reduction

CIA Central Intelligence Agency

CO2 Carbon Dioxide

CPCB Central Pollution Control Board

CPHEEO Central Public Health Engineering Organisation

DIPP Department of Industrial Policy & Promotion

EUR Euro

FC Grant Finance Commission Grant

FDI Foreign Direct Investment

FF Focal Firm

FPI Foreign Portfolio Investment

FTA Failure Tree Analysis

FV Future Value

GAAP Generally Accepted Accounting Standards

GDP Gross Domestic Product

GoI Government of India

IMSWM Integrated Municipal Solid Waste Management

INR Indian Rupee

IRR Internal Rate of Return

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JNNURM Jawaharlal Nehru Urban Renewal Mission

MBT Mechanical Biological Waste Treatment

MoF Ministry of Finance

MoUD Ministry of Urban Development

MSW Municipal Solid Waste

MSWM Municipal Solid Waste Management

NPV Net Present Value

NSWAI National Solid Waste Association of India

OF Other Firm

OPEX Operating Expenditure

PPP Private Public Partnership

PV Present Value

RDF Refuse Derived Fuel

SPV Special Purpose Vehicle

SWM Solid Waste Management

TOTEX Total Expenditure

UIDSSMT Infrastructure Development Scheme in Small & Medium Towns

ULB Urban Local Bodies

UN United Nations

UNCTAD United Nations Conference on Trade and Development

UNFCCC United Nations Framework Convention on Climate Change

USD US Dollar

WACC Weighted Average Cost of Capital

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1 Introduction

Rapid globalization and the sustainable treatment of the world’s environment are two major

topics on the agenda forming the challenges of the 21st century. Expanding international

collaboration and the development of globally active companies, as well as a rapidly increasing

Gross Domestic Product (GDP)1 are two well-known indicators of globalization trends. Apart

from these, discussions about carbon dioxide reduction programs, such as the Kyoto Protocol

initiative, point out the importance of a sustainable treatment of the environment in the future.

These developments offer a broad range of opportunities for companies and for investors. The

co-existence of hazards, such as the recent global financial and economic crisis, on the other

hand, can influence the above mentioned prosperous developments.

The work in hand focuses on the municipal solid waste management (MSWM) market in India,

particularly analyzing one sample project. India ranks second in the world in terms of labor force

and fifth in terms of real GDP growth rates in 2010.2 On the downside, waste collection and

treatment facilities for MSWM are not sufficiently developed.3 A further analysis will follow within

this work. However, the main finding is that this combination might provide profitable investment

opportunities. This practical-oriented work therefore focuses on the questions of how to work

out viable investment opportunities, how to detect possible drivers that could have an influence

on the profitability of an investment, how to ensure that these drivers are sufficiently

exhaustively identified, and how their influence on the project’s cashflow can be determined.

In order to ensure a common understanding of the principles and concepts used within this

work, a general introduction into the relevant concepts of investment evaluation will be provided

in Chapter 2. In the following chapter, the MSWM market in India will be analyzed with respect

to work out viable options for possible investments. Those findings will then be used in the case

study to evaluate a sample investment project4 in India. In the last chapter, the findings will be

summarized, and limitations of this analysis as well as an outlook will be provided.

1 Comparing data of the World Bank on real GDP (on constant 2000 US$), the development of the absolute GDP

shows an increase of 23% between 2000 and 2009 as well as an increase of 11% of the GDP per capita. 2 India’s workforce counts for approximately 478.3 million people, only being topped by China with approximately 780

million people. Its real GDP growth rate in 2010 is approximately 10.4 %, only being topped by Qatar, Paraguay, Singapore and Taiwan, China ranks sixth with a growth rate of approximately 10.3 %. See “CIA - The World Factbook. India,” 2011, https://www.cia.gov/library/publications/the-world-factbook/geos/in.html, accessed July 2011., “CIA - The World Factbook: Country Comparison: Labor force,” 2011, https://www.cia.gov/ library/publications/the-world factbook/rankorder/2095rank.html?countryName=India&countryCode=in&region Code=sas&rank=2#in, accessed June 2011., and “CIA - The World Factbook: Country Comparison: GDP - real growth rate,” 2011, https://www.cia.gov/library/publications/the-world-factbook/rankorder/2003rank.html ?countryName=India&countryCode=in&regionCode=sas&rank=5#in, accessed June 2011.

3 See “Welcome to National Solid Waste Association of India's Website: Municipal Solid Waste,” http://www.nswai.com/waste-municipal-solid-waste.php, accessed June 2011.

4 The terms investment project and project are used interchangeably within this work. Hence, project always refers to the term investment project, unless otherwise specified.

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2 Foundations of Investment Evaluation

Investment decisions always focus on questions of the application of funds, whereas financing

decisions deal with the sources of those funds.5 The latter could influence investments by ways

of incurring costs for financing, such as interest payments. However, because this work focuses

on investments, applicable financing measures are considered as being part of the investment

decision. Subchapter 2.1 deals with the relevant conceptual framework of investments.

Because investment decisions are always future oriented and the future is considered to be

uncertain, “[managers] try to understand what makes a project tick and what could go wrong

with it”6 before approving any proposal. Understanding uncertainty in conjunction with loss or

damage as risk,7 subchapter 2.2 focuses on this essential aspect of investment decision

making. As experience shows, the integration of risk into decisions is not always sufficiently

exercised. Subchapter 2.3 therefore provides a rather practical approach of including

uncertainty into investment decisions.

2.1 Basics of Investment Theory

The term investment is used in a variety of ways and in many different circumstances.

However, these applications have one particular characteristic in common: understanding

investments as placing funds today in order to benefit from returns in the future.8 Especially

German literature suggests several ways of further classifying investments. One approach is to

distinguish between asset- oriented and cash- oriented investments. The former hereby refers

to the balance sheet of the investing company, where the asset side represents the investments

and the liabilities side represents the financing.9 The important focal points therefore are book-

values of assets, liabilities as well as profit and loss statements.

5 See Ulrich Pape, Grundlagen der Finanzierung und Investition: Mit Fallbeispielen und Übungen, 1st ed. (München,

2008), p. 247. 6 Richard A. Brealey, Stewart C. Myers, and Franklin Allen, Principles of corporate finance, 9th ed. (Boston, 2008),

p. 268. 7 See Stanley Kaplan and B. J. Garrick, “On The Quantitative Definition of Risk”, Risk Analysis 1, no. 1 (1981): p. 12.

They point out that uncertainty as such does not constitute risk. Only if uncertainty in conjunction with a loss or damage occurs is it considered to be a risk.

8 See Dieter Schneider, Investition, Finanzierung und Besteuerung, 7th ed. (Wiesbaden, 1992), p. 10, Hans P. Becker, Investition und Finanzierung: Grundlagen der betrieblichen Finanzwirtschaft, 3rd ed. (Wiesbaden, 2009), p. 37 also commands a long-term commitment as a prerequisite, hence, mere current assets (such as material stock) are not considered to be an investment. James S. Sagner, “Capital budgeting: Problems and new approaches,” Journal of Corporate Accounting & Finance (Wiley) 19, no. 1 (2007), p. 10 suggests that capital should be bound for at least one year to be considered as an investment.

9 See Pape, U. (2008): pp. 247-252.

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The cash- oriented investment perspective, in contrast, focuses on the in- and outflows of liquid

means rather than local-GAAP-influenced values.10 This seems to be especially important in an

international context, such as within this work, in order to exclude possible effects resulting from

different accounting standards. The first distinction is therefore to understand an investment as

being cash-oriented.11

The second important distinction deals with different types: real investments and financial

investments. The former refers to investments in tangible and intangible assets that are related

to the business purpose, such as production facilities, machinery, patents, or trainings of

employees. Financial investments refer to placing funds on capital markets.12 Obviously, for the

purpose of this work, investments are further understood as being real.

When discussing investment decisions, one crucial question arises: What are the available

methods in the capital budgeting13 sector and which are generally used? Literature provides for

a great variety of methods, usually grouped into static and dynamic models. The former are

generally distinguished by using average, one period values without taking time differences into

account. Dynamic methods focus on the timing of in- and outflows of funds and also regard the

time value of money.14 Regarding the aim of this work with respect to providing a practically

oriented toolkit for the evaluation of investments, it would be beyond the scope of this work to

enter into a discussion about all of the possible evaluation techniques. Furthermore, current

empirical research provides for information about the most frequently used methods: payback,

net present value (NPV), and internal rate of return (IRR).15 Moreover, it is pointed out than

decision makers use a combination of methods in order to facilitate an investment decision.16 In

the following, a brief introduction to these methods as well as an illustrative example will be

provided.

10 See Lutz Kruschwitz, Investitionsrechnung, 11th ed. (München u.a, 2007), pp. 5–7. GAAP = Generally Accepted

Accounting Principles, such as IFRS, US- GAAP etc. 11 This approach is also preferred by Kruschwitz, L. (2007): pp. 3-5, and John Guerard and Eli Schwartz, Quantitative

corporate finance (New York, 2007), p. 247. 12 See Siegfried Trautmann, Investitionen (New York, 2006), pp. 1–6., or Becker, H. (2009): p. 37 who distinguishes

real-, intangible- and financial investments. However, it seems feasible to summarize the former two as real investments.

13 The terms investment decision and capital budgeting are used interchangeably within this work. See also Uwe Götze, Deryl Northcott, and Peter Schuster, Investment appraisal: Methods and models (2008), p. 6.

14 See Becker, H. (2009): pp. 41-58. 15 See John R. Graham and Campbell R. Harvey, “The Theory and Practice of Corporate Finance: Evidence from the

Field,” Journal of Financial Economics 60, 2-3 (2001): p. 197, who also point out the „hurdle rate“ ranking similar with the payback method; Patricia A. Ryan and Glenn P. Ryan, “Capital budgeting practices of the Fortune 1000: How have things changed?,” Journal of Business and Management 8, no. 4 (2002): pp. 359–360.

16 See Sagner, S. (2007): p. 42.

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Payback Method

The aim of this method is to count the years needed until the point in time when future cash-

flows equal the initial cash-outflow, i.e. the initial investment.17 This point is called cutoff- date.18

Even though it is considered to be a static model, it is often used in a rather dynamic context by

regarding period- appropriate cash- flows instead of average book- earnings.19 A further

modification of this method even takes the time value of money into account. This discounted

payback method uses discounted cash- flows in order to determine the cutoff-date.

Furthermore, this modified version ensures that only positive net present value projects (as

described within this subchapter) will be accepted. The major advantage of this method is its

simplicity; the main shortcoming is that cash- flows after the cutoff- date are neglected.20 This

method can deliver valuable information about investment projects, such as a comparison

between the payback period and the useful life of the investment (which should be greater than

the former). However, managers should not rely solely on this method when evaluating capital

budgeting projects.21

Net Present Value (NPV) Method

The NPV method builds on the core principle that “a dollar today is worth more than a dollar

tomorrow”22, also referred to as the time value of money. This principle relates to the idea that

the ability to invest money today will result in an interest payment in the future, hence

increasing the available amount in the future. Investing 100 EUR today (y0) at an interest-rate of

5% p.a. will result in a future value (FV) of 100 EUR x 1.05 = 105 EUR in the next year (y1). At

the same time, the present value (PV), i.e. the value in y0 of the 105 EUR is PV = 105 EUR /

1.05 = 100 EUR. In other words, future cash- flows (in y1) resulting from an investment in y0 are

worth less than today’s cash- flows. The appropriate saying could be ‘a dollar tomorrow is worth

less than a dollar today’.23 The present value is determined by dividing the applicable future

cashflow by a discount factor (in the example above 1.05), also called opportunity cost of

capital. This factor is based on the second core principle, namely “a safe dollar is worth more

than a risky one.”24 Brealey, Myers, Allen suggest that the opportunity cost of capital should

represent the return for the best available alternative with an equal level of risk.25

17 See Brealey, R. et. al. (2008): pp. 117-121. 18 See Brealey, R. et. al. (2008): p. 120. 19 See Kruschwitz, L. (2007): pp. 37-41, who also points out that a mere static application as an ‘average-method’

could also be possible in cases of comparable cash- flows. 20 See Brealey, R. et. al. (2008): pp. 117-121. 21 See Kruschwitz, L. (2007): pp. 37-41. 22 Brealey, R. et. al. (2008): p. 14. 23 See Brealey, R. et. al. (2008): p. 14-15. 24 Brealey, R. et. al. (2008): p. 16. 25 See Brealey, R. et. al. (2008): p. 14-19.

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However, different views exist about the understanding. Discussions often deal with detailed

aspects, but are also concerned with the determinability of actual future oriented discount

rates.26 Olfert, Reichel understand the discount rate as the minimum interest rate an investor

demands for a particular project. They highlight three possible general influences: Risk (the

higher the risk, the higher the interest rate), structure of capital employed (the larger the equity-

proportion, the higher the risk for the equity owners, the higher the interest rate), and the

possibility of taking tax considerations into account (because of influences of debt capital

interest payments). They also provide guidance for determining the appropriate interest rate.

Hence, managers should apply one of the following approaches: Capital market interest rates,

industry specific average interest rates, weighted average cost of capital (WACC) rates,

CAPM27- oriented interest rates, or interest rates based on purely subjective expectations.28 As

risk is the decisive factor within this framework and also within this work, subchapter 2.2 will

analyze risk in more detail and subchapter 2.3 will provide a practically applicable model that

comprises risk and NPV elements. The general rule for investment decisions that follows the

computation of NPVs is to invest in each and every project that provides for a positive NPV.29

Internal Rate of Return (IRR) Method

The IRR computes the applicable discount rate that leads to a NPV = 0. Hence, it is also based

on discounted cash- flows. However, it is important to point out that the IRR is not to be

confused with the opportunity cost of capital.30 The latter represents the minimum interest rate

an investor would demand for the project. The IRR, on the other hand, is a “profitability

measure”.31 The general rule of the IRR method is to invest in each and every project that

provides for an IRR in excess of the opportunity cost of capital. Some underlying assumptions

have to be taken into account when analyzing projects on the basis of the IRR method. Firstly, if

cash- flows’ signs change more than once, e.g. when a cash-outflow at the end of the project is

necessary, the computation might provide for no IRR or for several IRRs.32 Secondly, the

comparability of different investment options is not always given. Differences in initial

investment values and/or project life-times could trigger varying, yet not-comparable results.33

26 See for example Lutz Kruschwitz and Andreas Löffler, “Ein neuer Zugang zum Konzept des Discounted Cashflow,”

JfB (Journal für Betriebswirtschaft) 55, no. 1 (2005), p. 26. 27 CAPM = Capital Asset Pricing Model. 28 See Klaus Olfert and Christopher Reichel, Investition, 11th ed. (Ludwigshafen, 2009), pp. 89–91. 29 See Brealey, R. et. al. (2008): pp. 115-135. If capital is limited, a profitability index approach is suggested for one

period decisions. This approach shows the NPV per unit of investment. 30 See Brealey, R. et. al. (2008): pp. 121-130. 31 Brealey, R. et. al. (2008): p. 123. 32 See Brealey, R. et. al. (2008): pp. 124-126. 33 See Olfert, K./ Reichel, Ch. (2009): pp. 213-214.

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2.2 The understanding of Risk

As most readers will agree, the term ‘risk’ represents a colloquially well known idea. This

becomes clear, for example, within this work, where the term is used in the previous subchapter

without providing a thorough definition. However, when reviewing literature and discussing

these ideas with different people, it becomes obvious that a detailed and coherent

understanding of risk needs to be provided before analyzing its impact on investment decisions.

It would be outside the scope of this work to enter into a discussion about different schools of

thought with respect to the understanding of risk. Furthermore, it seems important to summarize

the main concept and derive a common understanding of the term risk (and its associated

terms) for the work at hand. Risk can be defined as the possibility of negative deviations from a

target.34 Hager additionally suggests that only unexpected deviations are considered risky,

because expected deviations would already be incorporated within the computation of

investment decisions.35 One could conclude that this approach suggests that a project becomes

less risky as knowledge about possible deviations increases. However, this reasoning is not yet

complete. The mere knowledge about influences is not enough. In order to complete the

picture, one should take following associated terms into account:36 A hazard is “a source of

danger” that “simply exists as a source.” Risk, on the other hand, is the transformation of a

danger into a possible deviation from the target, i.e. a damage, injury or loss. Safeguards are

measures that aim at combating hazards and therefore reducing risk. However, one cannot fully

eliminate risks by using safeguard measures. Furthermore, it is important to point out that being

aware of risk is also considered to be a safeguard measure. This refers back to the above

reasoning, arguing that risk can be reduced by increasing knowledge about hazards as one

possible safeguard measure.

On top of this, the notion of relativity of risk becomes noticeable. Kaplan, Garrick provide an

example of a person who puts a rattlesnake into another person’s mailbox. When the second

person is asked about the risk of putting his hand into the mailbox, he assumes little risk. The

other party, knowing about the rattlesnake, would talk about high risk. This shows that risk is

always relative, i.e. subjective to an individual.37 Challenging this aspect, one could argue that

an entrepreneur who enters into a new market might face less risk than existing market

participants just because he is not as well informed. 34 See Jan Duch, Risikoberichterstattung mit Cash-Flow at Risk-Modellen: Ökonomische Analyse einer Risiko-

quantifizierung im Risikobericht (Frankfurt am Main, 2006), p. 11. Hence, positive deviations are called opportunities.

35 Peter Hager, Corporate risk management: Cash flow at risk und value at risk (Frankfurt am Main, 2004), p. 9. 36 See Kaplan, S./Garrick, J. (1981): pp.11-12. 37 See Kaplan, S./Garrick, J. (1981): p.12.

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It makes good sense that this cannot be the true intention. However, both arguments seem

legitimate, the mailbox- owner could not have known about the rattlesnake (at least without

installing appropriate safeguard measures), but at the same time the entrepreneur does not

necessarily face less risk just because he is, ceteris paribus38, less well informed. But he might

face other risk or other intensities of risk than his competitors, as well as each of the existing

market participants might face different risk or risk levels. This refers back to the idea of

subjectivity of risk. Understanding this concept leads to further questions: How can risk be

classified? How can risk be identified? And how can one ensure that the main risks are

considered in an analysis?

Literature provides for a grand variety of different classifications of risk. It seems to be most

beneficial to introduce one appropriate scheme and compare this model with other approaches

in order to ensure its completeness and validity. The structure “of an ideal risk- characterization

scheme should be logically consistent […], equitable, and compatible with human cognitive

limitations.”39 The risk- pyramid40 as presented in Figure 1 provides a clear and precise picture

of categories of risks. However, this overview does not necessarily represent a full scope of

possible risky influences, but it provides a thorough understanding of possible sources of risks

of an enterprise and therefore acts as a helpful tool.

Risks of an Enterprise

Financial Risks Operational Risks

Performance Risks Liquidity Risks

Market Risks Default Risks

- Interest rate risks

- Currency exchange

rate risks

- Raw material price risks

- Energy price risks

- Other market risks

- Changes in asset values

- Counterparty risks

- Other default risks

- Solvency related risks

- Maturity/structuring of

liabilities related risks

- Other liquidity risks

- Business risks

- Purchasing related risks

- Production related risks

- Labor related risks

- IT related risks

- Legal risks

- Other operational risks

Figure 1: Categories of risks.41

38 Equivalent to all other things being equal. 39 M. G. Morgan et al., “Categorizing Risks for Risk Ranking,” Risk Analysis 20, no. 1 (2000): 54. 40 The following discription is based on Arnd Wiedemann, Die Passivseite als Erfolgsquelle: Zinsmanagement in

Unternehmen (Wiesbaden, 1998), pp. 4–7., Jan Duch, Risikoberichterstattung mit Cash-Flow at Risk-Modellen: Ökonomische Analyse einer Risikoquantifizierung im Risikobericht (Frankfurt am Main, 2006), pp. 12–16., Hager, P. (2004): p.12

41 Sources: Wiedemann, A. (1998): p. 4, Duch, J. (2006): p. 13, Hager, P. (2004): p.12.

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Traditionally, financial risk analysis focuses on liquidity risks. This comprises solvency or the

ability to pay in the short- term and the structuring of equity- and debt- ratios in the long- run.

Liquidity risks, which do not result from performance risks, are further understood as risks that

arise from maturity issues, such as differences between the lifetime of an asset and the

repayment period of the corresponding loan. Performance risks, on the contrary, focus on the

profit situation of an enterprise. They are further divided into market risks and default risks. The

former represents risks associated with changes in market prices, especially in connection with

interest rates, currency exchange rates, prices for raw materials, prices for energy and other

positions. Default risks, on the other hand, refer to changes in asset values (e.g. through

technical progress, obsolescence, contamination), and to counterparty risks (e.g. insolvency or

delayed payments of a debtor). Risks from changes in asset values do not necessarily have an

impact on the cash situation of the enterprise. However, it could be important for investment

calculations because the terminal value might be included in the cashflow computation.

Operational risks result from the enterprise’s activities within its value chain. They are further

subdivided into business risk, purchasing related risk, production process risk, labor related

risk, IT related risk, and legal risk.42 Business risk particularly includes declining revenues. This

can result from lower market prices or lower sales volumes. The reasons are diverse: they

could be reputational or political, mistakes in the marketing approach or changes of consumer

preferences. Purchasing risk includes the inability to source the needed materials in the

required quantity, quality and at the required point in time. Production risk refers to possible

mistakes in the production process. Labor related risk includes qualitative and quantitative

aspects of the workforce. Qualitative aspects are especially know- how and educational issues,

quantitative aspects include the required number of employees. IT related risk contains

disruptions of the IT systems as well as mistakes in the programming of applications.43 Legal

risk particularly includes changes in the legislative environment that may hamper business

activities and possible influences from inadequately worded or negotiated contracts.

42 Wiedemann, A. (1998): p. 5 also mentions management risk (as the possibility of wrong decisions of the

management, and organizational risks (relating to internal processes). However, because this work focuses on projects rather than the enterprise as such, these risks will be neglected.

43 See Wiedemann, A. (1998): p. 5 also includes a systemic risk into the scope of IT risk. This systemic risk refers to the non- application of appropriate risk- management tools. However, with respect to focusing on investment projects, systemic risk will not be covered in depth.

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Kremers44 provides other criteria to categorize risk. One possible option is to differentiate

between measurable and non- measurable risks. This distinction does not directly align with the

purpose of this work because all major risks that could have an impact on the cashflow should

be considered. Another option is to distinguish between insurable and non- insurable risks. This

is also not appropriate with respect to the purpose of this work. By introducing safeguard

measures within this subchapter this distinction is already implicitly recognized. A third option is

the differentiation between single risks and aggregated risks, whereas aggregated risk is

understood as a grouping of risks. This aspect is also implicitly considered within this work

when analyzing the risks of a particular project. A fourth possibility is to distinguish different time

horizons. Kremers provides for operational and strategic risks. Another possible distinction

could be three horizons: operational risks, short- term strategic risks, and long- term strategic

risks.45 Strategic risks are related to the long- term success of the enterprise. This is outside the

scope of this work. However, all major impacts on the project’s cashflow should be mentioned.

This will be done without distinguishing operational and strategic risks. The fifth possible

distinction is between internal and external risks. This is also suggested by Romeike as an

additional dimension.46 However, as Romeike points out, it can be difficult to isolate internal and

external risks. This view could be important for the analysis. However, it is deemed to also be

implicitly included in the risk- pyramid approach. As a result of testing alternative structures, one

can conclude that the major risks are included in the risk- pyramid approach and that therefore

the recognition of this structure can provide valuable guidance when analyzing the risks of an

investment project. The remaining question is how to ensure that all major risks are identified.

Following the notion of relativity of risk, one knows that the perception of risk is always seen

subjectively from one perspective. It could therefore be difficult to identify all applicable risks. In

fact, as Kremers points out, the completeness of risk-identification cannot be ensured, because

one cannot sufficiently validate if all risks were spotted.47 Moreover, “major losses often result

from a risk that never occurred to anyone.”48 It is therefore important to introduce a system that

provides practitioners with a comparably high degree of certainty of not neglecting important

influences.

44 See Markus Kremers, Risikoübernahme in Industrieunternehmen: Der Value-at-Risk als Steuerungsgrösse für das

industrielle Risikomanagement, dargestellt am Beispiel des Investitionsrisikos (Sternenfels, 2002), pp. 44–47. 45 See Hans P. Krane, Asbjørn Rolstadås, and Nils O. E. Olsson, “Categorizing risks in seven large projects—Which

risks do the projects focus on?,” Project Management Journal 41, no. 1 (2010), p. 83. 46 See Frank Romeike, Erfolgsfaktor Risiko-Management: Chance für Industrie und Handel ; Methoden, Beispiele,

Checklisten, 1st ed. (Wiesbaden, 2003), p. 186. 47 See Kremers, M. (2002): p. 78. 48 James Roth and Donald Espersen, “Categorizing Risk,” Internal Auditor 59, no. 2 (2002), p. 58.

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Generally, two different analytical approaches are distinguished: inductive versus deductive

approaches.49 The former means “reasoning from individual cases to a general conclusion”50

and the latter “constitutes reasoning from the general to the specific.”51 In order to specify

possible risks of an investment project, it is a logical consequence that one should not start by

naming all possible major risks (as the individual items) and work out their possible influence on

the system. For one reason this inductive approach is simply not possible as there is no

complete listing of all possible risks and potential risk-interdependencies. It would also not be

viable with respect to efficiency reasons. A deductive approach is the Failure Tree Analysis

(FTA). This technique generally focuses on a specific failure state and more basic roots are

built up until the primary causes are detected.52 Kremers suggests modifying the FTA when

applying it for the analysis of project- related risks. Instead of a specific failure state he

proposes to start with a specific risk category.53 Within this work, a slightly different approach is

introduced. As further described in subchapter 2.3, a tree- diagram54 can also be used for

analyzing project cash- flows. After developing this flow- chart one can identify the risks for

each of the elements of the cashflow using the risk- pyramid model. This approach ensures

that a risk assessment is performed for all elements of the cashflow computation. At the same

time, as an inductive process, risks that touch several elements of the computation can be

identified. This approach should be accompanied by conducting interviews with the respective

people in charge and also by visiting the respective locations and facilities in order to develop a

profound perception of the project details.55

Three types of investors are distinguished in terms of risk attitudes: risk- averse, risk- neutral,

and risk- seeking investors. Risk- averse investors try to avoid risk and therefore reduce their

scope of possible investments; risk- seeking investors take extra risk, even if the probability of a

gain is low; and risk- neutral investors only invest in projects with a secured expected value.56

The next step in developing a practical system in order to evaluate investment opportunities is

to combine the knowledge of investment computation and the notion of risk. One approach is

chosen and explained in detail within the following subchapter 2.3.

49 See W.E Vesely et al., Fault tree handbook (Washington, 1981), p. I-8.. Romeike, F./Hager, P. (2003): p. 186

suggest to differentiate between collection (e.g. checklists, interviews, SWOT Analysis) and search methods. Search methods are further subdivided into analytical (e.g. questionnaire, inductive and deductive tools) and creative methods (e.g. brainstorming, brainwriting).

50 Vesely, W.E. (1981): p. I-8. 51 Vesely, W.E. (1981): p. I-8. 52 See Vesely, W.E. (1981): p. I-8 and Kremers, M. (2002): p. 80. 53 Kremers, M. (2002): p. 80. 54 Also called flow- chart. These terms will be used interchangably within this work. 55 See Kremers, M. (2002): p. 80. 56 See Kruschwitz, L. (2007): pp. 307-308, and Schneider, D. (1992): pp. 457-458.

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2.3 A practical approach of combining capital budge ting methods and risk

Several methods exist that aim at evaluating risk- potentials of an enterprise or an investment

project. Often, classical and statistical measurement methods are distinguished.57 Classical

methods include scenario analyses, sensitivity analyses, and correction methods.58 Statistical

methods include risk- analysis techniques, such as analytical methods and simulation methods.

Risk- analysis techniques are also referred to as value-at-risk-models. Figure 2 summarizes this

distinction.

Figure 2: Types of analyses for risk- potentials.59

Practitioners use the correction method because of its easy use and the simplicity of its

underlying assumptions. The method is applied by using risk premiums and risk reductions as

mark- ups and mark- downs for the main estimated values, such as revenues, operating costs,

and useful life of the equipment. However, this method should only be used in order to

distinguish projects in a rough manner.60 It is therefore not appropriate for the purposes of this

work.

57 See Duch, J. (2006): p. 93. 58 See Duch, J. (2006): pp. 93-94. Duch does not mention correction methods, however, this method exists and

should be grouped within the classical methods. Kruschwitz, L. (2007): pp. 315-318 and Olfert, K./ Reichel, Ch. (2009): pp. 94-95 mention this method, however, do not provide a structure into classical and statistical methods.

59 Source: compiled by the author, according to Duch, J. (2006): pp. 93-94, Kruschwitz, L. (2007): pp. 315-318, Olfert, K./ Reichel, Ch. (2009): pp. 94-95.

60 See Kruschwitz, L. (2007): pp. 315-318.

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Sensitivity analyses are used to determine the influence (the sensitivity) of a possible change of

one or more parameters on the overall result. Therefore all influence drivers are deemed to be

constant except for the one of many parameters that shall be analyzed.61 This method can

deliver valuable information about the impact of an influence factor on the overall project.62

However, faced with a variety of different influences that could occur separately or in different

combinations, this method might not provide sufficient flexibility for the purpose of this work.

Scenario analyses focus on constructed consistent combinations of factors in order to evolve an

understanding about possible different states of future developments and the respective overall

results.63 This is often done by defining three estimates: pessimistic, average, and optimistic

scenarios.64 Scenario analyses therefore provide a broader understanding of the impact of

possible influence drivers and deliver results for the best and the worst cases of the investment

project.65 However, these scenarios do not provide information about the likelihood of their

respective occurrence. Hence, there could be a non- analyzed chance that one of the extreme

scenarios is more likely to occur than the average one.66 This method cures some of the

shortcomings of the previously mentioned approaches, but does not seem to be able to provide

a fully coherent way of analyzing the influence of risk on investment projects.

At this point risk- analysis approaches as statistical methods become relevant. The aim of these

techniques is to use the available information and provide a probability distribution of the

output- value of the investment computation.67 As defined earlier within subchapter 2.1, this

work focuses on the application of three primarily used methods of evaluating investment

projects: Payback, net present value (NPV), and internal rate of return (IRR). One common

characteristic of these three methods is the use of cash- flows as one integral element. Another

characteristic is that the latter two methods are concerned with respective discount rates.

Value-at-risk- models, i.e. risk analysis techniques, can be subdivided into analytical

approaches and simulation- based methods. Because analytical approaches demand highly

restrictive assumptions, these methods are rarely used.68 Simulations, on the contrary, provide

for less restrictive frameworks.

61 See Kruschwitz, L. (2007): pp. 318-324, Olfert, K./ Reichel, Ch. (2009): pp. 95-97. 62 See Kruschwitz, L. (2007): pp. 323-324. 63 See See Brealey, R. et. al. (2008): p. 274, Romeike, F./Hager, P. (2003): p. 144. 64 See David B. Hertz and Howard Thomas, “Decision and Risk Analysis in a New Product and Facilities Planning

Problem,” Sloan Management Review 24, no. 2 (1983), p. 173. 65 Given that the definition of the three scenarios reflects all necessary and correctly framed information. 66 See Hertz, D. (1983): p. 173. 67 See Kruschwitz, L. (2007): p. 324. 68 See Jürgen Weber and Utz Schäffer, Einführung in das Controlling, 13th ed. (Stuttgart, 2011), p. 344.

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Monte Carlo simulations, on the other hand, produce a large number of random variables that

are used to produce a probability distribution of the computed results of the capital budgeting

methods.69 Because an enterprise does not necessarily possess historic information about

future investment projects, the Monte Carlo simulation is used within this work to generate

information about possible future developments. From this point on the term risk- analysis

refers to the simulation approach using Monte Carlo simulation. Hence, the term Monte Carlo

simulation shall be understood as a tool used to provide data for the risk- analysis.

Risk- analysis as used within this work takes its roots back to an article by David B. Hertz which

was initially published in 1964.70 It found its way into practical applications through the years

and was further developed in many academic writings. The technique consists of a few steps

that will be described in the following:71

1. step: Determine the relevant input variables

In order to understand the relevant input variables, i.e. the variables that compose the

cashflow of the project, one needs to analyze what these variables are and how they

are related. One way of displaying these coherencies is the development of flow

charts.72 This approach is also referred to as tree- diagram and subdivides variables into

its components within a number of stages.73 Hence, the number of stages relates to the

level of detail. Kegel refers to the concept of variable number of levels depending on the

individual circumstances and the absence of a general guideline in order to set up a

project flow chart.74 Hertz suggests to start with the basic components of the project

computation and to expand the diagram in order to include all important aspects.75 A

possible approach of structuring a cashflow tree- diagram is provided in Figure 3.

69 See Weber, J./Schäffer, U. (2011): p. 344. 70 See Kruschwitz, L. (2007): p. 324, David B. Hertz, “Risk analysis in capital investment,” Harvard Business Review

57, no. 5 (1979), (originally published in Harvard Business Review, 1964). 71 Note that the exact number of steps varies between the relevant articles as the perspectives vary. A tailored

structure for the purpose of this work will be introduced that comprises aspects from different sources. 72 See Klaus-Peter Kegel, Risikoanalyse von Investitionen: Ein Modell für die Praxis (Darmstadt, 1991), pp. 197–223. 73 See Kegel, K.-P. (1991): p. 196. 74 See Kegel, K.-P. (1991): pp.197-198. 75 Hertz, D./Thomas, H. (1983): p. 18. See also Kegel, K.-P. (1991): pp.207-209 who outlines the respective flow-

charts in detail.

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Figure 3: Example structure of a cashflow tree- diagram.76

2. step: Search for possible risky influences

After sufficiently expanding the cashflow flow- chart into its computable components,

the next step is to match these variables with the relevant risky influences. One should

take the risk- pyramid into account and perform an analysis as pointed out in the

previous subchapter. This should also include conducting interviews with the respective

people in charge and visiting the respective locations and facilities in order to ensure

that all major risks are incorporated.

3. step: Selection of the uncertain input variables

After gaining an understanding of the risk carrying components, the next step is to select

the relevant input variables that should be incorporated in the following steps. Hertz

suggests including market size, selling prices, market growth rate, market share,

required investments, residual values, operating costs, fixed costs and useful life of the

facilities.77 However, as Kegel points out, these are merely illustrative suggestions.78

4. step: Define ranges and probability distributions for the selected input variables

This step involves a thorough understanding of the markets and the project because

applicable ranges of the previously selected input variables and appropriate probability

distributions of these values have to be defined. Kruschwitz provides an example, as

shown in Table 1, that indicates possible ranges of the selling price of a product and the

probability distribution of each range. An equal distribution is assumed within each

range.79

76 Source: Kegel, K.-P. (1991): p. 206. 77 See Hertz, D. (1983): p. 176. 78 See Kegel, K.-P. (1991): p. 200. 79 See Kruschwitz, L. (2007): p. 324.

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Range Probability

2.50 to 3.20 0.167 3.20 to 4.00 0.500 4.00 to 4.50 0.333

Table 1: Example range and probability distribution of a product’s selling price.80

5. step: Generate data and computing results using the Monte Carlo simulation

Generating data means that a random value for each selected risky input variable is

automatically generated.81 One set of variables consists of all input variables (those

generated and those considered not risky) needed to compute the respective

investment figures, i.e. output variables. Using the Monte Carlo simulation, this process

is repeated until a reliable probability distribution of the relevant output variables is

generated. That is when a change of the results due to an additional set of generated

data is negligible.82 One should note that a selected risky input variable might be

dependent on another variable. Hence, when formulating a model for an actual project

computation, one should incorporate these interdependences.83 Several computer

programs exist in order to assist in risk analysis.

6. step: Summarize and analyze the gained information

The result is an analysis that includes the selected output variables (Payback, NPV, and

IRR) and a probability distribution of the respective values. A possible diagram is shown

in Figure 4. One can conclude that, for example, that there is a 50% probability of an

IRR equal to or more than 15%.

Figure 4: Example probability-IRR diagram.84

80 Source: Kruschwitz, L. (2007): p. 324. 81 See Kruschwitz, L. (2007): p. 325. 82 See Kruschwitz, L. (2007): p. 325. 83 See Hertz, D. (1983): p. 176. 84 Source: compiled by the author, according to Hertz, D. (1983): p. 178.

-10 -5 0 5 10 15 20 25 30

IRR > 15%

50% probability

30

20

40

60

80

100%

0

50

10

Internal Rate of Return (IRR)

Pro

babi

lity

70

90

- 16 -

This approach includes most features of the other investment evaluating techniques. Beyond

that, this method includes the overall scope of possible developments. It can therefore be used

efficiently to provide a coherent picture of the actual investment project. This picture should also

include information about the impact of the single input variables. In chapter 4 this approach will

be directly applied for the analysis of a sample investment opportunity in the municipal solid

waste management market in India.

2.4 Conclusion

In practice, managers are often confronted with investment proposals that are not sufficiently

detailed, that do not provide consistent information, or are submitted at the last-minute. On the

other hand, with respect to corporate governance regulations, rules exist that provide for more

standardization in terms of the information requested, the timing, and authority limits. However,

in many of these standardized processes the notion of risk is not sufficiently addressed. Often,

a manager has to decide on a project that only includes one value, i.e. one possible scenario.

The presented approach of risk analysis could cure this problem by providing a comprehensive

technique that addresses the computation of cash- flows and the notion of risk in a unique way.

However, one can argue that it often is difficult and expensive to estimate probability

distributions of the relevant input variables.85 This objection seems valid, but as the responsible

decision- maker one should decide whether the benefits of a thorough investment and risk-

analysis outweigh the costs for compiling the necessary information. When understanding the

risky influences first (as done in the second step), one can already estimate the complexity of

gathering information. A second argument is that this approach does not provide clear rules for

decision making.86 This is true from a generic perspective, that is that this method does not

provide a general rule such as the NPV- rule.87 However, it provides a standardized structure

that can be used by the management to define a company- wide investment policy. This should

certainly be based on the risk attitudes of the management and the shareholders. Such a policy

should also include, amongst other aspects, the way of assessing the relevant input variables,

the estimation of probability distributions, and definitions of the computation of the respective

output variables.

85 See Weber, J./Schäffer, U. (2011): p. 344. 86 See Weber, J./Schäffer, U. (2011): p. 344. 87 NPV- rule: invest in all projects that provide for a positive net present value. See subchapter 2.1.

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3 Analysis of the Indian Municipal Solid Waste Mana gement Market

Before investing in a foreign country, one needs to gain an understanding of this country first.

Within this chapter, an insight into the Indian MSWM market is provided. The first subchapter

fosters a general understanding of the country. As waste management activities are generally

highly influenced by legal issues, the second subchapter focuses on the legislative framework

for MSWM. The third subchapter closes with a market analysis with regard to investment

opportunities.

3.1 India at a Glance

India as commonly known today is the result of some major events that occurred over the last

decade. The country became independent in 1947, finishing a 350 year colonial dependency as

a colony of the British Empire.88 This process started in 1930 with Mahatma Gandhi. Even now,

many elements of the British political system as well as traditions remain.89 India is known as

the world’s largest parliamentary democracy with some 700 million eligible voters.90 The

legislature is represented by the Parliament, i.e. the Houses of Representatives, which

comprises the Council of States (Rajya Sabha) and the House of the People (Lok Sabha).91

The head of the executive body is the President.92 The executive power, however, lies with the

Council of Ministers, headed by the Prime Minister. The Council of Ministers is responsible to

the House of the People.93 Its tasks include developing and following major political guidelines

and advising the President of India.94 The “Union of States”95 comprises 28 States and seven

Union Territories, subdivided into 603 districts. Whereas the Union Territories are centrally

governed by the federal government, the States each comprise their own legislative and

executive bodies. Head of the state government is the Chief Minister. The highest- ranking state

executive is the Governor, who is appointed by the President of India. However, the Governor is

largely vested with merely representative tasks.96

88 See Dirk Holtbrügge and Carina B. Friedmann, Geschäftserfolg in Indien: Strategien für den vielfältigsten Markt

der Welt, 1st ed. (Berlin, 2011), p. 10. 89 See Holtbrügge, D./Friedmann, C. (2011): p. 10. 90 See Johannes Wamser and Peter Sürken, Wirtschaftspartner Indien: Ein Managementhandbuch für die Praxis,

2nd ed. (Stuttgart, 2011), p. 18. 91 See “India at a Glance - Profile - Know India: National Portal of India,”

http://india.gov.in/knowindia/india_at_a_glance.php, accessed July 2011. 92 See Holtbrügge, D./Friedmann, C. (2011): p. 10, Constitution of India – Government (2011). Besides the President

also a Vice-President exists. See “Executive - The Union - Profile - Know India: National Portal of India,” http://india.gov.in/knowindia/executive.php, accessed July 2011.

93 See Holtbrügge, D./Friedmann, C. (2011): pp. 10-11, “Constitution of India - Government: National Portal of India,” 2011, http://india.gov.in/govt/constitutions_india.php, accessed July 2011.

94 See Holtbrügge, D./Friedmann, C. (2011): pp. 10-11, Constitution of India – Government (2011). 95 Constitution of India – Government (2011). 96 See Holtbrügge, D./Friedmann, C. (2011): pp. 12-13, “The States - Profile - Know India: National Portal of India,”

http://india.gov.in/knowindia/the_states.php, accessed July 2011.

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As it would be beyond the scope of this work to enter into a discussion about general law-

making procedures and the role of the institutions within this work, this topic will be addressed

directly with respect to waste management aspects in the following subchapter.

Addressing aspects of investment opportunities in India from the viewpoint of a foreigner,

questions with respect to the general possibility of foreign investment arise. Generally, two

types of foreign capital budgeting are distinguished: foreign direct investment (FDI) and foreign

portfolio investment (FPI).97 The understanding of FDI refers to situations in which a “resident of

one economy [invests] in another economy, and it is of a long- term nature […].”98 Long- term

nature includes existing long- term relationships between investor and the target, as well as a

“significant degree of influence on the management of that enterprise.”99 The latter is defined as

an ownership of at least 10% of the voting power.100 If all of these criteria are not met,

investments are deemed to be FPI instead of FDI.101

Before introducing the ‘New Industrial Policy Resolution’ in 1991, India provided a system of

strict limitations for foreign investments. In addition to that, the economic system was oriented

towards the Soviet approach, hence important industries were state controlled and the

economy was centrally planned.102 Also, after becoming independent from colonialism, India did

not want to depend on other countries again.103 A crucial change became necessary with the

fall of the Soviet Union, one of India’s most important trade partners.104 The economic reforms

included the abandonment of subsidies, attempts to deregulate the domestic markets and the

opening towards international markets. The latter involved a devaluation of the currency (Indian

rupee) by 20%, decreasing tariff rates, the abandonment of import quotas, and the facilitation of

foreign investments. After the reforms, international corporations were able to hold majority

stakes in Indian companies or to own Indian subsidiaries fully.105 However, some limitations

remain to exist with respect to certain sectors, approval processes, or stake holdings.106

97 UNCTAD (United Nations Conference on Trade and Development), UNCTAD training manual on statistics for FDI

and the operations of TNC's (New York, 2009), p. 35. 98 United Nations Conference on Trade and Development (2009): p. 35. 99 United Nations Conference on Trade and Development (2009): p. 38. 100 See United Nations Conference on Trade and Development (2009): p. 38. 101 For the purposes of the work in hand FPI will be neglected. 102 See Holtbrügge, D./Friedmann, C. (2011): pp. 18-21, Wamser, J./Sürken, P. (2011): p. 16. 103 See Holtbrügge, D./Friedmann, C. (2011): p. 20. 104 See Tim G. Luthra, Zulassung und Rechtsschutz von Direktinvestitionen in den Entwicklungsländern unter

Berücksichtigung Indiens, 1st ed. (Baden-Baden, 2002), pp. 47–48, who also names the abandonment of a restrictive indebtedness policy (alignment of the investment policy and the need of foreign currency), and the Second Gulf War (including increasing oil prices, decreasing sales onto Arabic markets, and decreasing migrant transfers) that almost lead to illiquidity.

105 See Holtbrügge, D./Friedmann, C. (2011): pp. 21-22. 106 Brent M. Cardenas, Conditions for foreign investments in India (New York, 2010), p. 163.

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The opening up of the economy lead to severely increasing growth rates in India. Previously

overshadowed locational advantages, such as the overall size of the domestic markets, the use

of the English language, or the secure and stable political and legal system, now became

activated.107 Figure 5 summarizes FDI and GDP developments before and after the introduction

of the liberalized economic policy.108 The diagram uses a logarithmic scale in order to capture

the developments of both values. As one can clearly see, the development of both values is

positive. Comparing average volumes before the introduction of the policies (in the diagram

1985 until 1991) and after the introduction (1992 until 2009), it becomes obvious that both GDP

and FDI developed extremely well over time.

Figure 5: Development of GDP and FDI in India.109

107 See Luthra, T. (2002): p. 55. 108 As the World Bank’s World dataBank does not provide for real FDI values, current values for both, GDP and FDI

figures, are used in order to ensure consistency. 109 Source: compiled by the author, with the use of data provided at World Bank Group, “World dataBank - View

Data,” http://databank.worldbank.org/ddp/html-jsp/QuickViewReport.jsp?RowAxis=WDI_Series~&ColAxis=WDI _Time~&PageAxis=WDI_Ctry~&PageAxisCaption=Country~&RowAxisCaption=Series~&ColAxisCaption=Time~&NEW_REPORT_SCALE=1&NEW_REPORT_PRECISION=0&newReport=yes&ROW_COUNT=2&COLUMN_COUNT=25&PAGE_COUNT=1&COMMA_SEP=true, accessed July 2011.

2003

2004

2005

2006

2007

2008

2009

100.00

1985

Cur

rent

US

$ (b

illio

ns)

+128%

+5,913%

1,000.00

Ø ’9

1-’0

9

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5-’9

1

Year

10,000.00

1987

1986

0.01

0.10

1.00

10.00

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

GDPFDI

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Statistics of the Department of Industrial Policy & Promotion (DIPP) point out that seven sectors

attract roughly 70% of FDI. These sectors include financial and non- financial services,

computer hard- and software, telecommunications, housing and real estate, construction

activities, automobile industry, and power.110 At the same time, more than 75% of FDI inflows

are invested in 18 states.111 The CIA World Fact Book points out that about 16% of the GDP

relates to agricultural activities, and about 29% to industrial activities, such as “textiles,

chemicals, food processing, steel, transportation equipment, cement, mining, petroleum,

machinery, software, [and] pharmaceuticals.” The remaining amount results from “services”.112

However, it should be noted that the term services includes more than the term ‘financial and

non- financial services’.

The economic growth brought important changes. Nevertheless, India faces intense contrasts:

migration and poverty from the land on the one hand, and incredible wealth, increasing

demand, and high- tech science, on the other.113 Recent studies predict a rapid urbanization,

suggesting that in 20 years every second citizen will live in one of the big cities.114 Today, India

has approximately 5,100 cities, of which more than 420 cities have more than 100,000

inhabitants (so- called class I cities), including 36 with more than one million people.115

Positive economic developments lead, amongst other things, to an increase of consumption

and production. This results in an increase in quantities of waste and could have severe

influences on the health of the people as well as on the environment, if not adequately

managed.116 In order to tackle these issues, the Government of India (GoI) introduced of a

rather sophisticated waste legislation. This will be analyzed in the following subchapter.

110 See DIPP (Department of Industrial Policy & Promotion), “Fact Sheet on Foreign Direct Investment (FDI),” 2011,

p. 2, http://www.dipp.nic.in/fdi_statistics/india_FDI_December2010.pdf, accessed July 2011. 111 DIPP (2011): p. 3. 112 “CIA - The World Factbook. India,” 2011, https://www.cia.gov/library/publications/the-world-factbook/geos/in.html,

accessed July 2011. 113 See Wamser, J./Sürken, P. (2011): p. 10, Holtbrügge, D./Friedmann, C. (2011): pp. 1, 9-10. 114 See Holtbrügge, D./Friedmann, C. (2011): pp. 9-10. 115 See Holtbrügge, D./Friedmann, C. (2011): pp. 9-10, Axel Seemann and A. Ravindra, “Abfallwirtschaft in Indien

Entsorgung von Haushaltsabfällen im Umbruch,” Müll und Abfall 40, no. 12 (2008): 621., Da Zhu et al., Improving municipal solid waste management in India: A sourcebook for policymakers and practitioners, 2nd ed. (Washington, op. 2008), p. 9.

116 See Zhu, D. et. al. (2008): p. 9.

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3.2 Understanding the legal waste management framew ork

Generally, local municipalities are responsible for the organization of solid waste management

in India. So- called urban local bodies (ULBs) were created to take over the various

responsibilities of a municipality.117 Much state and municipal legislation exists that deals with

organizational aspects of collection, transportation, and the disposal of waste.118 However,

these regulations did not appear to be sufficiently distinctive with respect to the actual

organization of the activities, responsibilities, and goals. Hence, most state legislation did not

provide an efficient framework in order to ensure an adequate level of solid waste

management.119 These problems were recognized on a federal level at the responsible Ministry

of Environment and Forests, when public interest litigation against the Indian and State

governments and municipal authorities was filed before the Supreme Court in 1996.120 As a

result, the court appointed a group of experts in order to provide a thorough analysis of all SWM

aspects and resulting recommendations. The experts’ report was used as a basis to develop a

federal set of rules regarding MSW issues.121 Hence, the Municipal Solid Wastes (Management

and Handling) Rules 2000122 were published in September 2000 and define the responsibilities

of each involved municipal authority. According to Art. 3 (No xiv) the relevant ‘municipal

authority’ is “[the] local body constituted under the relevant statutes and where the management

and handling of municipal solid waste is entrusted to such agency.” The responsibilities are laid

down in Article 4 and include, besides reporting and application issues, the timely

implementation of several aspects as named in Schedule I (according to Art. 4 No. 3, see Table

2). Schedule II lays out further compliance criteria with respect to the collection, segregation,

storage, transportation, processing, and disposal of municipal solid wastes.123 This can be done

by the municipality itself or by delegating the tasks to an operator. Schedule III refers to specific

regulations with respect to landfill sites, and Schedule IV defines “standards for composting,

treated leachates and incineration.”

117 See Zhu, D. et. al. (2008): p. 47. 118 See Zhu, D. et. al. (2008): p. 9. 119 See Zhu, D. et. al. (2008): p. 9. 120 See Zhu, D. et. al. (2008): p. 9. 121 See Zhu, D. et. al. (2008): p. 9. 122 Rules to Regulate the Mangement and Handling of the Municipal Solid Wastes, published 25 September 2000

(Municipal Solid Wastes (Management and Handling) Rules 2000). See Appendix I for the complete reprint. 123 A detailed understanding of these parameters will be provided within the following subchapter.

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Step Compliance Criteria Completion date

1 Setting up of waste processing and disposal facilities December 2003 or earlier

2 Monitoring the performance of waste processing and

disposal facilities

Once in six months

3 Improvement of existing landfill sites as per provisions of

these rules

December 2001 or earlier

4 Identification of landfill sites for future use and making sites

ready for operation

December 2002 or earlier

Table 2: The Four Steps of Schedule I.124

The question about the compliance with these rules arises as one understands that the

requirements laid out by the federal Ministry of Environment and Forests are rather challenging

for municipal authorities. Although no official data is available, recent studies provide estimates

that suggest a comparatively high degree of noncompliance. This can be seen in Figure 6.

Figure 6: Compliance with the Municipal Solid Wastes (Management and Handling) Rules 2000.125

The main reasons for non-compliance that are regularly stated are a lack of public awareness

and public motivation, a lack of appropriate resources (such as skilled workers, bins,

containers, and vehicles), and a lack of financial means.126

Recognizing a gap between the requirements laid down in the regulations and the actual

compliance can usually be considered as a project opportunity for an enterprise that offers

services to close the gap. As financing issues are named as one major obstacle for

124 Source: Municipal Solid Wastes (Management and Handling) Rules 2000. 125 Source: Zhu, D. et. al. (2008): p. 14. A description of the particular steps will be provided within the following

subchapter. 126 See Zhu, D. et. al. (2008): p. 15.

14%9%

52%

29%

72%

38%33%

41%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Com

plia

nce

storage depots

processingtransportstreet sweeping

disposalprimary collection

segregationstorage at source

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municipalities, a closer look at project funding possibilities should be taken.

Firstly, one should note that the relevant municipal authorities have a mandatory duty to provide

a minimum standard of MSWM services127 but secondly, they also have the right to levy taxes,

charges, fees, and the like in order to finance their mandatory duties.128 However, due to a

comparably weak tax base and low enforcement standards, the amount levied is generally

lower than the actual costs.129 Municipalities can apply for additional government grants in order

to pay salaries and to undertake development work.130 Given the limitations of government

grants and the factual inability of officials to levy higher taxes, on the one hand, and the

organizational inability to levy waste collection fees, results in low expenditures for (and

therefore a low standard of) waste management services.131 Hence, when engaging with

MSWM projects in India, one should bear these restrictions in mind. On the other hand, a

private company may contribute efficiency gains and economies of scale. This could lead to a

win- win situation in which the municipality involves a private company with a better cost-

structure and, hence, can increase the service- level of MSWM activities. At the same time, the

private company is able to generate positive cash- flows, under the assumption that the

municipality is able to pay the agreed remuneration.

Given the ability of foreign investments in municipal solid waste management projects, and the

possibility of becoming a private company operator on behalf of a municipality, a prospective

investor should analyze the current market conditions in a next step.

127 See Zhu, D. et. al. (2008): p. 47. 128 See Zhu, D. et. al. (2008): p. 47. 129 See Zhu, D. et. al. (2008): p. 48. 130 See Zhu, D. et. al. (2008): p. 48. 131 See Zhu, D. et. al. (2008): p. 49.

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3.3 Analysis of the Municipal Solid Waste Managemen t (MSWM) market

An analysis of the MSWM market in India includes an understanding of the material waste

streams covered, the activities conducted throughout the supply chain, the players within the

market, and a prognosis of future developments. Besides that, one should understand the

impact of waste management on the society. Phrased differently, the impact of an insufficient

waste management system could have detrimental effects on the environment and on human

health.132 For example, uncontrolled dumping of wastes could lead to water, air, and land

pollution with consequences for the environment and human health.133 Another example is the

danger of cutting on sharp objects, such as broken glass or infected needles.

An efficient waste management system tackles, amongst other challenges, environmental and

health issues. The responsible Central Public Health Engineering Organisation (CPHEEO)

under the Ministry of Urban Development (MoUD) points out that the Municipal Solid Wastes

(Management and Handling) Rules 2000 (MSW Rules 2000) aim at providing a respective

framework for ULBs.134

Slightly different definitions exist with respect to the understanding of municipal solid waste.

These differences mainly concern the scope, particularly differing with respect to the inclusion

of industrial wastes. This work is oriented towards the applicable legal definition as provided

within the MSW Rules 2000. Municipal solid waste therefore “includes commercial and

residential wastes generated in a municipal or notified area in either solid or semi-solid form

excluding industrial hazardous wastes but including treated biomedical wastes.”135

Controversially, the CPHEEO further distinguishes municipal solid waste, industrial waste,

biomedical waste, thermal power plant waste, effluent treatment plant waste, and other

waste.136 This perspective focuses on the origin of the different waste streams and points out

that the management of these waste streams “must be managed by their own waste

management system […].”137 However, it is also mentioned that interrelationships between the

streams should be facilitated. Moreover, the CPHEEO refers to further regulations, such as the

Hazardous Waste Management and Handling Rules (1989), and the Biomedical Waste

132 See UN (United Nations), State of the environment in Asia and the Pacific 2000 (New York, 2000), p. 170, Mufeed

Sharholy et al., “Municipal solid waste management in Indian cities – A review,” Waste Management 28, no. 2 (2008): p. 459, or Sarika Rathi, “Optimization model for integrated municipal solid waste management in Mumbai. India,” Environment and Development Economics 12, no. 1 (2007): p. 105, who also refers to the increasing use of (limited) natural resources.

133 See UN (2000): pp. 174-176. 134 See CPHEEO (Central Public Health and Environmental Engineering Organisation), Manual on Municipal Solid

Waste Management (2000), pp. 1–2. This document refers to the draft version of the “Municipal Waste (Management & Handling) Rules, 1999”, a predecessor of the MSW Rules 2000.

135 MSW Rules 2000: Art. 3 No. xv. 136 CPHEEO (2000): p. 26. 137 CPHEEO (2000): p. 26.

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Management and Handling Rules (1998), and implicitly excludes (industrial) hazardous wastes

from the scope of municipal responsibility under MSW regulations. A further discussion with

respect to municipal versus private ownership of wastes, as currently exercised, for example, in

Germany,138 does not seem to be necessary with respect to the scope of this work. Moreover,

the term MSW will be interpreted broadly with respect to the MSW Rules 2000 definition.

Hence, MSW particularly includes waste from different sources, excluding primarily hazardous

waste with industrial origin. As MSW includes “commercial […] waste”139 and particularly

excludes “industrial hazardous wastes”140, the term industrial should be interpreted narrowly.

Table 3 summarizes the main sources of MSW, names typical waste generators, and provides

examples of types of wastes.

Source of MSW Typical waste generators Example of types of waste

Residential Residencies Food wastes, paper, cardboard,

plastics, packaging wastes,

textiles, leather, yard wastes,

wood, glass, metals, ashes, etc.

Industrial Manufacturing, fabrication,

construction sites, power and

chemical plants

Housekeeping wastes,

packaging, food wastes,

construction and demolition

materials, etc.

Excluding hazardous wastes

Commercial Shops, hotels, restaurants,

markets, office buildings

Paper, cardboard, plastics,

wood, food wastes, glass,

metals, etc.

Institutional Schools, hospitals, prisons,

government centres

Paper, cardboard, plastics,

wood, food wastes, glass,

metals, etc.

Construction & Demolition New construction sites,

renovation sites, demolition sites

Wood, steel, concrete, soil, etc.

Municipal Services Street cleaning, landscaping,

parks, beaches, etc.

Street sweepings, garden

wastes, wood, etc.

Agriculture Farms Food wastes, agricultural wastes

Table 3: Sources and Types of Municipal Solid Wastes.141

138 See Markus Kremers, Risikoübernahme in Industrieunternehmen: Der Value-at-Risk als Steuerungsgrösse für

das industrielle Risikomanagement, dargestellt am Beispiel des Investitionsrisikos (Sternenfels, 2002). 139 MSW Rules 2000: Art. 3 No. xv. 140 MSW Rules 2000: Art. 3 No. xv. 141 Source: UN (2000): p. 170 with minor adaptions.

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The amount of MSW generated differs when comparing Indian cities (see Table 4). The daily

MSW generation rate per capita for the 20 largest cities in India (according to the 2001 census)

varies between 0.25 kilograms/capita/day [kg/c/d] in Nagpur and 0.62 kg/c/d in Chennai. This is

a difference of 0.37 kg/c/d or 148%. The weighted average MSW generation rate is 0.46 kg/c/d.

The compostable proportion of the MSW lies between 40.8% in Ahmedabad and 62.3% in Pune

with a weighted average percentage of 50.5%. Recyclables vary between 11.2% in Surat and

22.4% Bangalore, averaging 15.7%. The reasons for these differences are manifold and include

differences in living standards, in food habits, the impact of seasonal differences, and the

relative degree of commercial activities.142

No City Population

[mio] MSW Generation Rate

[kg/c/d] Compostables

[%] Recyclables

[%] 1 Greater Mumbai 11,978 0.45 62.4 16.7

2 Delhi 10,306 0.57 54.4 15.5

3 Kolkata 4,573 0.58 50.6 11.5

4 Chennai 4,344 0.62 41.3 16.3

5 Bangalore 4,301 0.39 51.8 22.4

6 Hyderabad 3,844 0.57 54.2 21.6

7 Ahmedabad 3,520 0.37 40.8 11.7

8 Kanpur 2,551 0.43 47.5 11.9

9 Pune 2,538 0.46 62.4 16.7

10 Surat 2,434 0.41 56.9 11.2

11 Jaipur 2,323 0.39 45.5 12.1

12 Lucknow 2,186 0.22 47.4 15.5

13 Nagpur 2,052 0.25 47.4 15.5

14 Indore 1,475 0.38 49.0 12.6

15 Bhopal 1,437 0.40 52.4 22.3

16 Ludhiana 1,398 0.53 49.8 19.3

17 Patna 1,366 0.37 52.0 12.6

18 Vadodara 1,306 0.27 47.4 14.5

19 Agra 1,275 0.51 46.4 15.8

20 Jamshedpur 1,105 0.31 43.4 15.7

(Weighted) Average 3,316 0.46 50.5 15.7

Table 4: MSW generation, proportion of compostables and recyclables of the TOP 20 cities in India.143

142 See Sharholy, M. et. al. (2008): p. 460. 143 Source: CPCB (Central Pollution Control Board), “Waste Generation and Composition,” (2004/2005),

http://www.cpcb.nic.in/wast/municipalwast/Waste_generation_Composition.pdf, accessed July 2011.

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The Indian MSWM system is a combination of different activities done by a number of different

participants. It is therefore helpful to introduce the formal and the informal sectors first. The

formal sector in the waste management context refers to the organized system as provided by

the municipality,144 hence, including municipal and designated private companies. The informal

sector, on the contrary, includes parties that participate in different activities without

authorization. This particularly includes the collection and partial treatment of certain types of

wastes in order to sell these materials.145 Figure 6 within the previous subchapter provides an

overview of different steps of the MSWM process.146 These particularly include storage of MSW

at source, segregation of recyclable waste at source, primary collection activities, street

sweeping activities, use of storage depots, transportation of wastes, processing or treatment

activities, and the disposal of wastes.

In many Indian towns, storage at source resources, such as waste bins are lacking. However, in

cases of availability of those options, bins are mostly provided for decomposable and non-

decomposable wastes at local disposal centers.147 Due to the lack of storage facilities, waste is

often simply thrown onto streets, into drains, and other like places.148 Segregation of waste at

source level is also not sufficiently practiced. Even though some recyclables, such as paper and

cardboard, glass, plastics, and metals, are partially separated and mostly sold into the informal

sector, the segregation potential is not yet exhausted.149 So- called rag pickers are generally

poor people who collect and sell recyclables into the informal sector. They not only collect those

materials on the streets and disposal centers, but also on landfills and the like.150 Figure 7

provides sample pictures showing the current situation in many towns. The secondary collection

of MSW mainly refers to emptying the bins placed at the disposal centers. Even now, most

ULBs do not provide door- to- door or so- called primary collection options.151 Even though this

may be in conformity with the MSW Rules 2000, Schedule II, No. 1, in which house- to- house

collection can also be “community bin collection (central bin), […or…] collection on a regular

pre- informed timing and scheduling by using bell ringing of musical vehicle”, community bins

regularly foster unauthorized dumping of wastes.152

144 See Kaveri Gill, Of poverty and plastic: Scavenging and scrap trading entrepreneurs in urban India's urban

informal economy (Oxford, 2010), p. 9. 145 See Ulrike Lange, Roland Linzner, Gudrun Obersteiner, and Bernd Bilitewski, “Der informelle Sektor in der Abfall-

wirtschaft weltweit: Eine Bestandsanalyse,” Müll und Abfall, no. 6 (2011): p. 271. 146 The terms step, process step, activity, and process activity will be used interchargeably within this work. The term

process is understood as a conglomerate of several process steps. 147 See Sharholy, M. et. al. (2008): p. 462. 148 See See Zhu, D. et. al. (2008): p. 16. 149 See See Zhu, D. et. al. (2008): p. 16. 150 See Zhu, D. et. al. (2008): pp. 16-17. 151 See Zhu, D. et. al. (2008): p. 19, Sharholy, M. et. al. (2008): p. 462. 152 See Sharholy, M. et. al. (2008): p. 462.

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Moreover, due to budgeting restraints, collection is generally not provided for all parts of a city.

Studies show that the average coverage in Indian cities is about 70%. The remaining 30% of

the city’s waste that is not collected usually originates from rather low- income and uncontrolled

parts of the towns.153 As primary collection is not an option in most cities and most MSW is

thrown onto the streets, ULBs run street sweeping systems in order to collect and carry wastes

to disposal centers.154 After collecting wastes either via door- to- door means or at disposal

centers, the next step is the decision of where the vehicle gets emptied. This could be done in

transfer stations, to which the collection trucks deliver their waste. Other trucks then transport

the MSW to processing or disposal sites. However, this approach is rarely used in India. Mostly,

collection trucks go directly to the relevant sites.155 If so, the requirements concerning

transportation of MSW according to the MSW Rules 2000 have to also be complied with by the

collection vehicles. According to Schedule II, No. 4, the vehicles have to be covered in order to

not scatter waste.

Figure 7: Impressions of open municipal solid waste dumping in India.156

153 See Sharholy, M. et. al. (2008): p. 462. 154 See Zhu, D. et. al. (2008): p. 20. 155 See Sharholy, M. et. al. (2008): p. 462. 156 Source: MoUD (Ministry of Urban Development) and Nagar Nigam Aligarh, “City Sanitation Plan - Aligarh: Draft

Report,,” (2011), pp. 20–22, http://www.urbanindia.nic.in/programme/uwss/CSP/Draft_CSP%5CAligarh_CSP.pdf, accessed July 2011.

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Treatment or processing of MSW and the final disposal of non- treatable wastes are the last

steps in the MSWM process. On a global scale, a large number of possible treatment options

are available for different types of wastes. This ranges from landfilling to waste- to- energy

techniques, or from composting to biogas production, including many other available

techniques. Also, combined treatment options, such as mechanical biological waste treatment

(MBT), exist. Different recycling options for different types of wastes are available, such as the

reuse of plastics or even the application of plasma technologies to separate used composite

materials, such as tetra- packs.157 As seen in Figure 6, the compliance levels for processing

and disposal of wastes according to the MSW Rules 2000 are 9% and 14%, respectively. The

MSW Rules 2000, Schedule I, No. 5 point out that waste treatment facilities shall be

implemented in order to reduce the landfill quantities. As organic or compostable wastes are

contained in a large proportion in MSW, averaging 50% according to Table 3, MSW Rules 2000

particularly point out that these wastes should be treated “by composting, vermicomposting,

anaerobic digestion or any other appropriate biological processing for stabilization of wastes.”158

In addition to that, “recoverable resources shall follow the route of recycling.”159 Incineration of

wastes can also be applied. As previously mentioned, different techniques exist.

However, implementation of these methods is rarely observable in India.160 The case study

within this work will focus on the implementation of an MBT plant for MSW in India. It should be

questioned as to why this technique and not another. A first indicator when reviewing recent

literature is the finding that ‘classical’ waste incineration and waste- to- energy approaches are

deemed to be inappropriate in most Asian countries including India.161 The reasons include

technical, economic, and environmental aspects. With respect to technical concerns, it is

pointed out that primarily high organic and moisture contents result in an extremely low calorific

value, hence meaning poor performance of incineration plants. This is connected to economic

concerns. Due to relatively high capital and operating expenditures, people fear increasing

costs of waste treatment. At the same time, air pollution plays a role. Increasingly stringent

157 See for example Sharholy, M. et. al. (2008): p. 463, Department of Public Works City of Los Angeles, “Summary

Report: Evaluation of Alternative Solid Waste Processing Technologies,” (2005), http://www.lacitysan.org/solid_resources/strategic_programs/alternative_tech/PDF/summary_report.pdf, accessed July 2011., Tobias Zimmermann and Patrick Kemnitz, “Rubbish with Potential: A Business Model for Mechanical Biological Waste Treatment in China,” BusinessForum China, no. 3 (2009), Seemann, A./Ravindra, A. (2008), Alcoa Inc., “News Releases: Alcoa Participates in the World's First Carton Packaging Recycling Plant Using Innovative Plasma Technology: The Plasma Process Separates Aluminum and Plastic, Components of the Aseptic Package,” 2005, http://www.alcoa.com/global/en/news/news_detail.asp?newsYear=2005&pageID =20050513005361en, accessed July 2011.

158 MSW Rules 2000: Schedule II, No. 5. 159 MSW Rules 2000: Schedule II, No. 5. 160 See Sharholy, M. et. al. (2008): p. 463, Zhu, D. et. al. (2008): p. 24, Seemann, A./Ravindra, A. (2008): pp. 622-

623. 161 See for example UN (2000): p. 180, Sharholy, M. et. al. (2008): p. 464, Zhu, D. et. al. (2008): p. 24, Seemann,

A./Ravindra, A. (2008): p. 624.

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regulations lead to the application of advanced filter techniques, resulting in high

expenditures.162 The main advantages of waste to energy and other incineration techniques are

“a quantity reduction, reclamation and hazard free treatment of the municipal waste”.163 This,

however, is also achieved by MBT techniques. Moreover, by recovery of different materials at

several process steps additional revenues can be generated, resulting in reducing the initial

gate fee.164 An in-depth understanding of MBT techniques in India will be provided within the

case study in the fourth chapter. Disposal of MSW should be “restricted to non-biodegradable,

inert waste and other waste that is not suitable either for recycling or for biological processing

[…,…] residues of waste processing facilities as well as pre-processing rejects from waste

processing facilities.”165 Schedule III further defines the specific features of landfill sites.

However, due to a lack of processing facilities, most MSW is dumped openly, mixed with other

wastes and in an uncontrolled manner.166

The major private players in the Indian waste management market are Ramky Enviro Engineers

Ltd., Excel Industries Ltd., and SELCO International Ltd.. All of these companies are based in

India and are actively involved in MSWM activities and have a track record of successful

projects in different fields of waste management in India.167 The market potential in MSWM

activities is estimated at around 8 billion USD per annum, however, today private companies

only generate revenues of around 500 million USD per year.168 The GoI focuses on integrating

private companies via private public partnerships (PPP). According to gtai and NSWAI analysis,

in 2010 around 70 PPP projects were ongoing and an additional 17 projects are scheduled to

be tendered in 2011.169 A PPP is defined as an entity formed by a governmental authority and

one or more private companies that provide public goods or services. The payment thereby

varies between being fully paid by the public authority to an exclusive payment of the users.

Also, the participation of the authority with respect to shares in equity varies.

162 See for example UN (2000): p. 180, Sharholy, M. et. al. (2008): p. 464, Zhu, D. et. al. (2008): p. 24, Seemann,

A./Ravindra, A. (2008): p. 624. 163 ZhongDe Waste Technology AG, “ZhongDe Waste Technology AG: State Council of China strengthens municipal

waste treatment industry: Press releases,” 2011, http://www.zhongdetech.com/news/index.html?id=51, accessed July 2011.

164 See Zimmermann, T./Kemnitz, P. (2009): p. 38. 165 MSW Rules 2000: Schedule II, No. 5. 166 See Sharholy, M. et. al. (2008): p. 463. 167 See Waste Mangagement World, “Waste Market Potential in India,” 2009, http://www.waste-management-world.

com/index/display/article-display/368989/articles/waste-management-world/markets-policy-finance/2009/09/waste-market-potential-in-india.html, accessed July 2011., E. K. Sharma, “Waste King Wants More,” Business Today 19, no. 14 (2010).

168 See gtai (Germany Trade & Investment), “Länder und Märkte: Indien: Privater Sektor soll Indiens wachsendes Müllproblem lösen,” 2011, http://www.gtai.de/fdb-SE,MKT201103158003,Google.html, accessed July 2011.

169 See gtai (2011).

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However, the private partner usually assumes the main burden of operational, financial, and

technical risks.170 PPP projects are deemed to be a very important way of developing MSWM

activities within municipalities.171 Therefore an increase is predicted, resulting in possible

investment opportunities for private companies. This particularly includes the development and

operation of waste treatment facilities, such as different waste to energy plants.172

3.4 Conclusion

Municipal solid waste management is recognized as an important goal in the rapidly developing

India Moreover, predictions suggest that the MSW quantities in the Indian cities will grow at a

rate of about 5% per annum. And not least because a framework for a PPP participation for

companies is provided, international waste management corporations should consider investing

in India. Contracts with municipalities are generally the result of a tendering procedure won by

one bidder. This is also the case for PPP project in waste management in India. Often, these

tender documents provide a comprehensive definition and framework of the goods and services

required. Hence, the creativity and variability of the bidder is rather restricted. However, in some

cases, the framework suggests only a rather open description, leaving room for individual

suggestions. Because of the different possibilities, one needs a broad knowledge of the

regulatory framework of the respective market, technical understanding, and experience in

investment calculation in order to develop a reasonable concept for a specific tendering

procedure and to evaluate the investment opportunity in depth.

170 See MoUD (Ministry of Urban Development) and MoF (Ministry of Finance), “Toolkit for Public Private Partnership

frameworks in Municipal Solid Waste Management: Volume I –Overview and Process,” (2011): pp. 8-9. 171 See PPP Toolkit Volume I (2011): p. 9. 172 See gtai (2011).

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4 Case Study: An Investment in MSWM treatment in In dia

Using the theoretical foundations laid down in the previous chapters, this fourth chapter aims at

applying the relevant toolbox to a sample project in the MSWM market in India. The aim of the

work at hand is to provide a practical framework including the relevant methodic approaches in

order to evaluate investment opportunities in the Indian MSWM market. The sample project

therefore represents an artificial example that is based on actual data. With respect to

contractual and tender aspects, the ‘Toolkit for Public Private Partnership frameworks in

Municipal Solid Waste Management’ (PPP Toolkit) published by the MoUD and the Ministry of

Finance (MoF) will provide valuable generic information.173 In order to ensure the applicability

of this framework in practice, one could compare these with actual bid documents. Based on

the example of the town of Anantnag in the State of Jammu and Kashmir,174 one can identify a

high degree of similarity between the documents. This actual project is not used within this work

because of insufficient information about the town of Anantnag and due to very small waste

quantities within this tendering procedure. Previous research about waste management was

carried out for a number of Indian towns, such as the city of Aligarh. The following subchapter

will provide a description of an artificial tendering procedure and define the scope of the project

computation within this work. The following subchapters will then focus on the composition of

cash- flows, related risks, the combination of these elements, and a subsequent evaluation of

the project.

4.1 Description of the Investment Opportunity

The city of Aligarh is a medium-size town in the State of Uttar Pradesh. Aligarh is located about

130 km southeast of Delhi, India’s capital (see Figure 8). It comprises an area of about 35

square kilometers, inhabited by around 867,000 people in 2011.175 Between 2001 and 2011 the

number of inhabitants grew by almost 200.000 or 30%.176 The slum population of the town grew

by almost 193,000 people between 2001 and 2010. Comparing this increase with the total

population growth during that time (an increase of around 158,000 inhabitants), one can clearly

see an outpacing development of the slum population in the city of Aligarh.177

173 See PPP Toolkit Volume I (2011). 174 See GoI (Government of India), “Tenders India, The Indian Government Tenders Information System,” 2011,

http://tenders.gov.in/innerpage.asp?choice=tc5&tid=jnk409649&wno=1, accessed July 2011., and the subsequent documents.

175 See City Sanitation Plan: pp. 20-22, Nadeem Khalil and Mubashra Khan, “A case of a municipal solid waste management system for a medium-sized Indian city, Aligarh,” Management of Environmental Quality 20, no. 2 (2009): 122–123.

176 See City Sanitation Plan: pp. 21-22. 177 See City Sanitation Plan: pp. 21-22.

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This could be important for the current analysis, because the daily waste generation in slum

areas is less than in all other income group levels (in Aligarh slums around 2 kg/c/d versus an

average of 4.4 kg/c/d in all other income groups) and the significantly differing composition of

wastes from slum areas.178

Figure 8: Map of India and the Location of Aligarh.179

With respect to waste management in the city, one should note that the responsibilities are

shared between the Public Health Department (street cleansing and collection) and the

Transportation Department of Aligarh Municipal Corporation (AMC).180 These departments

employ workers and own vehicles and other modes of transportation in order to fulfill their

duties.181 Inhabitants pay around 30-40 INR (Indian rupees)182 per month and are particularly

dissatisfied with the current practice of MSWM for a number of reasons.183 Comparing the

current practice of MSWM with the standards set out in the MSW Rules 2000, one can

conclude that these rules are not sufficiently implemented. No separation at source is practiced,

collection activities do not cover the whole city, poorly engineered techniques are used, and

waste is dumped without prior processing or segregation on open dumpsites.184

178 See Khalil, N./Khan, M. (2009): pp. 131, 133. 179 Source: compiled by the author. 180 See Khalil, N./Khan, M. (2009): pp. 124-125. 181 See City Sanitation Plan: pp. 39-42. 182 Indian Rupee (INR) is the official currency in India. The current exchange rate is 1 INR = 0.0159 EUR. Hence, 30

INR equal arround 0.48 EUR. See onvista.de, “Indische Rupie Kurs - Wechselkurs - aktueller Kurs,” 2011a, http://www.onvista.de/devisen/snapshot.html#devisenrechner, accessed July 2011.

183 See City Sanitation Plan: p. 49. 184 See City Sanitation Plan: pp. 75-77.

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Daily waste generation rates are computed at around 325 to 400 tons per day [t/d].185

However, collection services are only provided in roughly 70% of the city and a large number of

rag pickers (about 700 people) collect valuable materials. This results in a significantly lower

collected waste quantity (around 186 t/d in 2005).186

For purposes of this work, it will be assumed that AMC will put the implementation of an

integrated municipal solid waste management (IMSWM) system out to tender.187 The IMSWM

system is assumed to contain collection, street cleansing, transportation, segregation and

treatment, as well as disposal of MSW.188 It is possible to form a consortium consisting of

different companies that will jointly carry out the requested services. Therefore, the relevant

companies would form a new special purpose vehicle (SPV) that will seal the contract with the

municipality.189 The new PPP will be owned by AMC and the SPV. The municipality will

particularly make contributions in kind, offering collection equipment. Moreover, AMC will take

on the responsibilities of further educating inhabitants and monitoring compliance with the

appropriate regulations. The private partners will contribute by cash and/or in kind, depending

on their role. With respect to the scope of this work, it will further be assumed that different

private companies contribute services and that the focal point of this work is only one company

contributing one particular service, namely building and operating a mechanical biological waste

treatment (MBT) plant in Aligarh. The internal allocation of duties amongst the companies will

be as follows, that for the ease of understanding only the focal firm (FF) and a conglomerate of

other firms (OF) that are responsible for all other activities are distinguished. OF will collect and

transport MSW within the city of Aligarh and will also provide cleansing services for roads and

drains. The MSW is transported to FF’s MBT plant, is processed, and the resulting outputs will

be distributed to different companies. A scientific landfill site for residuals is operated by OF. OF

will also collect and transport organic wastes that are to be collected separately. The collected

organic wastes will also be processed in FF’s MBT plant. It is further assumed that the contract

duration will be 20 years, and that the consortium was accepted as a potential bidder.190

185 See Khalil, N./Khan, M. (2009): p. 131, who refer to AMC information (325 t/d) and suggest to calculate with 350

t/d. City Sanitation Plan: p. 42 points out monthly waste disposals of around 12,000 t, hence resulting in a daily disposal rate of around 387 to 400 t/d.

186 See Khalil, N./Khan, M. (2009): p. 132. 187 As AMC has actually done. See for example City Sanitation Plan: p. 89, however, no detailed information about

the tendering procedure is available and not necessary with respect to presenting a sample project computation within this work.

188 See for example PPP Toolkit Volume I (2011): p. 12 189 See PPP Toolkit Volume I (2011): pp. 8-9, 64. 190 See MoUD (Ministry of Urban Development) and MoF (Ministry of Finance), “Toolkit for Public Private Partnership

frameworks in Municipal Solid Waste Management: Volume III –Model PPP Templates and Documentation,” (2011) and the subsequent appendix ‚Model Request for Qualification‘.

- 35 -

MBT plants include a combination of mechanical and biological treatment elements that can be

composed in various ways.191 The mechanical components are usually used to shred, sieve,

and to sort the mixed input of MSW. This could include recyclables, high calorific, inert, and

organic waste components.192 Recyclables are sold, and high calorific wastes are further

processed to produce so-called refuse derived fuel (RDF) which is then sold as secondary fuel

substituting for primary fuels such as coal.193 Inert wastes might be disposed of at a landfill.

Organic components will be treated by biological means, such as aerobic composting or

anaerobic digestion methods.194 The output of this step will include composts that might be sold

to farmers or need to be disposed of at a landfill, biogas that might be used to supply energy

needed for the MBT plant,195 and residues that also need to be disposed of at a landfill.196 As

organic wastes are to be collected separately, the quality might provide the possibility of directly

treating these wastes biologically. In this case the capacity of the mechanical treatment

elements could be reduced, whereas the biological treatment facilities should be able to cope

with the overall quantity of organic wastes. However, if the separately collected organic waste

turns out to include a significant proportion of non-organic fractions, the possibility of

mechanical pre- treatment has to be available.

The next step is to provide a comprehensive analysis of the project’s cash- flows. This will be

done within the next subchapter, using the outlined framework of the project. Further specific

information with respect to assumptions of waste characteristics, waste streams and the like will

also be provided.

191 See Axel Seemann, “Co-incineration of Municipal Solid Waste in Cement Industry: Proceedings of the Inter-

national Conference on Sustainable Solid Waste Management,” (2007), p. 350, http://www.swlf.ait.ac.th/IntlConf/Data/ICSSWM%20web/FullPaper/Session%20VI/6_B1%20_Axel%20Seeman_.pdf, accessed July 2011.

192 See Siegmund Böhmer et al., “Waste to Energy in Malta: Scenarios for Implementation,” (2008), p. 13, http:// www.mrra.gov.mt/files/uploaded/files/techreportwaste.pdf, accessed July 2011., Seemann, A. (2007): p. 350.

193 See Zimmermann, T./Kemnitz, P. (2009): p. 38, Seemann, A. (2007): p. 353. 194 See Seemann, A. (2007): p. 350. 195 Produced electricity and heat can also be sold. 196 See Zimmermann, T./Kemnitz, P. (2009): p. 38, Böhmer, S. et. al. (2008): p. 14.

- 36 -

4.2 Configuration of the project’s cash in- and out flow elements

As pointed out in subchapter 2.3, cash- inflows include revenues, possible terminal values from

selling assets at the end of the project and other cash- inflows. Cash- outflows comprise capital

expenditures (CAPEX) and operational expenditures (OPEX). CAPEX refers to investment

activities, such as setting up of production facilities, OPEX include costs that occur due to

operating the facilities, such as labor or energy costs. The sum of both is called total

expenditure (TOTEX).197 The cash- flows are often summarized in a tree- diagram. Depending

on the level of detail this can comprise several levels and can also include basic mathematical

operations in order to show dependencies. In order to ensure that all major cashflow influence

drivers are considered, one should start with a simple structure and subsequently work out all

details. Hence, Figure 9 provides a first overview of the relevant figures.

Figure 9: First cashflow tree- diagram.198

197 See “Definition: CAPEX | Wirtschaftslexikon Gabler,” http://wirtschaftslexikon.gabler.de/Definition/capex.html,

accessed July 2011, “Definition: OPEX | Wirtschaftslexikon Gabler,” http://wirtschaftslexikon.gabler.de/ Definition/opex.html, accessed July 2011, “Definition: TOTEX | Wirtschaftslexikon Gabler,” http://wirtschafts lexikon.gabler.de/Definition/totex.html, accessed July 2011.

198 Source: compiled by the author.

- 37 -

Cash inflows

The evaluation of a bid by the municipality generally follows a three step process, starting with a

pre-qualification, continuing with a technical evaluation and finishing with a financial evaluation.

Hence, the final decision of a ULB for one company or consortium in a tendering procedure

depends on the evaluation of the financial offer.199 Consequently, the bid price should be the

last variable to be calculated within a project computation. A similar reasoning applies to the

sale of output materials and energy. Because the actual production quantity essentially

depends on the treatment process and the composition of input materials, these variables

should also be computed after gaining a thorough understanding of the treatment plant.

Other sources of revenue particularly include carbon finance activities. The Kyoto Protocol

introduced the Clean Development Mechanism (CDM) under which it is possible for bodies in

developing countries to sell Certified Emission Reductions (CERs) to bodies in developed

countries in order to meet the carbon reduction commitments laid down in the Kyoto Protocol. A

CER credit thereby represents an equivalent one ton of carbon emission saving.200 With regard

to the treatment of MSW in MBT plants in China, it is estimated that one ton of MSW treatment

equals about 1.5 tons of carbon emission savings.201 An equal saving will be assumed for MSW

treatment in India. Provided that the price of CERs will remain at a rate of 10 to 15 EUR per

ton,202 additional revenues of around 940 to 1,400 INR per ton of MSW can be generated.

However, one should note that registration fees range from 50,000 to 250,000 USD, equalling 2

to 11 million INR203 or an average treatment of around 5,500 tons of MSW. The registration

process also takes about one to three years.204

As the IMSWM project is assumed to be a BOT (build, operate, transfer) project, the MBT plant

has to be handed over to the municipality at the end of the contract period “free of cost and free

from all encumbrances and in good operable condition having sufficient residual economic

life.”205 Hence, no positive terminal value can be expected.

199 See PPP Toolkit Volume III (2011) and the subsequent appendix ‚Model Request for Proposal‘ pp. 35-41. The

evaluation should be based on a pre-defined set of parameters. 200 See UNFCCC (United Nations Framework Convention on Climate Change), “Clean Development Mechanism

(CDM) ,” 2009, http://unfccc.int/kyoto_protocol/mechanisms/clean_development_mechanism/items/2718.php, accessed July 2011., PPP Toolkit Volume I (2011): pp. 59-60.

201 See Zimmermann, T./Kemnitz, P. (2009): p. 37. 202 See PPP Toolkit Volume I (2011): pp. 59-60. 203 The current exchange rate is 1 INR = 0.022 USD, 1 USD = 44.51 INR. See onvista.de, “Indische Rupie Kurs -

Wechselkurs” 2011b, http://www.onvista.de/devisen/snapshot.html#devisenrechner, accessed July 2011. 204 See PPP Toolkit Volume I (2011): p. 59. 205 PPP Toolkit Volume III (2011) and the subsequent appendix ‚Term Sheet Template – MSW Processing Facility‘,

Article 14.

- 38 -

Another possible source of cash inflows are government grants or subsidies. Different schemes

exist in India in order to facilitate infrastructure developments. The main schemes are the 13th

Finance Commission Grant (13th FC Grant), the Jawaharlal Nehru Urban Renewal Mission

(JNNURM), the Urban Infrastructure Development Scheme in Small & Medium Towns

(UIDSSMT), and subsidies for compost plant and waste to energy projects. The 13th FC Grant,

however, only supports renewable energy projects with a connection to the grid.206 The

JNNURM only covers a defined range of towns, not including Aligarh.207 The UIDSSMT was

designed to grant funds to cities not listed with the JNNURM. The project at hand could

therefore receive 80% central government and 10% state government funds after approval.208

GoI subsidies for compost plants are no longer available and subsidies for waste to energy

projects are not applicable because it is assumed that the produced RDF is sold to third

parties.209

206 See PPP Toolkit Volume I (2011): pp. 61-62. 207 See JNNURM (Jawaharlal Nehru Urban Renewal Mission), “Mission Cities,” 2008, http://jnnurm.nic.in/nurmudwe

b/missioncities.htm, accessed July 2011. 208 See PPP Toolkit Volume I (2011): pp. 62-63. 209 See PPP Toolkit Volume I (2011): p. 63.

- 39 -

Cash outflows

In order to evolve the relevant CAPEX for the MBT plant, one needs to assess the capacity first.

As it is assumed that MSW will be treated by mechanical and biological components, and that,

due to the rapid growth of the city, further investments might become necessary in the future.

The MSW flows are computed in Table 5. Possible future investments are not taken into

consideration at this point in time.

Computation of MBT Input from MSW Collection

Year 0 Year 1 Year 5 Year 10

No of Inhabitants 867,000 867,000 1,798,000 4,474,000

Waste Generated [t/d] 350 350 726 1,806

Waste Collected by

- Rag Pickers [t/d] 80 85 166 413

- Municipality/PPP [t/d] 186 265 550 1,393

Thereof

MBT Input per annum [t/a] n/a 66,780 115,000 293,000

Table 5: Computation of MBT input from MSW collection210.

As the city’s population is growing rapidly, and the segregation of organic matter at source level

will provide a poor quality of waste, thus also needing to be mechanically pre- treated, the

capacity of the MBT plant should be at around 120,000 t/a. As it would be beyond the scope of

this work to provide a technical description of the MBT components, this is calculated with

average values drawn from current projects and project computations. Average CAPEX per ton

of capacity for comparable projects are within a range of 267 to 300 EUR.211 Estimating 290

EUR/t will result in an overall CAPEX for the MBT plant of 34.8 million EUR or 2.189 billion INR.

This sum is deemed to include all components of the plant itself, necessary vehicles, and

administrative facilities. However, no investment in the site is necessary as it would be provided

by the ULB at a fixed rate of 1 INR per square meter per annum.212 It is assumed that around 2

hectares (20,000 square meters) are needed. Furthermore, the project would be financed by

equity means. Hence, no redemption or interest payments have to be considered.

210 Source: compiled by the author. 211 See Böhmer, S. et. al. (2008): p. 65. 212 See PPP Toolkit Volume III (2011) and the subsequent appendix ‚Term Sheet Template – MSW Processing

Facility‘, Article 5.

- 40 -

Other operating expenses include personnel expenses, maintenance costs, fuel costs,

insurance and licensing costs, disposal costs, administrative costs, and taxes.213 Energy costs

are deemed to be provided internally due to the use of the produced biogas. As another firm

(OF) within the consortium will provide landfill services, the focal firm (FF) will only pay a per ton

gate fee for the disposed waste quantities. A 100% tax deduction is granted for companies that

provide solid waste management services. Within the first 20 years of the project, this deduction

can be used for 10 consecutive years.214 As the consortium is a corporation under Indian law it

is deemed to be a domestic company. Hence, the applicable income tax rate is assumed to be

30% over the project lifetime.215 A comprehensive summary of the cash elements is provided

within Figure 10.

213 EPA (United States Environmental Protection Agency), Full Cost Accounting for Municipal Solid Waste

Management: A Handbook (Washington, 1997), p. 39. 214 See PPP Toolkit Volume I (2011): p. 63. 215 See Income Tax Department of India, “Tax Computation,” 2011, http://law.incometaxindia.gov.in/DIT/Xtras/taxc

alc.aspx, accessed July 2011.

- 41 -

Figure 10: Cash- flow tree- diagram for the sample project.216


- 42 -

4.3 Identification of risks and combination with ca sh- flow elements

As pointed out in the previous chapters, the next steps of conducting a risk- analysis of the

investment opportunity are to search for possible risky influences, to select the relevant

uncertain variables, and to define ranges and probability distributions for these variables. In

order to ensure that the main risks are recognized, one should use the deductive risk- pyramid

approach. As risks are always seen subjectively from one perspective, it will only be possible to

identify all major risks from the perspective of the focal firm (FF). However, as previously

pointed out, there is no absolute and objective scope of risks.

The identification of risks of the separate project variables should be done by expanding the

available cashflow tree- diagram. More precisely, the different risks should be named per

variable and grouped by the respective categories of the risk- pyramid. The analysis of the

particular project can be seen in Appendix 2.

Operational risks with respect to the sample project particularly include business risks,

purchasing related risks, production related risks, labor related risks, and legal risks. Major

business risks are related to the input quantity and quality of MSW, as well as to the

development of prices for recycling materials and CERs. Purchasing risks include the actual

initial and replacement CAPEX values as well as maintenance and fuel costs. Production

related risks relate the proportion of sorted recyclables, the remaining disposable tonnage,

maintenance costs, and the quantity of fuel needed. Labor related risks include the number of

employees needed and the development of the respective salaries. Legal risks especially refer

to changes of environmental laws and standards with respect to changes in output volumes or

qualities as well as replacement CAPEX needs. Other aspects are the CDM registration

including the extent of CO2 equivalents and the amount of registration fees, and the availability

of government grants.

Liquidity risks particularly refer to CAPEX and related government grant cases. One needs to

ensure that liquid means are available at the beginning of the project and that possible

government grants are available. With respect to default risks, counterparty risks including

payments of the municipality and third- party recycling companies are especially noticeable.

- 43 -

Market risks in the sample project are mainly connected to currency exchange rate

developments and inflation. It is assumed that the MBT plant will be developed in and imported

from the EU, payable in EUR, and the CDM registration fees are payable in USD.217 CERs will

be sold to the EU markets, hence exchange rate risks also apply. Inflationary developments will

be included from the second year onwards in all computations except for CER revenues.

In order to combine identified risks and cashflow variables in a computable way, one needs to

understand the measurable impact behind the risks. Taken the initial CAPEX as an example, it

becomes clear that market risks (in particular currency exchange risk), liquidity risks, and

operational risks (in particular purchase related risks) are involved. As the project would only be

installed if the mother company approves and grants funds to the project, liquidity risk can be

neglected because it needs to be assumed that applicable funds are granted. Currency

exchange rate risk refers to the development of the exchange rate between the Euro and the

Indian rupee. Hence, the management needs to define ranges of development and respective

probability distributions. A similar exercise is done for the initial CAPEX values.218 At the same

time, the defined currency exchange rate development is (amongst other impacts) applied for

the computation of replacement CAPEX amounts. A full list of all measurable impacts can be

seen in Appendix 2.

With respect to waste quantities and the composition of MSW, it is assumed that the input

quantity will increase over the years. The probability of higher inputs develops correspondingly

towards the maximum quantity of the MBT plant. It is further assumed that the revenues from

the municipality are a per ton gate fee. The development of inflation rates and a marginal

probability of default are taken into consideration. The recycling revenues represent a function

of input quantity, the proportion of separate saleable fractions and their respective prices. The

proportion219 of each output fraction is a function of the quality of the input quantity, the

treatment process, and the proportion of the respective fraction used to produce RDF.220 In

order to include these interdependencies into the computation, percentage values for the

proportion of different fractions of the overall input, and the percentage of use of fractions to

produce RDF are defined.

217 See “CDM Rulebook - Large-Scale - Registration - Registration fee,” http://www.cdmrulebook.org/110, accessed

July 2011. 218 In the work at hand, it is assumed that the CAPEX can be calculated by multiplying a CAPEX per capacity price

timest he maximum capacity. This is a reasonable approach for approximate values. 219 The term proportion refers to the percentage of one fraction within the overall output. The term composition refers

to the summary of all proportions. 220 Within this work it is assumed that the production of RDF includes the use of plastics, paper, and other input

materials.

- 44 -

Assuming that the plant is able to fully sort out the separate input materials (e.g. one ton of

plastic input within the mixture of MSW will result in one ton of separated plastic output after the

treatment process) and that, due to biological treatment steps, the weight of the organic fraction

(and only of this fraction) will be reduced, leads to a change in the composition of the output

streams. Further, in order to produce RDF, high caloric fractions (such as plastics, paper and

cardboard, and wood) are needed. Hence, a large proportion of these fractions cannot be sold

separately. A sample computation is provided in Figure 11 including appropriate assumptions.

Figure 11: Sample computation of input and output flows.221

Further impacts were identified with respect to cash outflows. Regarding initial CAPEX and

CDM registration activities, exchange rate risks apply as the facilities will be imported from

Europe and the registration fees are payable in USD. Also, price developments of the MBT

plant are taken into consideration. The registration fees are calculated on the basis of average

annual tonnage of CO2 emission savings. Fees are 0.10 USD per ton for the first 15,000 tons

and 0.20 USD for the following.222 With respect to personnel expenses it is assumed that

salaries are likely to increase heavily over the next years. According to recent studies, average

income levels in India will increase from around 115,000 INR today to around 320,000 INR in

2025.223

221 Source: compiled by the author. 222 See CDM Rulebook. 223 See “The 'Bird of Gold': The Rise of India's Consumer Market,” http://www.mckinsey.com/mgi/publications/india

_consumer_market/slideshow/main.asp, accessed July 2011.

Input Outputthereof thereof

Metals 1,0 t 1% Metals 1,0 t 2%

Glass 0,7 t 1% Glass 0,7 t 1%

Paper 10,0 t 10% Paper 3,0 t 6%

Plastics 5,0 t 5% Plastics 2,0 t 4%

Compost 56,0 t 56% Compost 8,4 t 16%

others 27,3 t 27% others 26,2 t 50%

RDF 11,1 t 21%

thereofPaper 7,0 tPlastics 3,0 tothers 1,1 t

further AssumptionsWeight reduction of compost 85%Use of paper to produce RDF 70%Use of plastics to produce RDF 60%Use of others to produce RDF 4%

100,0 t 52,4 t

- 45 -

Fuel costs are calculated on the basis of annual demand of fuel multiplied by the price per liter.

The demand is based on the assumption that 4 vehicles are used 8 hours per day on 300 days

per annum and consume 15 liters of fuel per hour, equaling roughly 144,000 liters of fuel per

annum. The price range is defined according to recent price developments, taking

developments from 2006 until today into account.224 In addition, it is assumed that further

energy needs are covered internally by using the produced biogas.

Inflation rates tend to be high in India (around 11.7% in 2010).225 The development is taken into

consideration for all elements of the cashflow computation except for revenues from CERs.

The sale of CERs takes place in Europe and the cash is transferred to India.226 Hence, currency

exchange rate risks apply but not Indian inflationary developments. More importantly, the

inflation rate impact is not included in the developments of the single variables but is mentioned

as a separate impact parameter and thus also computed separately.

After calculating the costs and revenues from other sources except for gate fees paid by the

municipality, the gate fee is determined to be 10 INR per ton. The computation also includes the

assumption that the disposal costs will be 10 INR per ton, and that administrative cost will be

1% of the initial CAPEX. Incorporating this last variable into the analysis, the overall pre tax

cashflow as well as the income tax become computable. It is assumed that the allowed tax

exemption of 10 years within the first 20 years of the project duration is used within the first ten

years.

After transforming rather abstract risks into measureable and computable variables, the next

step is to generate data and to calculate results. This is done within the following subchapter.

224 See “TABLE-Fuel prices in India's capital since 2000 | Reuters,” http://in.reuters.com/article/2011/05/14/india-fuel-

idINL3E7GB2E420110514, accessed July 2011. 225 See “CIA - The World Factbook. India,” 2011, https://www.cia.gov/library/publications/the-worldfactbook/geos/in

.html, accessed July 2011. 226 One could argue that European inflationary developments should be incorporated. However, with respect to

relatively low inflation rates in Europe, this is neglected within this work.

- 46 -

4.4 Computation and Evaluation of the Investment Op portunity

A Monte Carlo simulation approach is used within this work to generate a large amount of

random variables that are then applied to calculate possible outcomes. Repeating this

calculation several, in the work at hand 1,000 times, leads to a stable distribution of possible

results that can be used to predict future developments of a project.

When using a computerized number generator, such as Microsoft Excel, one needs to ensure

that the numbers are normally distributed. Besides that, one needs to include the distribution

curves of the previously defined ranges that are (most likely) not normally distributed but one

range will appear more probable than another. Given the case that the probability of Range A is

90% means that 9 out of 10 times, the randomly created value must be within that range. The

following example in Table 6 illustrates this concept and also refers to the case when different

probability distributions need to be considered. It also shows the way of computing possible

outcomes.

Computation of Fuel Costs

Range A

Range B

from to probability from to probability

Liters Needed 10 20 90% 20 30 10%

Price per Liter 1 1.5 10%

1,5 2 90%

Liters Needed Price per Liter

No Random Range Computation Result Random Range Computation Result

1 0.12 A 10+(20-10) x 0.12 11.20 0.85 A 1.0+(1,5-1) x 0,85 1.43

2 0.28 A 10+(20-10) x 0.28 12.81 0.57 B 1.5+(2-1.5) x 0,57 1.78

3 0.16 A 10+(20-10) x 0.16 11.55 0.80 B 1.5+(2-1.5) x 0,80 1.90

4 0.04 A 10+(20-10) x 0.04 10.43 0.69 B 1.5+(2-1.5) x 0,69 1.85

5 0.13 A 10+(20-10) x 0.13 11.35 0.14 B 1.5+(2-1.5) x 0,14 1.57

6 0.99 A 10+(20-10) x 0.99 19.92 0.68 B 1.5+(2-1.5) x 0,68 1.84

7 0.75 A 10+(20-10) x 0.75 17.48 0.07 B 1.5+(2-1.5) x 0,07 1.54

8 0.62 A 10+(20-10) x 0.62 16.20 0.58 B 1.5+(2-1.5) x 0,58 1.79

9 0.54 A 10+(20-10) x 0.54 15.38 0.11 B 1.5+(2-1.5) x 0,11 1.56

10 0.15 B 20+(30-20) x 0.15 21.51 0.07 B 1.5+(2-1.5) x 0,07 1.54

Table 6: Sample computation of Fuel Costs using Monte Carlo simulation.227


- 47 -

Turning to the sample project that is analyzed in this work, one can compile the following cash-

flow statement based on the tree- diagram presented in Figure 10. This statement groups the

components of the annual cash- flows. The figures presented are statistically derived and show

the mean (µ) of the 1,000 randomly chosen computations. The mean thereby represents the

arithmetic average of the values.228 The following Table 7 also includes the results of the three

highlighted methods used for investment decisions.

Sample Project – MBT Plant in Aligarh - Cash Flow Overview (in Mio. INR)

Year Initial CAPEX Replacement CAPEX

Revenues OPEX After Tax Cash Flow

0 -251,0

-251.0 1

-0.6 137.5 -8.2 130.1

2

-1.3 166.3 -10.0 157.3 3

-1.7 166.9 -10.1 157.1

4

-1.7 164.8 -10.2 155.1 5

-1.7 165.0 -10.1 155.8

6

-1.7 166.7 -10.2 156.9 7

-1.7 166.0 -10.2 156.3

8

-1.7 166.8 -10.2 157.1 9

-1.7 167.6 -10.1 157.9

10

-0.6 135.5 -8.2 128.2 11

-1.0 149.7 -9.1 133.0

12

-1.0 149.7 -9.3 132.9 13

-1.0 157.2 -9.3 138.2

14

-1.0 154.8 -9.4 136.4 15

-1.2 155.8 -9.7 137.1

16

-1.2 160.0 -9.9 139.9 17

-1.2 161.6 -9.9 141.0

18

-1.2 166.7 -10.1 144.5 19

-1.3 164.9 -10.0 143.0

20

-1.7 165.4 -10.1 142.7

NPV 912.2 Mio INR

IRR 64 %

Payback 2.25 years

Table 7: Cash- Flow Statement for the Sample Project MBT Plant in Aligarh.229

228 See Appendix 2 for further details, including standard deviation (σ). 229 Source: compiled by the author.

- 48 -

The discount rate for the NPV computation was determined to be 10%. This is assumed to be

the minimum interest rate a potential investor would demand. The average internal rate of

return (IRR), i.e. the interest rate with an NPV equal to 0, as well as the other two figures

appear to be very attractive to a potential investor. This is mainly due to the large amount of

government grants, as these grants reduce the initial CAPEX by around 90%. In return, the

plant has to be handed over to the municipality after the project duration. This results in the

absence of terminal values at the end of the project term. But as these would be discounted

over the 20 year duration one can assume that the present value would be comparably small.

As seen in Figure 12, the probability of achieving a NPV in excess of 1 million IND is 50%.

However, the chance of making less than one million, or even make a loss are also 50%. The

highest possible loss (-2.4 million INR) is also higher than the highest possible positive net

present value (1.8 million INR). This is partly due to the assumed default of payment rates.230

An equal reasoning applies for the internal rate of return (IRR). Even though the negative

impact is comparably low, the probability of gaining an IRR less than 60% is about one fourth.

On the other hand, there is 85% probability of achieving a payback of the initial CAPEX within

the first three years of the project.

230 It is assumed that the municipality and the payment of the government grant will default 1 out of 100 times, the

third party recycling companies 5 out of 100 times.

- 49 -

Figure 12: Probability distribution of the three highlighted investment methods.231


-2.500 -2.000 -1.500 -1.000 -500 0 500 1.000 1.500 2.000

100%

Pro

babi

lity

90

80

70

60

50

Net Present Value (NPV) in mio INR

0

10

20

30

40

50% probability

50 6030 40 80 100900

50% probability

70 110%2010-10

90

80

70

60

50

40

30

20

10

0

Internal Rate of Return (IRR)

Pro

babi

lity

100%

1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5 5,0 5,5 6,0 6,5 7,0

50% probability

Payback in years

Pro

babi

lity

70

0

80

90

100%

60

50

40

30

20

10

- 50 -

5 Conclusion and Outlook

The aim of this work is to provide a practically oriented toolkit for the evaluation of investments

with respect to the possible influence of risks in the municipal solid waste management market

in India.

“Garbage in – Garbage out”232 is a well known saying with respect to the quality of information.

This applies particularly well for the work at hand, because the prediction of the future always

involves subjective estimated guesses. The better these guesses are the more reliable is the

outcome of the analysis. One first important step in this respect is to ensure that all major risks

are included. Understanding the notion of relativity of risk in conjunction with understanding

safeguard measures leads onto the right path: knowing about risk is already a safeguard

measure and could reduce the probability of negative deviations from the target. This work

provides a practical approach of combining investment project computation and risk with the

intention of detecting all major risks by combining cashflow tree- diagrams and the risk-

pyramid. It further introduces the concept of risk- analysis in order to include the detected risky

influences into the project’s cashflow computation. This method basically suggests to define

ranges of values for uncertain aspects, to attach probability distributions for these ranges, and

to include these aspects into the project computation. The Monte Carlo simulation is used to

generate a large amount of uniformly distributed random values in order to compute different

possible project outcomes.

The Indian MSWM market offers a broad variety of business opportunities. On the one hand,

the legislative framework requires a high standard of waste management services, oriented on

European and German waste legislation.233 On the other hand, most of the responsible

municipalities do not comply with these rules.234 Therefore, different government grants and

subsidies were introduced focusing on waste management and other aspects of infrastructure

and sanitation.235 The MSWM market, however, is dominated by rapidly growing Indian waste

management companies.236

Conducting a risk analysis for a sample MSWM project in an Indian medium size town revealed

several findings. Firstly, the Government of India strongly supports investments in the MSWM

field and provides a number of grants as well as a lot of relevant information.

232 See for example Jürgen Weber and Utz Schäffer, Balanced Scorecard & Controlling: Implementierung - Nutzen

für Manager und Controller - Erfahrungen in deutschen Unternehmen, 3rd ed. (Wiesbaden, 2000), p. 337. 233 See Seemann, A./Ravindra, A. (2008): p. 621. 234 See See Zhu, D. et. al. (2008): p. 14. 235 See PPP Toolkit Volume I (2011): pp. 60-64. 236 See for example Sharma, E (2010).

- 51 -

Secondly, an increasing number of projects are underway, particularly referring to integrated

MSWM activities. These include the whole range of MSWM activities, particularly including

state- of- the- art source- segregation, collection, waste treatment, and disposal techniques.

With respect to the information needed for the analysis it is important to retrieve profound data.

The immanent danger is that decision makers rely on the output of insufficiently researched

information but perceive the output as valid because of the sophisticated underlying method.

Therefore a manual should be developed in order to ensure a high standard of information

retrieval and a high degree of information consistency. At the same time, further rules need to

be implemented with respect to the actual decision for or against investment projects. These

rules should particularly include the dimension of risk as one important parameter.

Looking from a rather global perspective, the resulting analysis framework that is tailored to the

MSWM market in India could also be used for investment project evaluations in the waste

management sectors of other countries. However, one should apply due care in order to ensure

that all major risks are included in the analysis.

- 52 -

Appendices

- 53 -

Appendix 1: Municipal Solid Waste (Management and H andling) Rules 2000

Ministry of Environment and Forests

Notification

New Delhi, the 25 th September, 2000

S.O. 908(E).- Whereas the draft of the Municipal Solid Wastes (Management and Handling)

Rules, 1999 were published under the notification of the Government of India in the Ministry of

Environment and Forests number S.O. 783(E), dated, the 27th September, 1999 in the Gazette

of India, Part II, Section 3, Sub-section (ii) of the same date inviting objections and suggestions

from the persons likely to be affected thereby, before the expiry of the period of sixty days from

the date on which the copies of the Gazette containing the said notification are made available

to the public;

And whereas copies of the said Gazette were made available to the public on the 5th October,

1999;

And whereas the objections and suggestions received from the public in respect of the said

draft rules have been duly considered by the Central Government;

Now, therefore, in exercise of the powers conferred by section 3, 6 and 25 of the Environment

(Protection) Act, 1986 (29 of 1986), the Central Government hereby makes the following rules

to regulate the management and handling of the municipal solid wastes, namely :-

1. Short title and commencement : --

1. These rules may be called the Municipal Solid Wastes (Management and Handling) Rules, 2000.

2. Save as otherwise provided in these rules, they shall come into force on the date of their publication in the Official Gazette.

2. Application .-- These rules shall apply to every municipal authority responsible for collection,

segregation, storage, transportation,, processing and disposal of municipal

solid wastes.

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3. Definitions.-- In these rules, unless the context otherwise requires ,--

i. "anaerobic digestion" means a controlled process involving microbial decomposition of organic matter in the absence of oxygen;

ii. "authorization" means the consent given by the Board or Committee to the "operator of a facility" ;

iii. "biodegradable substance " means a substance that can be degraded by micro-organisms;

iv. "biomethanation" means a process which entails enzymatic decomposition of the organic matter by microbial action to produce methane rich biogas;

v. "collection" means lifting and removal of solid wastes from collection points or any other location;

vi. "composting" means a controlled process involving microbial decomposition of organic matter;

vii. "demolition and construction waste" means wastes from building materials debris and rubble resulting from construction, re-modelling, repair and demolition operation;

viii. "disposal" means final disposal of municipal solid wastes in terms of the specified measures to prevent contamination of ground-water, surface water and ambient air quality;

ix. "Form" means a Form appended to these rules; x. "generator of wastes" means persons or establishments generating municipal solid

wastes; xi. "land filling" means disposal of residual solid wastes on land in a facility designed with

protective measures against pollution of ground water, surface water and air fugitive dust, wind-blown litter, bad odour, fire hazard, bird menace, pests or rodents, greenhouse gas emissions, slope instability and erosion;

xii. "leachate" means liquid that seeps through solid wastes or other medium and has extracts of dissolved or suspended material from it;

xiii. "lysimeter" is a device used to measure rate of movement of water through or from a soil layer or is used to collect percolated water for quality analysis;

xiv. "municipal authority" means Municipal Corporation, Municipality, Nagar Palika, Nagar Nigam, Nagar Panchayat, Municipal Council including notified area committee (NAC) or any other local body constituted under the relevant statutes and, where the management and handling of municipal solid waste is entrusted to such agency;

xv. "municipal solid waste" includes commercial and residential wastes generated in a municipal or notified areas in either solid or semi-solid form excluding industrial hazardous wastes but including treated bio-medical wastes;

xvi. "operator of a facility" means a person who owns or operates a facility for collection, segregation, storage, transportation, processing and disposal of municipal solid wastes and also includes any other agency appointed as such by the municipal authority for the management and handling of municipal solid wastes in the respective areas;

xvii. "pelletisation" means a process whereby pellets are prepared which are small cubes or cylindrical pieces made out of solid wastes and includes fuel pellets which are also referred as refuse derived fuel;

xviii. "processing" means the process by which solid wastes are transformed into new or recycled products;

xix. "recycling" means the process of transforming segregated solid wastes into raw materials for producing new products, which may or may not be similar to the original products;

xx. "schedule" means a Schedule appended to these rules; xxi. "segregation" means to separate the municipal solid wastes into the groups of organic,

inorganic, recyclables and hazardous wastes; xxii. "State Board or the Committee" means the State Pollution Control Board of a State,

or as the case may be, the Pollution Control Committee of a Union territory;

- 55 -

xxiii. "storage" means the temporary containment of municipal solid wastes in a manner so as to prevent littering, attraction to vectors, stray animals and excessive foul odour;

xxiv. "transportation " means conveyance of municipal solid wastes from place to place hygienically through specially designed transport system so as to prevent foul odour, littering, unsightly conditions and accessibility to vectors;

xxv. "vadose water" water which occurs between the ground, surface and the water table that is the unsaturated zone;

xxvi. "vermicomposting" is a process of using earthworms for conversion of bio-degradable wastes into compost.

4. RESPONSIBILITY OF MUNICIPAL AUTHORITY: -

1. Every municipal authority shall, within the territorial area of the municipality, be responsible for the implementation of the provisions of these rules, and for any infrastructure development for collection, storage, segregation, transportation, processing and disposal of municipal solid wastes.

2. The municipal authority or an operator of a facility shall make an application in Form-I, for grant of authorization for setting up waste processing and disposal facility including landfills from the State Board or the Committee in order to comply with the implementation programme laid down in Schedule I .

3. The municipal authority shall comply with these rules as per the implementation schedule laid down in Schedule I.

4. The municipal authority shall furnish its annual report in Form-II , -

a. to the Secretary-incharge of the Department of Urban Development of the concerned State or as the case may be of the Union territory, in case of a metropolitan city; or

b. to the District Magistrate or the Deputy Commissioner concerned in case of all other towns and cities, with a copy to the State Board or the Committee on or before the 30th day of June every year.

5. RESPONSIBILITY OF THE STATE GOVERNMENT AND THE U NION TERRITORY

ADMINISTRATIONS: --

(1) The Secretary-incharge of the Department of Urban Development of the concerned

State or the Union territory, as the case may be, shall have the overall responsibility for

the enforcement of the provisions of these rules in the metropolitan cities.

(2) The District Magistrate or the Deputy Commissioner of the concerned district shall

have the overall responsibility for the enforcement of the provisions of these rules within

the territorial limits of their jurisdiction.

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6. RESPONSIBILITY OF THE CENTRAL POLLUTION CONTROL BOARD AND THE STATE

BOARD OR THE COMMITTEES: —

1. The State Board or the Committee shall monitor the compliance of the standards regarding ground water, ambient air, leachate quality and the compost quality including incineration standards as specified under Schedules II, III and IV.

2. The State Board or the Committee, after the receipt of application from the municipal authority or the operator of a facility in Form I, for grant of authorization for setting up waste processing and disposal facility including landfills, shall examine the proposal taking into consideration the views of other agencies like the State Urban Development Department, the Town and Country Planning Department, Air Port or Air Base Authority, the Ground Water Board or any such other agency prior to issuing the authorization.

3. The State Board or the Committee shall issue the authorization in Form-III to the municipal authority or an operator of a facility within forty-five days stipulating compliance criteria and standards as specified in Schedules II, III and IV including such other conditions, as may be necessary.

4. The authorization shall be valid for a given period and after the validity is over, a fresh authorization shall be required.

5. The Central Pollution Control Board shall co-ordinate with the State Boards and the Committees with particular reference to implementation and review of standards and guidelines and compilation of monitoring data.

7. MANAGEMENT OF MUNICIPAL SOLID WASTES. --

1. Any municipal solid waste generated in a city or a town, shall be managed and handled in accordance with the compliance criteria and the procedure laid down in Schedule-II.

2. The waste processing and disposal facilities to be set up by the municipal authority on their own or through an operator of a facility shall meet the specifications and standards as specified in Schedules III and IV .

8. ANNUAL REPORTS: —

1. The State Boards and the Committees shall prepare and submit to the Central Pollution Control Board an annual report with regard to the implementation of these rules by the 15th of September every year in Form-IV .

2. The Central Pollution Control Board shall prepare the consolidated annual review report on management of municipal solid wastes and forward it to the Central Government along with its recommendations before the 15th of December every year.

9. ACCIDENT REPORTING. -- When an accident occurs at any municipal solid wastes

collection, segregation, storage, processing, treatment and disposal facility or landfill site or

during the transportation of such wastes, the municipal authority shall forthwith report the

accident in Form-V to the Secretary in-charge of the Urban Development Department in

metropolitan cities, and to District Collector or Deputy Commissioner in all other cases.

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Schedule I

[see rules4(2) and (3)]

Implementation Schedule

Serial

No.

5.1.1 Compliance Criteria Schedule

1. Setting up of waste processing and disposal facilities By 31.12.2003 or

earlier

2. Monitoring the performance of waste processing and

disposal facilities

Once in six

months

3. Improvement of existing landfill sites as per provisions

of these rules

By 31.12.2001 or

earlier

4. Identification of landfill sites for future use and making

site (s) ready for operation

By 31.12.2002 or

earlier

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Schedule -II

[see rules 6(1) and (3), 7(1)]

Management of Municipal Solid Wastes

S.No Parameters Compliance criteria

1. Collection of

municipal solid

wastes

1. Littering of municipal solid waste shall be prohibited in cities,

towns and in urban areas notified by the State Governments.

To prohibit littering and facilitate compliance, the following

steps shall be taken by the municipal authority, namely: -

i.Organising house-to-house collection of municipal solid wastes through any of the methods, like community bin collection (central bin), house-to-house collection, collection on regular pre-informed timings and scheduling by using bell ringing of musical vehicle (without exceeding permissible noise levels);

ii.Devising collection of waste from slums and squatter areas or localities including hotels, restaurants, office complexes and commercial areas;

iii.Wastes from slaughter houses, meat and fish markets, fruits and vegetable markets, which are biodegradable in nature, shall be managed to make use of such wastes;

iv.Bio-medical wastes and industrial wastes shall not be mixed with municipal solid wastes and such wastes shall follow the rules separately specified for the purpose;

v.Collected waste from residential and other areas shall be transferred to community bin by hand-driven containerised carts or other small vehicles;

vi.Horticlutural and construction or demolition wastes or debris shall be separately collected and disposed off following proper norms. Similarly, wastes generated at dairies shall be regulated in accordance with the State laws;

vii.Waste (garbage, dry leaves) shall not be burnt;

viii. Stray animals shall not be allowed to move around waste storage facilities or at any other place in the city or town and shall be managed in accordance with the State laws.

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2. The municipal authority shall notify waste collection schedule

and the likely method to be adopted for public benefit in a city

or town.

3. It shall be the responsibility of generator of wastes to avoid

littering and ensure delivery of wastes in accordance with the

collection and segregation system to be notified by the

municipal authority as per para 1(2) of this Schedule.

2. Segregation of

municipal solid

wastes

In order to encourage the citizens, municipal authority shall

organise awareness programmes for segregation of wastes and

shall promote recycling or reuse of segregated materials. The

municipal authority shall undertake phased programme to ensure

community participation in waste segregation. For this purpose,

the municipal authorities shall arrange regular meetings at

quarterly intervals with representatives of local resident welfare

associations and non-governmental organizations.

3. Storage of

municipal solid

wastes

Municipal authorities shall establish and maintain storage facilities

in such a manner as they do not create unhygienic and in sanitary

conditions around it. Following criteria shall be taken into account

while establishing and maintaining storage facilities, namely: -

i.Storage facilities shall be created and established by taking into account quantities of waste generation in a given area and the population densities. A storage facility shall be so placed that it is accessible to users;

ii.Storage facilities to be set up by municipal authorities or any other agency shall be so designed that wastes stored are not exposed to open atmosphere and shall be aesthetically acceptable and user-friendly;

iii.Storage facilities or ‘bins’ shall have ‘easy to operate’ design for handling, transfer and transportation of waste. Bins for storage of bio-degradable wastes shall be painted green, those for storage of recyclable wastes shall be printed white and those for storage of other wastes shall be printed black;

iv.Manual handling of waste shall be prohibited. If unavoidable due to constraints, manual handling shall be carried out under proper precaution with due care for safety of workers.

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4. Transportation

of municipal

solid wastes

Vehicles used for transportation of wastes shall be covered.

Waste should not be visible to public, nor exposed to open

environment preventing their scattering. The following criteria shall

be met, namely:-

i.The storage facilities set up by municipal authorities shall be daily attended for clearing of wastes. The bins or containers wherever placed shall be cleaned before they start overflowing;

ii.Transportation vehicles shall be so designed that multiple handling of wastes, prior to final disposal, is avoided.

5. Processing of

municipal solid

wastes

Municipal authorities shall adopt suitable technology or

combination of such technologies to make use of wastes so as to

minimize burden on landfill. Following criteria shall be adopted,

namely:-

(i) The biodegradable wastes shall be processed by composting, vermicomposting, anaerobic digestion or any other appropriate biological processing for stabilization of wastes. It shall be ensured that compost or any other end product shall comply with standards as specified in Schedule-IV;

(ii) Mixed waste containing recoverable resources shall follow the route of recycling. Incineration with or without energy recovery including pelletisation can also be used for processing wastes in specific cases. Municipal authority or the operator of a facility wishing to use other state-of-the-art technologies shall approach the Central Pollution Control Board to get the standards laid down before applying for grant of authorisation.

6. Disposal of

municipal solid

wastes

Land filling shall be restricted to non-biodegradable, inert waste

and other waste that are not suitable either for recycling or for

biological processing. Land filling shall also be carried out for

residues of waste processing facilities as well as pre-processing

rejects from waste processing facilities. Land filling of mixed waste

shall be avoided unless the same is found unsuitable for waste

processing. Under unavoidable circumstances or till installation of

alternate facilities, land-filling shall be done following proper

norms. Landfill sites shall meet the specifications as given in

Schedule –III.

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Schedule III

[see rules 6(1) and (3), 7(2)]

Specifications for Landfill Sites

Site Selection

1. In areas falling under the jurisdiction of ‘Development Authorities’ it shall be the responsibility of such Development Authorities to identify the landfill sites and hand over the sites to the concerned municipal authority for development, operation and maintenance. Elsewhere, this responsibility shall lie with the concerned municipal authority.

2. Selection of landfill sites shall be based on examination of environmental issues. The Department of Urban Development of the State or the Union territory shall co-ordinate with the concerned organisations for obtaining the necessary approvals and clearances.

3. The landfill site shall be planned and designed with proper documentation of a phased construction plan as well as a closure plan.

4. he landfill sites shall be selected to make use of nearby wastes processing facility. Otherwise, wastes processing facility shall be planned as an integral part of the landfill site.

5. The existing landfill sites, which continue to be used for more than five years, shall be improved in accordance of the specifications given in this Schedule.

6. Biomedical wastes shall be disposed off in accordance with the Bio-medical Wastes (Management and Handling) Rules, 1998 and hazardous wastes shall be managed in accordance with the Hazardous Wastes (Management and Handling) Rules, 1989, as amended from time to time.

7. The landfill site shall be large enough to last for 20-25 years.

8. The landfill site shall be away from habitation clusters, forest areas, water bodies monuments, National Parks, Wetlands and places of important cultural, historical or religious interest.

9. A buffer zone of no-development shall be maintained around landfill site and shall be incorporated in the Town Planning Department’s land-use plans.

10. Landfill site shall be away from airport including airbase. Necessary approval of airport or airbase authorities prior to the setting up of the landfill site shall be obtained in cases where the site is to be located within 20 km of an airport or airbase.

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Facilities at the Site

11. Landfill site shall be fenced or hedged and provided with proper gate to monitor incoming vehicles or other modes of transportation.

12. The landfill site shall be well protected to prevent entry of unauthorised persons and stray animals.

13. Approach and other internal roads for free movement of vehicles and other machinery shall exist at the landfill site.

14. The landfill site shall have wastes inspection facility to monitor wastes brought in for landfill, office facility for record keeping and shelter for keeping equipment and machinery including pollution monitoring equipments.

15. Provisions like weigh bridge to measure quantity of waste brought at landfill site, fire protection equipments and other facilities as may be required shall be provided.

16. Utilities such as drinking water (preferably bathing facilities for workers) and lighting arrangements for easy landfill operations when carried out in night hours shall be provided.

17. Safety provisions including health inspections of workers at landfill site shall be periodically made.

5.1.1.1 Specifications for land filling

18. Wastes subjected to land filling shall be compacted in thin layers using landfill compactors to achieve high density of the wastes. In high rainfall areas where heavy compactors cannot be used alternative measures shall be adopted.

19. Wastes shall be covered immediately or at the end of each working day with minimum 10 cm of soil, inert debris or construction material till such time waste processing facilities for composting or recycling or energy recovery are set up as per Schedule I.

20. Prior to the commencement of monsoon season, an intermediate cover of 40-65 cm thickness of soil shall be placed on the landfill with proper compaction and grading to prevent infiltration during monsoon. Proper drainage berms shall be constructed to divert run-off away from the active cell of the landfill.

21. After completion of landfill, a final cover shall be designed to minimize infiltration and erosion. The final cover shall meet the following specifications, namely: --

a. The final cover shall have a barrier soil layer comprising of 60 cms of clay or amended soil with permeability coefficient less that 1 x 10-7 cm/sec.

b. On top of the barrier soil layer there shall be a drainage layer of 15 cm.

c. On top of the drainage layer there shall be a vegetative layer of 45 cm to support natural plant growth and to minimize erosion.

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Pollution prevention

22.In order to prevent pollution problems from landfill operations, the following provisions

shall be made, namely: -

a. Diversion of storm water drains to minimize leachate generation and prevent pollution of surface water and also for avoiding flooding and creation of marshy conditions;

b. Construction of a non-permeable lining system at the base and walls of waste disposal area. For landfill receiving residues of waste processing facilities or mixed waste or waste having contamination of hazardous materials (such as aerosols, bleaches, polishes, batteries, waste oils, paint products and pesticides) minimum liner specifications shall be a composite barrier having 1.5 mm high density polyethylene (HDPE) geomembrane, or equivalent, overlying 90 cm of soil (clay or amended soil) having permeability coefficient not greater than 1 x 10-7 cm/sec. The highest level of water table shall be at least two meter below the base of clay or amended soil barrier layer;

c. Provisions for management of leachates collection and treatment shall be made. The treated leachates shall meet the standards specified in Schedule- IV;

d. Prevention of run-off from landfill area entering any stream, river, lake or pond.

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Water Quality Monitoring

23. Before establishing any landfill site, baseline data of ground water quality in the area shall be collected and kept in record for future reference. The ground water quality within 50 metres of the periphery of landfill site shall be periodically monitored to ensure that the ground water is not contaminated beyond acceptable limit as decided by the Ground Water Board or the State Board or the Committee. Such monitoring shall be carried out to cover different seasons in a year that is, summer, monsoon and post-monsoon period.

24. Usage of groundwater in and around landfill sites for any purpose (including drinking and irrigation) is to be considered after ensuring its quality. The following specifications for drinking water quality shall apply for monitoring purpose, namely: -

S.No. Parameters IS 10500: 1991

Desirable limit (mg/l

except for pH)

1. Arsenic 0.05

2. Cadmium 0.01

3 Chromium 0.05

4. Copper 0.05

5. Cyanide 0.05

6. Lead 0.05

7. Mercury 0.001

8. Nickel -

9. Nitrate as NO3 45.0

10 PH 6.5-8.5

11. Iron 0.3

12. Total hardness (as CaCO3) 300.0

13. Chlorides 250

14. Dissolved solids 500

15. Phenolic compounds 0.001

16. Zinc 5.0

17. Sulphate (as SO4) 200

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Ambient Air Quality Monitoring

25. Installation of landfill gas control system including gas collection system shall be made at landfill site to minimize odour generation, prevent off-site migration of gases and to protect vegetation planted on the rehabilitated landfill surface.

26. The concentration of methane gas generated at landfill site shall not exceed 25 per cent of the lower explosive limit (LEL).

27. The landfill gas from the collection facility at a landfill site shall be utilized for either direct thermal applications or power generation, as per viability. Otherwise, landfill gas shall be burnt (flared) and shall not be allowed to directly escape to the atmosphere or for illegal tapping. Passive venting shall be allowed if its utiliztion or flaring is not possible.

28. Ambient air quality at the landfill site and at the vicinity shall be monitored to meet the following specified standards, namely :-

S.No. Parameters Acceptable levels

(i) Sulphur dioxide 120µg/m3 (24 hours)

(ii) Suspended Particulate

Matter

500µg/m3 (24 hours)

(iii) Methane Not to exceed 25 per cent of the

lower explosive limit (equivalent to

650 mg /m3) (24 hours)

(iv) Ammonia daily average

(sample duration 24 hrs)

o.4mg/m3 (400 µg/m3)

(v) Carbon monoxide 1 hour average : 2 mg/m3

8 hour average : 1 mg/m3

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29. The ambient air quality monitoring shall be carried out by the concerned authority as per the

following schedule, namely:-

(a) Six times in a year for cities having population of more than fifty lakhs;

(b) Four times in a year for cities having population between ten and fifty lakhs;

(c) Two times in a year for town or cities having population between one and ten lakhs.

Plantation at Landfill Site

30. A vegetative cover shall be provided over the completed site in accordance with the and

following specifications, namely: -

(a) Selection of locally adopted non-edible perennial plants that are resistant to

drought and extreme temperatures shall be allowed to grow;

(b) The plants grown be such that their roots do not penetrate more than 30 cms.

This condition shall apply till the landfill is stabilised;

(c) Selected plants shall have ability to thrive on low-nutrient soil with minimum

nutrient addition;

(d) Plantation to be made in sufficient density to minimize soil erosion.

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5.2 Closure of Landfill Site and Post-care

31. The post-closure care of landfill site shall be conducted for at least fifteen years and long

term monitoring or care plan shall consist of the following, namely :-

(a) Maintaining the integrity and effectiveness of final cover, making repairs and

preventing run-on and run-off from eroding or otherwise damaging the final

cover;

(b) Monitoring leachate collection system in accordance with the requirement;

(c) Monitoring of ground water in accordance with requirements and maintaining

ground water quality;

(d) Maintaining and operating the landfill gas collection system to meet the

standards.

32. Use of closed landfill sites after fifteen years of post-closure monitoring can be considered

for human settlement or otherwise only after ensuring that gaseous and leachate analysis

comply with the specified standards.

Special provisions for hilly areas

33. Cities and towns located on hills shall have location-specific methods evolved for final

disposal of solid wastes by the municipal authority with the approval of the concerned State

Board or the Committee. The municipal authority shall set up processing facilities for

utilization of biodegradable organic wastes. The inert and non-biodegradable waste shall be

used for building roads or filling-up of appropriate areas on hills. Because of constraints in

finding adequate land in hilly areas, wastes not suitable for road-laying or filling up shall be

disposed of in specially designed landfills.

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Schedule IV

[see rules 6(1) and (3), 7(2)]

Standards for Composting, Treated Leachates and Inc ineration

1. The waste processing or disposal facilities shall include composting, incineration, pelletisation, energy recovery or any other facility based on state-of-the-art technology duly approved by the Central Pollution Control Board

2. In case of engagement of private agency by the municipal authority, a specific agreement between the municipal authority and the private agency shall be made particularly, for supply of solid waste and other relevant terms and conditions.

3. In order to prevent pollution problems from compost plant and other processing facilities, the following shall be complied with, namely :-

i. The incoming wastes at site shall be maintained prior to further processing. To the extent possible, the waste storage area should be covered. If, such storage is done in an open area, it shall be provided with impermeable base with facility for collection of leachate and surface water run-off into lined drains leading to a leachate treatment and disposal facility;

ii. Necessary precautions shall be taken to minimise nuisance of odour, flies, rodents, bird menace and fire hazard;

iii. In case of breakdown or maintenance of plant, waste intake shall be stopped and arrangements be worked out for diversion of wastes to the landfill site;

iv. Pre-process and post-process rejects shall be removed from the processing facility on regular basis and shall not be allowed to pile at the site. Recyclables shall be routed through appropriate vendors. The non-recyclables shall be sent for well designed landfill site(s).

v. In case of compost plant, the windrow area shall be provided with impermeable base. Such a base shall be made of concrete or compacted clay, 50 cm thick, having permeability coefficient less than 10–7 cm/sec. The base shall be provided with 1 to 2 per cent slope and circled by lined drains for collection of leachate or surface run-off;

vi. Ambient air quality monitoring shall be regularly carried out particularly for checking odour nuisance at down-wind direction on the boundary of processing plant.

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vii. In order to ensure safe application of compost, the following specifications for compost quality shall be met, namely:-

5.2.1 Parameters Concentration not to

exceed * (mg/kg dry basis ,

except pH value and C/N

ratio)

Arsenic 10.00

Cadmium 5.00

Chromium 50.00

Copper 300.00

Lead 100.00

Mercury 0.15

Nickel 50.00

Zinc 1000.00

C/N ratio 20-40

PH 5.5-8.5

* Compost (final product) exceeding the above stated concentration limits shall not be used

for food crops. However, it may be utilized for purposes other than growing food crops.

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4. The disposal of treated leachates shall follow the following standards, namely:-

S.No Parameter Standards ( Mode of Disposal )

Inland surface

Public sewers

Land disposal

1 Suspended solids, mg/l, max 100 600 200

2 Dissolved solids (inorganic) mg/l, max.

2100 2100 2100

3 PH value 5.5 to 9.0 5.5 to 9.0 5.5 to 9.0

4 Ammonical nitrogen (as N), mg/l, max.

50 50 -

5 Total Kjeldahl nitrogen (as N), mg/l, max.

100 - -

6 Biochemical oxygen demand ( 3 days at 270 C) max.(mg/l)

30 350 100

7 Chemical oxygen demand, mg/l, max.

250 - -

8 Arsenic (as As), mg/l, max 0.2 0.2 0.2

9 Mercury (as Hg), mg/l, max 0.01 0.01 -

10 Lead (as Pb), mg/l, max 0.1 1.0 -

11 Cadmium (as Cd), mg/l, max 2.0 1.0 -

12 Total Chromium (as Cr), mg/l, max.

2.0 2.0 -

13 Copper (as Cu), mg/l, max. 3.0 3.0 -

14 Zinc (as Zn), mg/l, max. 5.0 15 -

15 Nickel (as Ni), mg/l, max 3.0 3.0 -

16 Cyanide (as CN), mg/l, max. 0.2 2.0 0.2

17 Chloride (as Cl), mg/l, max. 1000 1000 600

18 Fluoride (as F), mg/l, max 2.0 1.5 -

19 Phenolic compounds (as C6H5OH) mg/l, max.

1.0 5.0 -

Note : While discharging treated leachates into inland surface waters, quantity of leachates

being discharged and the quantity of dilution water available in the receiving water

body shall be given due consideration.

The incinerators shall meet the following operating and emission standards, namely:

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Operating Standards

(1) The combustion efficiency (CE) shall be at least 99.00%.

(2) The combustion efficiency is computed as follows :

%CO2

C.E. = ------------------------ x 100

%CO2 + %CO

6 Emission Standards

Parameters Concentration mg/Nm 3

at (12% CO2 correction

(1) Particulate matter 150

(2) Nitrogen Oxides 450

(3) HCl 50

(4) Minimum stack height shall be 30 metres above ground

Volatile organic compounds in ash shall not be more than 0.01%. (5)

Note :

1. Suitably designed pollution control devices shall be installed or retrofitted with the incinerator to achieve the above emission limits, if necessary.

2. Wastes to be incinerated shall not be chemically treated with any chlorinated disinfectants

3. Chlorinated plastics shall not be incinerated.

4. Toxic metals in incineration ash shall be limited within the regulatory quantities as specified in the Hazardous Wastes (Management and Handling) Rules, 1989 as amended from time to time.

5. Only low sulphur fuel like l.d.o., l.s.h.s or Diesel shall be used as fuel in the incinerator.

- 72 -

Appendix 2: Cash- flow Computation of the Sample Pr oject

I. Identification of Risks

Figure 13: Combination of the project cashflow and risks.237


After TaxCash-Flow

Pre Tax Cash-Flow

Income Tax

Cash Inflows

Cash Outflows

Gate Fee

Input Quantity

Price per ton

RevenuesRecycling Revenues

Output Quantity

Price

CO2 Savings in tons

Price per ton

Carbon Finance

Other InflowsGovernment

GrantsUIDSSMT

CAPEX

OPEX

Initial CAPEX

Replacement CAPEX

CDM registration

Site leases

Square meters needed

Lease per square meter

Personnel Expenses

Number of Employees

Salary

Maintenance Costs

Fuel Costs

Liters of Fuel needed

Price per liter

Tonnage disposed

Price per ton

Disposal Costs

Administrative Costs

Applicable Tax Exemptions

Tax Base

Tax Rate Depreciation

Proportion

CO2 Equivalents

Input Quality

Business Risks

Purchasing Risks

Production related Risks

Labor related Risks

Legal Risks

Liquidity Risks

Default Risks

Market Risks

Operational Risks

Performance Risks

Fianancial Risks

- 73 -

II. List of Measurable Impacts

Note: the second column incorporates the unit of the element and the probability (p) of

occurrence of the respective range.

Input Quantity [t] year Range 1 Range 2 Range 3

1 t 60.000 80.000 80.000 100.000 100.000 120.000 p 40% 55% 5%

2 t 60.000 80.000 80.000 100.000 100.000 120.000 p 35% 55% 10%

3 t 60.000 80.000 80.000 100.000 100.000 120.000 p 35% 60% 5%

4 t 60.000 80.000 80.000 100.000 100.000 120.000 p 30% 60% 10%

5 t 60.000 80.000 80.000 100.000 100.000 120.000 p 30% 50% 20%

6 t 60.000 80.000 80.000 100.000 100.000 120.000 p 30% 50% 20%

7 t 60.000 80.000 80.000 100.000 100.000 120.000 p 25% 45% 30%

8 t 60.000 80.000 80.000 100.000 100.000 120.000 p 25% 45% 30%

9 t 60.000 80.000 80.000 100.000 100.000 120.000 p 25% 45% 30%

10 t 60.000 80.000 80.000 100.000 100.000 120.000 p 20% 40% 40%

11 t 60.000 80.000 80.000 100.000 100.000 120.000 p 20% 35% 45%

12 t 60.000 80.000 80.000 100.000 100.000 120.000 p 20% 25% 55%

13 t 60.000 80.000 80.000 100.000 100.000 120.000 p 15% 20% 65%

14 t 60.000 80.000 80.000 100.000 100.000 120.000 p 15% 20% 65%

15 t 60.000 80.000 80.000 100.000 100.000 120.000 p 15% 20% 65%

16 t 60.000 80.000 80.000 100.000 100.000 120.000 p 10% 15% 75%

17 t 60.000 80.000 80.000 100.000 100.000 120.000 p 10% 15% 75%

18 t 60.000 80.000 80.000 100.000 100.000 120.000 p 5% 10% 85%

19 t 60.000 80.000 80.000 100.000 100.000 120.000 p 5% 10% 85%

20 t 60.000 80.000 80.000 100.000 100.000 120.000 p 5% 10% 85%

- 74 -

Metal Input[% of Input Quantity] year Range 1 Range 2 Range 3

1 % 0.0% 0.5% 0.5% 1.0% 1.0% 1.5% p 1% 90% 9%

2 % 0.0% 0.5% 0.5% 1.0% 1.0% 1.5% p 1% 90% 9%

3 % 0.0% 0.5% 0.5% 1.0% 1.0% 1.5% p 1% 90% 9%

4 % 0.0% 0.5% 0.5% 1.0% 1.0% 1.5% p 1% 90% 9%

5 % 0.0% 0.5% 0.5% 1.0% 1.0% 1.5% p 5% 85% 10%

6 % 0.0% 0.5% 0.5% 1.0% 1.0% 1.5% p 5% 85% 10%

7 % 0.0% 0.5% 0.5% 1.0% 1.0% 1.5% p 5% 85% 10%

8 % 0.0% 0.5% 0.5% 1.0% 1.0% 1.5% p 5% 85% 10%

9 % 0.0% 0.5% 0.5% 1.0% 1.0% 1.5% p 5% 85% 10%

10 % 0.0% 0.5% 0.5% 1.0% 1.0% 1.5% p 5% 85% 10%

11 % 0.0% 0.5% 0.5% 1.0% 1.0% 1.5% p 5% 85% 10%

12 % 0.0% 0.5% 0.5% 1.0% 1.0% 1.5% p 5% 85% 10%

13 % 0.0% 0.5% 0.5% 1.0% 1.0% 1.5% p 5% 85% 10%

14 % 0.0% 0.5% 0.5% 1.0% 1.0% 1.5% p 5% 85% 10%

15 % 0.0% 0.5% 0.5% 1.0% 1.0% 1.5% p 5% 85% 10%

16 % 0.0% 0.5% 0.5% 1.0% 1.0% 1.5% p 5% 85% 10%

17 % 0.0% 0.5% 0.5% 1.0% 1.0% 1.5% p 5% 85% 10%

18 % 0.0% 0.5% 0.5% 1.0% 1.0% 1.5% p 5% 85% 10%

19 % 0.0% 0.5% 0.5% 1.0% 1.0% 1.5% p 5% 85% 10%

20 % 0.0% 0.5% 0.5% 1.0% 1.0% 1.5% p 5% 85% 10%

- 75 -

Metal Price per ton [INR/t] year Range 1 Range 2 Range 3

1 INR/t 5.000 7.000 7.000 9.000 9.000 11.000 p 1% 90% 9%

2 INR/t 5.000 7.000 7.000 9.000 9.000 11.000 p 1% 90% 9%

3 INR/t 5.000 7.000 7.000 9.000 9.000 11.000 p 1% 90% 9%

4 INR/t 5.000 7.000 7.000 9.000 9.000 11.000 p 1% 90% 9%

5 INR/t 5.000 7.000 7.000 9.000 9.000 11.000 p 1% 90% 9%

6 INR/t 5.000 7.000 7.000 9.000 9.000 11.000 p 1% 90% 9%

7 INR/t 5.000 7.000 7.000 9.000 9.000 11.000 p 1% 85% 14%

8 INR/t 5.000 7.000 7.000 9.000 9.000 11.000 p 1% 85% 14%

9 INR/t 5.000 7.000 7.000 9.000 9.000 11.000 p 1% 85% 14%

10 INR/t 5.000 7.000 7.000 9.000 9.000 11.000 p 1% 85% 14%

11 INR/t 5.000 7.000 7.000 9.000 9.000 11.000 p 1% 85% 14%

12 INR/t 5.000 7.000 7.000 9.000 9.000 11.000 p 1% 80% 19%

13 INR/t 5.000 7.000 7.000 9.000 9.000 11.000 p 1% 80% 19%

14 INR/t 5.000 7.000 7.000 9.000 9.000 11.000 p 1% 80% 19%

15 INR/t 5.000 7.000 7.000 9.000 9.000 11.000 p 1% 80% 19%

16 INR/t 5.000 7.000 7.000 9.000 9.000 11.000 p 1% 80% 19%

17 INR/t 5.000 7.000 7.000 9.000 9.000 11.000 p 1% 75% 24%

18 INR/t 5.000 7.000 7.000 9.000 9.000 11.000 p 1% 75% 24%

19 INR/t 5.000 7.000 7.000 9.000 9.000 11.000 p 1% 75% 24%

20 INR/t 5.000 7.000 7.000 9.000 9.000 11.000 p 1% 75% 24%

- 76 -

Glass Input[% of Input Quantity] year Range 1 Range 2 Range 3

1 % 0.0% 0.2% 0.2% 0.8% 0.8% 1.0% p 1% 90% 9%

2 % 0.0% 0.2% 0.2% 0.8% 0.8% 1.0% p 1% 90% 9%

3 % 0.0% 0.2% 0.2% 0.8% 0.8% 1.0% p 1% 90% 9%

4 % 0.0% 0.2% 0.2% 0.8% 0.8% 1.0% p 1% 90% 9%

5 % 0.0% 0.2% 0.2% 0.8% 0.8% 1.0% p 1% 90% 9%

6 % 0.0% 0.2% 0.2% 0.8% 0.8% 1.0% p 1% 88% 11%

7 % 0.0% 0.2% 0.2% 0.8% 0.8% 1.0% p 1% 87% 12%

8 % 0.0% 0.2% 0.2% 0.8% 0.8% 1.0% p 1% 86% 13%

9 % 0.0% 0.2% 0.2% 0.8% 0.8% 1.0% p 1% 86% 13%

10 % 0.0% 0.2% 0.2% 0.8% 0.8% 1.0% p 1% 85% 14%

11 % 0.0% 0.2% 0.2% 0.8% 0.8% 1.0% p 1% 85% 14%

12 % 0.0% 0.2% 0.2% 0.8% 0.8% 1.0% p 1% 85% 14%

13 % 0.0% 0.2% 0.2% 0.8% 0.8% 1.0% p 1% 84% 15%

14 % 0.0% 0.2% 0.2% 0.8% 0.8% 1.0% p 1% 84% 15%

15 % 0.0% 0.2% 0.2% 0.8% 0.8% 1.0% p 1% 83% 16%

16 % 0.0% 0.2% 0.2% 0.8% 0.8% 1.0% p 1% 83% 16%

17 % 0.0% 0.2% 0.2% 0.8% 0.8% 1.0% p 1% 82% 17%

18 % 0.0% 0.2% 0.2% 0.8% 0.8% 1.0% p 1% 81% 18%

19 % 0.0% 0.2% 0.2% 0.8% 0.8% 1.0% p 1% 81% 18%

20 % 0.0% 0.2% 0.2% 0.8% 0.8% 1.0% p 1% 80% 19%

- 77 -

Glass Price per ton [INR/t] year Range 1 Range 2 Range 3

1 INR/t 3.000 3.500 3.500 4.500 4.500 5.000 p 1% 90% 9%

2 INR/t 3.000 3.500 3.500 4.500 4.500 5.000 p 1% 90% 9%

3 INR/t 3.000 3.500 3.500 4.500 4.500 5.000 p 1% 85% 14%

4 INR/t 3.000 3.500 3.500 4.500 4.500 5.000 p 1% 85% 14%

5 INR/t 3.000 3.500 3.500 4.500 4.500 5.000 p 1% 85% 14%

6 INR/t 3.000 3.500 3.500 4.500 4.500 5.000 p 1% 85% 14%

7 INR/t 3.000 3.500 3.500 4.500 4.500 5.000 p 1% 80% 19%

8 INR/t 3.000 3.500 3.500 4.500 4.500 5.000 p 1% 90% 9%

9 INR/t 3.000 3.500 3.500 80 4.500 5.000 p 1% 90% 9%

10 INR/t 3.000 3.500 3.500 80 4.500 5.000 p 1% 80% 19%

11 INR/t 3.000 3.500 3.500 4.500 4.500 5.000 p 1% 75% 24%

12 INR/t 3.000 3.500 3.500 4.500 4.500 5.000 p 1% 75% 24%

13 INR/t 3.000 3.500 3.500 4.500 4.500 5.000 p 1% 75% 24%

14 INR/t 3.000 3.500 3.500 4.500 4.500 5.000 p 1% 75% 24%

15 INR/t 3.000 3.500 3.500 4.500 4.500 5.000 p 1% 75% 24%

16 INR/t 3.000 3.500 3.500 4.500 4.500 5.000 p 1% 75% 24%

17 INR/t 3.000 3.500 3.500 4.500 4.500 5.000 p 1% 75% 24%

18 INR/t 3.000 3.500 3.500 4.500 4.500 5.000 p 1% 75% 24%

19 INR/t 3.000 3.500 3.500 4.500 4.500 5.000 p 1% 75% 24%

20 INR/t 3.000 3.500 3.500 4.500 4.500 5.000 p 1% 75% 24%

- 78 -

Paper and Cardboard Input[% of Input Quantity] year Range 1 Range 2 Range 3

1 % 8.0% 10.0% 10.0% 14.0% 14.0% 16.0% p 1% 90% 9%

2 % 8.0% 10.0% 10.0% 14.0% 14.0% 16.0% p 1% 90% 9%

3 % 8.0% 10.0% 10.0% 14.0% 14.0% 16.0% p 1% 90% 9%

4 % 8.0% 10.0% 10.0% 14.0% 14.0% 16.0% p 1% 90% 9%

5 % 8.0% 10.0% 10.0% 14.0% 14.0% 16.0% p 5% 85% 10%

6 % 8.0% 10.0% 10.0% 14.0% 14.0% 16.0% p 5% 85% 10%

7 % 8.0% 10.0% 10.0% 14.0% 14.0% 16.0% p 5% 85% 10%

8 % 8.0% 10.0% 10.0% 14.0% 14.0% 16.0% p 5% 85% 10%

9 % 8.0% 10.0% 10.0% 14.0% 14.0% 16.0% p 5% 85% 10%

10 % 8.0% 10.0% 10.0% 14.0% 14.0% 16.0% p 6% 85% 9%

11 % 8.0% 10.0% 10.0% 14.0% 14.0% 16.0% p 6% 85% 9%

12 % 8.0% 10.0% 10.0% 14.0% 14.0% 16.0% p 6% 85% 9%

13 % 8.0% 10.0% 10.0% 14.0% 14.0% 16.0% p 6% 85% 9%

14 % 8.0% 10.0% 10.0% 14.0% 14.0% 16.0% p 6% 85% 9%

15 % 8.0% 10.0% 10.0% 14.0% 14.0% 16.0% p 6% 85% 9%

16 % 8.0% 10.0% 10.0% 14.0% 14.0% 16.0% p 7% 85% 8%

17 % 8.0% 10.0% 10.0% 14.0% 14.0% 16.0% p 7% 85% 8%

18 % 8.0% 10.0% 10.0% 14.0% 14.0% 16.0% p 7% 85% 8%

19 % 8.0% 10.0% 10.0% 14.0% 14.0% 16.0% p 7% 85% 8%

20 % 8.0% 10.0% 10.0% 14.0% 14.0% 16.0% p 7% 85% 8%

- 79 -

Paper and Cardboard Price per ton [INR/t] year Range 1 Range 2 Range 3

1 INR/t 2.000 3.000 3.000 4.000 4.000 5.000 p 1% 90% 9%

2 INR/t 2.000 3.000 3.000 4.000 4.000 5.000 p 1% 90% 9%

3 INR/t 2.000 3.000 3.000 4.000 4.000 5.000 p 1% 90% 9%

4 INR/t 2.000 3.000 3.000 4.000 4.000 5.000 p 1% 89% 10%

5 INR/t 2.000 3.000 3.000 4.000 4.000 5.000 p 1% 88% 11%

6 INR/t 2.000 3.000 3.000 4.000 4.000 5.000 p 1% 87% 12%

7 INR/t 2.000 3.000 3.000 4.000 4.000 5.000 p 1% 86% 13%

8 INR/t 2.000 3.000 3.000 4.000 4.000 5.000 p 1% 85% 14%

9 INR/t 2.000 3.000 3.000 4.000 4.000 5.000 p 1% 85% 14%

10 INR/t 2.000 3.000 3.000 4.000 4.000 5.000 p 1% 85% 14%

11 INR/t 2.000 3.000 3.000 4.000 4.000 5.000 p 1% 85% 14%

12 INR/t 2.000 3.000 3.000 4.000 4.000 5.000 p 1% 85% 14%

13 INR/t 2.000 3.000 3.000 4.000 4.000 5.000 p 1% 84% 15%

14 INR/t 2.000 3.000 3.000 4.000 4.000 5.000 p 1% 83% 16%

15 INR/t 2.000 3.000 3.000 4.000 4.000 5.000 p 1% 82% 17%

16 INR/t 2.000 3.000 3.000 4.000 4.000 5.000 p 1% 81% 18%

17 INR/t 2.000 3.000 3.000 4.000 4.000 5.000 p 1% 80% 19%

18 INR/t 2.000 3.000 3.000 4.000 4.000 5.000 p 1% 80% 19%

19 INR/t 2.000 3.000 3.000 4.000 4.000 5.000 p 1% 80% 19%

20 INR/t 2.000 3.000 3.000 4.000 4.000 5.000 p 1% 80% 19%

- 80 -

% of Paper and Cardboard to produce RDF year Range 1 Range 2 Range 3

1 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

2 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

3 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

4 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

5 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

6 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

7 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

8 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

9 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

10 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

11 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

12 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

13 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

14 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

15 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

16 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

17 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

18 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

19 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

20 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

- 81 -

Plastics Input[% of Input Quantity] year Range 1 Range 2 Range 3

1 % 3.0% 5.0% 5.0% 7.0% 7.0% 9.0% p 5% 85% 10%

2 % 3.0% 5.0% 5.0% 7.0% 7.0% 9.0% p 5% 85% 10%

3 % 3.0% 5.0% 5.0% 7.0% 7.0% 9.0% p 5% 85% 10%

4 % 3.0% 5.0% 5.0% 7.0% 7.0% 9.0% p 5% 85% 10%

5 % 3.0% 5.0% 5.0% 7.0% 7.0% 9.0% p 5% 85% 10%

6 % 3.0% 5.0% 5.0% 7.0% 7.0% 9.0% p 6% 85% 9%

7 % 3.0% 5.0% 5.0% 7.0% 7.0% 9.0% p 6% 85% 9%

8 % 3.0% 5.0% 5.0% 7.0% 7.0% 9.0% p 6% 85% 9%

9 % 3.0% 5.0% 5.0% 7.0% 7.0% 9.0% p 6% 85% 9%

10 % 3.0% 5.0% 5.0% 7.0% 7.0% 9.0% p 6% 85% 9%

11 % 3.0% 5.0% 5.0% 7.0% 7.0% 9.0% p 6% 85% 9%

12 % 3.0% 5.0% 5.0% 7.0% 7.0% 9.0% p 6% 85% 9%

13 % 3.0% 5.0% 5.0% 7.0% 7.0% 9.0% p 6% 85% 9%

14 % 3.0% 5.0% 5.0% 7.0% 7.0% 9.0% p 7% 84% 9%

15 % 3.0% 5.0% 5.0% 7.0% 7.0% 9.0% p 7% 84% 9%

16 % 3.0% 5.0% 5.0% 7.0% 7.0% 9.0% p 7% 84% 9%

17 % 3.0% 5.0% 5.0% 7.0% 7.0% 9.0% p 7% 84% 9%

18 % 3.0% 5.0% 5.0% 7.0% 7.0% 9.0% p 8% 84% 8%

19 % 3.0% 5.0% 5.0% 7.0% 7.0% 9.0% p 8% 84% 8%

20 % 3.0% 5.0% 5.0% 7.0% 7.0% 9.0% p 8% 84% 8%

- 82 -

Plastics Price per ton [INR/t] year Range 1 Range 2 Range 3

1 INR/t 4.500 5.500 5.500 6.500 6.500 8.500 p 1% 90% 9%

2 INR/t 4.500 5.500 5.500 6.500 6.500 8.500 p 2% 89% 9%

3 INR/t 4.500 5.500 5.500 6.500 6.500 8.500 p 2% 88% 10%

4 INR/t 4.500 5.500 5.500 6.500 6.500 8.500 p 2% 87% 11%

5 INR/t 4.500 5.500 5.500 6.500 6.500 8.500 p 2% 86% 12%

6 INR/t 4.500 5.500 5.500 6.500 6.500 8.500 p 2% 85% 13%

7 INR/t 4.500 5.500 5.500 6.500 6.500 8.500 p 2% 84% 14%

8 INR/t 4.500 5.500 5.500 6.500 6.500 8.500 p 2% 83% 15%

9 INR/t 4.500 5.500 5.500 6.500 6.500 8.500 p 2% 82% 16%

10 INR/t 4.500 5.500 5.500 6.500 6.500 8.500 p 2% 80% 18%

11 INR/t 4.500 5.500 5.500 6.500 6.500 8.500 p 2% 80% 18%

12 INR/t 4.500 5.500 5.500 6.500 6.500 8.500 p 2% 80% 18%

13 INR/t 4.500 5.500 5.500 6.500 6.500 8.500 p 2% 80% 18%

14 INR/t 4.500 5.500 5.500 6.500 6.500 8.500 p 2% 80% 18%

15 INR/t 4.500 5.500 5.500 6.500 6.500 8.500 p 2% 80% 18%

16 INR/t 4.500 5.500 5.500 6.500 6.500 8.500 p 2% 80% 18%

17 INR/t 4.500 5.500 5.500 6.500 6.500 8.500 p 2% 80% 18%

18 INR/t 4.500 5.500 5.500 6.500 6.500 8.500 p 2% 80% 18%

19 INR/t 4.500 5.500 5.500 6.500 6.500 8.500 p 2% 80% 18%

20 INR/t 4.500 5.500 5.500 6.500 6.500 8.500 p 2% 80% 18%

- 83 -

% of Plastics to produce RDF year Range 1 Range 2 Range 3

1 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

2 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

3 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

4 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

5 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

6 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

7 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

8 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

9 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

10 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

11 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

12 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

13 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

14 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

15 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

16 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

17 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

18 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

19 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

20 % 70.0% 80.0% 80.0% 90.0% 90.0% 100.0% p 1% 90% 9%

- 84 -

% of Others to produce RDF year Range 1 Range 2 Range 3

1 % 1.0% 3.0% 3.0% 5.0% 5.0% 7.0% p 1% 90% 9%

2 % 1.0% 3.0% 3.0% 5.0% 5.0% 7.0% p 1% 90% 9%

3 % 1.0% 3.0% 3.0% 5.0% 5.0% 7.0% p 1% 90% 9%

4 % 1.0% 3.0% 3.0% 5.0% 5.0% 7.0% p 1% 90% 9%

5 % 1.0% 3.0% 3.0% 5.0% 5.0% 7.0% p 1% 90% 9%

6 % 1.0% 3.0% 3.0% 5.0% 5.0% 7.0% p 1% 90% 9%

7 % 1.0% 3.0% 3.0% 5.0% 5.0% 7.0% p 1% 90% 9%

8 % 1.0% 3.0% 3.0% 5.0% 5.0% 7.0% p 1% 90% 9%

9 % 1.0% 3.0% 3.0% 5.0% 5.0% 7.0% p 1% 90% 9%

10 % 1.0% 3.0% 3.0% 5.0% 5.0% 7.0% p 1% 90% 9%

11 % 1.0% 3.0% 3.0% 5.0% 5.0% 7.0% p 1% 90% 9%

12 % 1.0% 3.0% 3.0% 5.0% 5.0% 7.0% p 1% 90% 9%

13 % 1.0% 3.0% 3.0% 5.0% 5.0% 7.0% p 1% 90% 9%

14 % 1.0% 3.0% 3.0% 5.0% 5.0% 7.0% p 1% 90% 9%

15 % 1.0% 3.0% 3.0% 5.0% 5.0% 7.0% p 1% 90% 9%

16 % 1.0% 3.0% 3.0% 5.0% 5.0% 7.0% p 1% 90% 9%

17 % 1.0% 3.0% 3.0% 5.0% 5.0% 7.0% p 1% 90% 9%

18 % 1.0% 3.0% 3.0% 5.0% 5.0% 7.0% p 1% 90% 9%

19 % 1.0% 3.0% 3.0% 5.0% 5.0% 7.0% p 1% 90% 9%

20 % 1.0% 3.0% 3.0% 5.0% 5.0% 7.0% p 1% 90% 9%

- 85 -

RDF Price per ton [INR/t] year Range 1 Range 2 Range 3

1 INR/t 500 1.000 1.000 1.500 1.500 2.000 p 60% 20% 20%

2 INR/t 500 1.000 1.000 1.500 1.500 2.000 p 60% 20% 20%

3 INR/t 500 1.000 1.000 1.500 1.500 2.000 p 60% 20% 20%

4 INR/t 500 1.000 1.000 1.500 1.500 2.000 p 60% 20% 20%

5 INR/t 500 1.000 1.000 1.500 1.500 2.000 p 60% 20% 20%

6 INR/t 500 1.000 1.000 1.500 1.500 2.000 p 55% 30% 15%

7 INR/t 500 1.000 1.000 1.500 1.500 2.000 p 55% 30% 15%

8 INR/t 500 1.000 1.000 1.500 1.500 2.000 p 50% 30% 20%

9 INR/t 500 1.000 1.000 1.500 1.500 2.000 p 50% 30% 20%

10 INR/t 500 1.000 1.000 1.500 1.500 2.000 p 45% 40% 15%

11 INR/t 500 1.000 1.000 1.500 1.500 2.000 p 45% 40% 15%

12 INR/t 500 1.000 1.000 1.500 1.500 2.000 p 45% 40% 15%

13 INR/t 500 1.000 1.000 1.500 1.500 2.000 p 45% 40% 15%

14 INR/t 500 1.000 1.000 1.500 1.500 2.000 p 40% 50% 10%

15 INR/t 500 1.000 1.000 1.500 1.500 2.000 p 30% 50% 20%

16 INR/t 500 1.000 1.000 1.500 1.500 2.000 p 30% 50% 20%

17 INR/t 500 1.000 1.000 1.500 1.500 2.000 p 30% 50% 20%

18 INR/t 500 1.000 1.000 1.500 1.500 2.000 p 30% 50% 20%

19 INR/t 500 1.000 1.000 1.500 1.500 2.000 p 30% 60% 10%

20 INR/t 500 1.000 1.000 1.500 1.500 2.000 p 30% 60% 10%

- 86 -

Compost Input[% of Input Quantity] year Range 1 Range 2 Range 3

1 % 45.0% 55.0% 55.0% 65.0% 65.0% 75.0% p 1% 90% 9%

2 % 45.0% 55.0% 55.0% 65.0% 65.0% 75.0% p 1% 90% 9%

3 % 45.0% 55.0% 55.0% 65.0% 65.0% 75.0% p 1% 90% 9%

4 % 45.0% 55.0% 55.0% 65.0% 65.0% 75.0% p 1% 90% 9%

5 % 45.0% 55.0% 55.0% 65.0% 65.0% 75.0% p 1% 90% 9%

6 % 45.0% 55.0% 55.0% 65.0% 65.0% 75.0% p 1% 90% 9%

7 % 45.0% 55.0% 55.0% 65.0% 65.0% 75.0% p 1% 90% 9%

8 % 45.0% 55.0% 55.0% 65.0% 65.0% 75.0% p 1% 90% 9%

9 % 45.0% 55.0% 55.0% 65.0% 65.0% 75.0% p 1% 90% 9%

10 % 45.0% 55.0% 55.0% 65.0% 65.0% 75.0% p 1% 90% 9%

11 % 45.0% 55.0% 55.0% 65.0% 65.0% 75.0% p 1% 90% 9%

12 % 45.0% 55.0% 55.0% 65.0% 65.0% 75.0% p 1% 90% 9%

13 % 45.0% 55.0% 55.0% 65.0% 65.0% 75.0% p 1% 90% 9%

14 % 45.0% 55.0% 55.0% 65.0% 65.0% 75.0% p 1% 90% 9%

15 % 45.0% 55.0% 55.0% 65.0% 65.0% 75.0% p 1% 90% 9%

16 % 45.0% 55.0% 55.0% 65.0% 65.0% 75.0% p 1% 90% 9%

17 % 45.0% 55.0% 55.0% 65.0% 65.0% 75.0% p 1% 90% 9%

18 % 45.0% 55.0% 55.0% 65.0% 65.0% 75.0% p 1% 90% 9%

19 % 45.0% 55.0% 55.0% 65.0% 65.0% 75.0% p 1% 90% 9%

20 % 45.0% 55.0% 55.0% 65.0% 65.0% 75.0% p 1% 90% 9%

- 87 -

Compost Weight Reduction[%] year Range 1 Range 2 Range 3

1 % 50.0% 70.0% 70.0% 80.0% 80.0% 90.0% p 1% 90% 9%

2 % 50.0% 70.0% 70.0% 80.0% 80.0% 90.0% p 1% 90% 9%

3 % 50.0% 70.0% 70.0% 80.0% 80.0% 90.0% p 1% 90% 9%

4 % 50.0% 70.0% 70.0% 80.0% 80.0% 90.0% p 1% 90% 9%

5 % 50.0% 70.0% 70.0% 80.0% 80.0% 90.0% p 1% 90% 9%

6 % 50.0% 70.0% 70.0% 80.0% 80.0% 90.0% p 5% 85% 10%

7 % 50.0% 70.0% 70.0% 80.0% 80.0% 90.0% p 5% 85% 10%

8 % 50.0% 70.0% 70.0% 80.0% 80.0% 90.0% p 5% 85% 10%

9 % 50.0% 70.0% 70.0% 80.0% 80.0% 90.0% p 5% 85% 10%

10 % 50.0% 70.0% 70.0% 80.0% 80.0% 90.0% p 5% 85% 10%

11 % 50.0% 70.0% 70.0% 80.0% 80.0% 90.0% p 5% 85% 10%

12 % 50.0% 70.0% 70.0% 80.0% 80.0% 90.0% p 5% 85% 10%

13 % 50.0% 70.0% 70.0% 80.0% 80.0% 90.0% p 5% 85% 10%

14 % 50.0% 70.0% 70.0% 80.0% 80.0% 90.0% p 5% 85% 10%

15 % 50.0% 70.0% 70.0% 80.0% 80.0% 90.0% p 5% 85% 10%

16 % 50.0% 70.0% 70.0% 80.0% 80.0% 90.0% p 5% 85% 10%

17 % 50.0% 70.0% 70.0% 80.0% 80.0% 90.0% p 5% 85% 10%

18 % 50.0% 70.0% 70.0% 80.0% 80.0% 90.0% p 5% 85% 10%

19 % 50.0% 70.0% 70.0% 80.0% 80.0% 90.0% p 5% 85% 10%

20 % 50.0% 70.0% 70.0% 80.0% 80.0% 90.0% p 5% 85% 10%

- 88 -

Compost Price per ton [INR/t] year Range 1 Range 2 Range 3

1 INR/t 1.000 2.000 2.000 3.000 3.000 4.000 p 1% 90% 9%

2 INR/t 1.000 2.000 2.000 3.000 3.000 4.000 p 1% 90% 9%

3 INR/t 1.000 2.000 2.000 3.000 3.000 4.000 p 1% 90% 9%

4 INR/t 1.000 2.000 2.000 3.000 3.000 4.000 p 1% 90% 9%

5 INR/t 1.000 2.000 2.000 3.000 3.000 4.000 p 1% 90% 9%

6 INR/t 1.000 2.000 2.000 3.000 3.000 4.000 p 1% 90% 9%

7 INR/t 1.000 2.000 2.000 3.000 3.000 4.000 p 1% 90% 9%

8 INR/t 1.000 2.000 2.000 3.000 3.000 4.000 p 1% 90% 9%

9 INR/t 1.000 2.000 2.000 3.000 3.000 4.000 p 1% 90% 9%

10 INR/t 1.000 2.000 2.000 3.000 3.000 4.000 p 1% 90% 9%

11 INR/t 1.000 2.000 2.000 3.000 3.000 4.000 p 1% 90% 9%

12 INR/t 1.000 2.000 2.000 3.000 3.000 4.000 p 1% 90% 9%

13 INR/t 1.000 2.000 2.000 3.000 3.000 4.000 p 1% 90% 9%

14 INR/t 1.000 2.000 2.000 3.000 3.000 4.000 p 1% 90% 9%

15 INR/t 1.000 2.000 2.000 3.000 3.000 4.000 p 1% 90% 9%

16 INR/t 1.000 2.000 2.000 3.000 3.000 4.000 p 1% 90% 9%

17 INR/t 1.000 2.000 2.000 3.000 3.000 4.000 p 1% 90% 9%

18 INR/t 1.000 2.000 2.000 3.000 3.000 4.000 p 1% 90% 9%

19 INR/t 1.000 2.000 2.000 3.000 3.000 4.000 p 1% 90% 9%

20 INR/t 1.000 2.000 2.000 3.000 3.000 4.000 p 1% 90% 9%

- 89 -

CO2 Equivalents per Input ton [t] year Range 1 Range 2 Range 3

1 t 0.5 1.0 1.0 2.0 2.0 2.5 p 7% 90% 3%

2 t 0.5 1.0 1.0 2.0 2.0 2.5 p 7% 90% 3%

3 t 0.5 1.0 1.0 2.0 2.0 2.5 p 7% 90% 3%

4 t 0.5 1.0 1.0 2.0 2.0 2.5 p 7% 90% 3%

5 t 0.5 1.0 1.0 2.0 2.0 2.5 p 7% 90% 3%

6 t 0.5 1.0 1.0 2.0 2.0 2.5 p 7% 90% 3%

7 t 0.5 1.0 1.0 2.0 2.0 2.5 p 7% 90% 3%

8 t 0.5 1.0 1.0 2.0 2.0 2.5 p 7% 90% 3%

9 t 0.5 1.0 1.0 2.0 2.0 2.5 p 7% 90% 3%

10 t 0.5 1.0 1.0 2.0 2.0 2.5 p 7% 90% 3%

11 t 0.5 1.0 1.0 2.0 2.0 2.5 p 7% 90% 3%

12 t 0.5 1.0 1.0 2.0 2.0 2.5 p 7% 90% 3%

13 t 0.5 1.0 1.0 2.0 2.0 2.5 p 7% 90% 3%

14 t 0.5 1.0 1.0 2.0 2.0 2.5 p 7% 90% 3%

15 t 0.5 1.0 1.0 2.0 2.0 2.5 p 7% 90% 3%

16 t 0.5 1.0 1.0 2.0 2.0 2.5 p 7% 90% 3%

17 t 0.5 1.0 1.0 2.0 2.0 2.5 p 7% 90% 3%

18 t 0.5 1.0 1.0 2.0 2.0 2.5 p 7% 90% 3%

19 t 0.5 1.0 1.0 2.0 2.0 2.5 p 7% 90% 3%

20 t 0.5 1.0 1.0 2.0 2.0 2.5 p 7% 90% 3%

- 90 -

CER Price per ton [EUR/t] year Range 1 Range 2 Range 3

1 EUR 10.0 12.5 12.5 17.5 17.5 20.0 p 7% 90% 3%

2 EUR 10.0 12.5 12.5 17.5 17.5 20.0 p 7% 90% 3%

3 EUR 10.0 12.5 12.5 17.5 17.5 20.0 p 7% 90% 3%

4 EUR 10.0 12.5 12.5 17.5 17.5 20.0 p 7% 90% 3%

5 EUR 10.0 12.5 12.5 17.5 17.5 20.0 p 7% 90% 3%

6 EUR 10.0 12.5 12.5 17.5 17.5 20.0 p 7% 90% 3%

7 EUR 10.0 12.5 12.5 17.5 17.5 20.0 p 7% 90% 3%

8 EUR 10.0 12.5 12.5 17.5 17.5 20.0 p 7% 90% 3%

9 EUR 10.0 12.5 12.5 17.5 17.5 20.0 p 7% 90% 3%

10 EUR 10.0 12.5 12.5 17.5 17.5 20.0 p 3% 90% 7%

11 EUR 10.0 12.5 12.5 17.5 17.5 20.0 p 3% 90% 7%

12 EUR 10.0 12.5 12.5 17.5 17.5 20.0 p 3% 90% 7%

13 EUR 10.0 12.5 12.5 17.5 17.5 20.0 p 3% 90% 7%

14 EUR 10.0 12.5 12.5 17.5 17.5 20.0 p 3% 90% 7%

15 EUR 10.0 12.5 12.5 17.5 17.5 20.0 p 3% 90% 7%

16 EUR 10.0 12.5 12.5 17.5 17.5 20.0 p 3% 90% 7%

17 EUR 10.0 12.5 12.5 17.5 17.5 20.0 p 3% 90% 7%

18 EUR 10.0 12.5 12.5 17.5 17.5 20.0 p 3% 90% 7%

19 EUR 10.0 12.5 12.5 17.5 17.5 20.0 p 3% 90% 7%

20 EUR 10.0 12.5 12.5 17.5 17.5 20.0 p 3% 90% 7%

- 91 -

Initial CAPEX [EUR] Range 1 Range 2 Range 3

EUR 31.200.000 33.600.000 33.600.000 36.000.000 36.000.000 38.400.000 p 7% 90% 3%

Replacement CAPEX [INR] year Range 1 Range 2 Range 3

1 INR 0.0 1.000.000.0 1.000.000.0 2.000.000.0 2.000.000.0 3.000.000.0 p 90% 8% 2%

2 INR 0.0 1.000.000.0 1.000.000.0 2.000.000.0 2.000.000.0 3.000.000.0 p 90% 5% 5%

3 INR 0.0 1.000.000.0 1.000.000.0 2.000.000.0 2.000.000.0 3.000.000.0 p 90% 5% 5%

4 INR 0.0 1.000.000.0 1.000.000.0 2.000.000.0 2.000.000.0 3.000.000.0 p 90% 3% 7%

5 INR 0.0 1.000.000.0 1.000.000.0 2.000.000.0 2.000.000.0 3.000.000.0 p 90% 3% 7%

6 INR 0.0 1.000.000.0 1.000.000.0 2.000.000.0 2.000.000.0 3.000.000.0 p 90% 3% 7%

7 INR 0.0 1.000.000.0 1.000.000.0 2.000.000.0 2.000.000.0 3.000.000.0 p 90% 3% 7%

8 INR 0.0 1.000.000.0 1.000.000.0 2.000.000.0 2.000.000.0 3.000.000.0 p 90% 3% 7%

9 INR 0.0 1.000.000.0 1.000.000.0 2.000.000.0 2.000.000.0 3.000.000.0 p 90% 3% 7%

10 INR 0.0 1.000.000.0 1.000.000.0 2.000.000.0 2.000.000.0 3.000.000.0 p 40% 40% 20%

11 INR 0.0 1.000.000.0 1.000.000.0 2.000.000.0 2.000.000.0 3.000.000.0 p 60% 30% 10%

12 INR 0.0 1.000.000.0 1.000.000.0 2.000.000.0 2.000.000.0 3.000.000.0 p 60% 30% 10%

13 INR 0.0 1.000.000.0 1.000.000.0 2.000.000.0 2.000.000.0 3.000.000.0 p 60% 30% 10%

14 INR 0.0 1.000.000.0 1.000.000.0 2.000.000.0 2.000.000.0 3.000.000.0 p 60% 30% 10%

15 INR 0.0 1.000.000.0 1.000.000.0 2.000.000.0 2.000.000.0 3.000.000.0 p 40% 50% 10%

16 INR 0.0 1.000.000.0 1.000.000.0 2.000.000.0 2.000.000.0 3.000.000.0 p 40% 50% 10%

17 INR 0.0 1.000.000.0 1.000.000.0 2.000.000.0 2.000.000.0 3.000.000.0 p 50% 30% 20%

18 INR 0.0 1.000.000.0 1.000.000.0 2.000.000.0 2.000.000.0 3.000.000.0 p 50% 30% 20%

19 INR 0.0 1.000.000.0 1.000.000.0 2.000.000.0 2.000.000.0 3.000.000.0 p 30% 60% 10%

20 INR 0.0 1.000.000.0 1.000.000.0 2.000.000.0 2.000.000.0 3.000.000.0 p 10% 60% 30%

- 92 -

Employees Needed [No] year Range 1 Range 2 Range 3

1 No 5.0 10.0 10.0 15.0 15.0 20.0 p 2% 85% 13%

2 No 5.0 10.0 10.0 15.0 15.0 20.0 p 2% 85% 13%

3 No 5.0 10.0 10.0 15.0 15.0 20.0 p 2% 90% 8%

4 No 5.0 10.0 10.0 15.0 15.0 20.0 p 2% 90% 8%

5 No 5.0 10.0 10.0 15.0 15.0 20.0 p 2% 90% 8%

6 No 5.0 10.0 10.0 15.0 15.0 20.0 p 2% 90% 8%

7 No 5.0 10.0 10.0 15.0 15.0 20.0 p 2% 90% 8%

8 No 5.0 10.0 10.0 15.0 15.0 20.0 p 2% 90% 8%

9 No 5.0 10.0 10.0 15.0 15.0 20.0 p 2% 90% 8%

10 No 5.0 10.0 10.0 15.0 15.0 20.0 p 2% 90% 8%

11 No 5.0 10.0 10.0 15.0 15.0 20.0 p 3% 90% 7%

12 No 5.0 10.0 10.0 15.0 15.0 20.0 p 3% 90% 7%

13 No 5.0 10.0 10.0 15.0 15.0 20.0 p 4% 90% 6%

14 No 5.0 10.0 10.0 15.0 15.0 20.0 p 5% 90% 5%

15 No 5.0 10.0 10.0 15.0 15.0 20.0 p 5% 90% 5%

16 No 5.0 10.0 10.0 15.0 15.0 20.0 p 5% 90% 5%

17 No 5.0 10.0 10.0 15.0 15.0 20.0 p 5% 87% 8%

18 No 5.0 10.0 10.0 15.0 15.0 20.0 p 5% 87% 8%

19 No 5.0 10.0 10.0 15.0 15.0 20.0 p 5% 87% 8%

20 No 5.0 10.0 10.0 15.0 15.0 20.0 p 5% 87% 8%

- 93 -

Salary per Empoyee per anno [INR] year Range 1 Range 2 Range 3

1 No 50.000.0 150.000.0 150.000.0 300.000.0 300.000.0 450.000.0 p 90% 5% 3%

2 No 50.000.0 150.000.0 150.000.0 300.000.0 300.000.0 450.000.0 p 90% 5% 3%

3 No 50.000.0 150.000.0 150.000.0 300.000.0 300.000.0 450.000.0 p 90% 5% 3%

4 No 50.000.0 150.000.0 150.000.0 300.000.0 300.000.0 450.000.0 p 87% 7% 3%

5 No 50.000.0 150.000.0 150.000.0 300.000.0 300.000.0 450.000.0 p 86% 8% 3%

6 No 50.000.0 150.000.0 150.000.0 300.000.0 300.000.0 450.000.0 p 85% 9% 3%

7 No 50.000.0 150.000.0 150.000.0 300.000.0 300.000.0 450.000.0 p 84% 10% 3%

8 No 50.000.0 150.000.0 150.000.0 300.000.0 300.000.0 450.000.0 p 83% 11% 3%

9 No 50.000.0 150.000.0 150.000.0 300.000.0 300.000.0 450.000.0 p 82% 12% 3%

10 No 50.000.0 150.000.0 150.000.0 300.000.0 300.000.0 450.000.0 p 81% 13% 3%

11 No 50.000.0 150.000.0 150.000.0 300.000.0 300.000.0 450.000.0 p 80% 14% 3%

12 No 50.000.0 150.000.0 150.000.0 300.000.0 300.000.0 450.000.0 p 79% 15% 3%

13 No 50.000.0 150.000.0 150.000.0 300.000.0 300.000.0 450.000.0 p 78% 16% 3%

14 No 50.000.0 150.000.0 150.000.0 300.000.0 300.000.0 450.000.0 p 77% 17% 3%

15 No 50.000.0 150.000.0 150.000.0 300.000.0 300.000.0 450.000.0 p 76% 18% 3%

16 No 50.000.0 150.000.0 150.000.0 300.000.0 300.000.0 450.000.0 p 75% 19% 3%

17 No 50.000.0 150.000.0 150.000.0 300.000.0 300.000.0 450.000.0 p 74% 20% 3%

18 No 50.000.0 150.000.0 150.000.0 300.000.0 300.000.0 450.000.0 p 73% 21% 3%

19 No 50.000.0 150.000.0 150.000.0 300.000.0 300.000.0 450.000.0 p 72% 22% 3%

20 No 50.000.0 150.000.0 150.000.0 300.000.0 300.000.0 450.000.0 p 71% 23% 3%

- 94 -

Liters of Fuel needed [l] year Range 1 Range 2 Range 3

1 l 100.000.0 120.000.0 120.000.0 140.000.0 140.000.0 160.000.0 p 5% 90% 5%

2 l 100.000.0 120.000.0 120.000.0 140.000.0 140.000.0 160.000.0 p 7% 88% 5%

3 l 100.000.0 120.000.0 120.000.0 140.000.0 140.000.0 160.000.0 p 8% 87% 5%

4 l 100.000.0 120.000.0 120.000.0 140.000.0 140.000.0 160.000.0 p 9% 86% 5%

5 l 100.000.0 120.000.0 120.000.0 140.000.0 140.000.0 160.000.0 p 10% 85% 5%

6 l 100.000.0 120.000.0 120.000.0 140.000.0 140.000.0 160.000.0 p 12% 83% 5%

7 l 100.000.0 120.000.0 120.000.0 140.000.0 140.000.0 160.000.0 p 10% 80% 10%

8 l 100.000.0 120.000.0 120.000.0 140.000.0 140.000.0 160.000.0 p 10% 80% 10%

9 l 100.000.0 120.000.0 120.000.0 140.000.0 140.000.0 160.000.0 p 10% 80% 10%

10 l 100.000.0 120.000.0 120.000.0 140.000.0 140.000.0 160.000.0 p 10% 80% 10%

11 l 100.000.0 120.000.0 120.000.0 140.000.0 140.000.0 160.000.0 p 10% 80% 10%

12 l 100.000.0 120.000.0 120.000.0 140.000.0 140.000.0 160.000.0 p 10% 80% 10%

13 l 100.000.0 120.000.0 120.000.0 140.000.0 140.000.0 160.000.0 p 10% 80% 10%

14 l 100.000.0 120.000.0 120.000.0 140.000.0 140.000.0 160.000.0 p 10% 80% 10%

15 l 100.000.0 120.000.0 120.000.0 140.000.0 140.000.0 160.000.0 p 10% 80% 10%

16 l 100.000.0 120.000.0 120.000.0 140.000.0 140.000.0 160.000.0 p 10% 80% 10%

17 l 100.000.0 120.000.0 120.000.0 140.000.0 140.000.0 160.000.0 p 10% 80% 10%

18 l 100.000.0 120.000.0 120.000.0 140.000.0 140.000.0 160.000.0 p 10% 80% 10%

19 l 100.000.0 120.000.0 120.000.0 140.000.0 140.000.0 160.000.0 p 10% 80% 10%

20 l 100.000.0 120.000.0 120.000.0 140.000.0 140.000.0 160.000.0 p 10% 80% 10%

- 95 -

Price per Liter of Fuel [INR/l] year Range 1 Range 2 Range 3

1 INR 30.0 40.0 40.0 50.0 50.0 60.0 p 90% 5% 5%

2 INR 30.0 40.0 40.0 50.0 50.0 60.0 p 90% 5% 5%

3 INR 30.0 40.0 40.0 50.0 50.0 60.0 p 85% 6% 9%

4 INR 30.0 40.0 40.0 50.0 50.0 60.0 p 85% 6% 9%

5 INR 30.0 40.0 40.0 50.0 50.0 60.0 p 80% 7% 13%

6 INR 30.0 40.0 40.0 50.0 50.0 60.0 p 80% 7% 13%

7 INR 30.0 40.0 40.0 50.0 50.0 60.0 p 80% 7% 13%

8 INR 30.0 40.0 40.0 50.0 50.0 60.0 p 75% 8% 17%

9 INR 30.0 40.0 40.0 50.0 50.0 60.0 p 75% 8% 17%

10 INR 30.0 40.0 40.0 50.0 50.0 60.0 p 70% 9% 21%

11 INR 30.0 40.0 40.0 50.0 50.0 60.0 p 70% 9% 21%

12 INR 30.0 40.0 40.0 50.0 50.0 60.0 p 65% 10% 25%

13 INR 30.0 40.0 40.0 50.0 50.0 60.0 p 65% 10% 25%

14 INR 30.0 40.0 40.0 50.0 50.0 60.0 p 60% 10% 30%

15 INR 30.0 40.0 40.0 50.0 50.0 60.0 p 60% 10% 30%

16 INR 30.0 40.0 40.0 50.0 50.0 60.0 p 55% 11% 34%

17 INR 30.0 40.0 40.0 50.0 50.0 60.0 p 55% 11% 34%

18 INR 30.0 40.0 40.0 50.0 50.0 60.0 p 50% 12% 38%

19 INR 30.0 40.0 40.0 50.0 50.0 60.0 p 50% 12% 38%

20 INR 30.0 40.0 40.0 50.0 50.0 60.0 p 45% 10% 45%

- 96 -

Maintenance Costs [INR] year Range 1 Range 2 Range 3

1 INR 500.000.0 750.000.0 750.000.0 1.000.000.0 1.000.000.0 1.250.000.0 p 90% 8% 2%

2 INR 500.000.0 750.000.0 750.000.0 1.000.000.0 1.000.000.0 1.250.000.0 p 90% 5% 5%

3 INR 500.000.0 750.000.0 750.000.0 1.000.000.0 1.000.000.0 1.250.000.0 p 90% 5% 5%

4 INR 500.000.0 750.000.0 750.000.0 1.000.000.0 1.000.000.0 1.250.000.0 p 90% 3% 7%

5 INR 500.000.0 750.000.0 750.000.0 1.000.000.0 1.000.000.0 1.250.000.0 p 90% 3% 7%

6 INR 500.000.0 750.000.0 750.000.0 1.000.000.0 1.000.000.0 1.250.000.0 p 90% 3% 7%

7 INR 500.000.0 750.000.0 750.000.0 1.000.000.0 1.000.000.0 1.250.000.0 p 90% 3% 7%

8 INR 500.000.0 750.000.0 750.000.0 1.000.000.0 1.000.000.0 1.250.000.0 p 90% 3% 7%

9 INR 500.000.0 750.000.0 750.000.0 1.000.000.0 1.000.000.0 1.250.000.0 p 90% 3% 7%

10 INR 500.000.0 750.000.0 750.000.0 1.000.000.0 1.000.000.0 1.250.000.0 p 40% 40% 20%

11 INR 500.000.0 750.000.0 750.000.0 1.000.000.0 1.000.000.0 1.250.000.0 p 60% 30% 10%

12 INR 500.000.0 750.000.0 750.000.0 1.000.000.0 1.000.000.0 1.250.000.0 p 60% 30% 10%

13 INR 500.000.0 750.000.0 750.000.0 1.000.000.0 1.000.000.0 1.250.000.0 p 60% 30% 10%

14 INR 500.000.0 750.000.0 750.000.0 1.000.000.0 1.000.000.0 1.250.000.0 p 60% 30% 10%

15 INR 500.000.0 750.000.0 750.000.0 1.000.000.0 1.000.000.0 1.250.000.0 p 40% 50% 10%

16 INR 500.000.0 750.000.0 750.000.0 1.000.000.0 1.000.000.0 1.250.000.0 p 40% 50% 10%

17 INR 500.000.0 750.000.0 750.000.0 1.000.000.0 1.000.000.0 1.250.000.0 p 50% 30% 20%

18 INR 500.000.0 750.000.0 750.000.0 1.000.000.0 1.000.000.0 1.250.000.0 p 50% 30% 20%

19 INR 500.000.0 750.000.0 750.000.0 1.000.000.0 1.000.000.0 1.250.000.0 p 30% 60% 10%

20 INR 500.000.0 750.000.0 750.000.0 1.000.000.0 1.000.000.0 1.250.000.0 p 10% 60% 30%

- 97 -

Exchange Rate EUR/INR (1 EUR = x INR) year Range 1 Range 2 Range 3

1 INR 50.0 60.0 60.0 70.0 70.0 80.0 p 7% 90% 3%

2 INR 50.0 60.0 60.0 70.0 70.0 80.0 p 7% 90% 3%

3 INR 50.0 60.0 60.0 70.0 70.0 80.0 p 7% 90% 3%

4 INR 50.0 60.0 60.0 70.0 70.0 80.0 p 7% 90% 3%

5 INR 50.0 60.0 60.0 70.0 70.0 80.0 p 6% 88% 3%

6 INR 50.0 60.0 60.0 70.0 70.0 80.0 p 6% 88% 3%

7 INR 50.0 60.0 60.0 70.0 70.0 80.0 p 6% 88% 3%

8 INR 50.0 60.0 60.0 70.0 70.0 80.0 p 6% 88% 3%

9 INR 50.0 60.0 60.0 70.0 70.0 80.0 p 6% 88% 3%

10 INR 50.0 60.0 60.0 70.0 70.0 80.0 p 6% 88% 3%

11 INR 50.0 60.0 60.0 70.0 70.0 80.0 p 5% 88% 3%

12 INR 50.0 60.0 60.0 70.0 70.0 80.0 p 5% 88% 3%

13 INR 50.0 60.0 60.0 70.0 70.0 80.0 p 5% 88% 3%

14 INR 50.0 60.0 60.0 70.0 70.0 80.0 p 5% 88% 3%

15 INR 50.0 60.0 60.0 70.0 70.0 80.0 p 5% 88% 3%

16 INR 50.0 60.0 60.0 70.0 70.0 80.0 p 5% 88% 3%

17 INR 50.0 60.0 60.0 70.0 70.0 80.0 p 5% 88% 3%

18 INR 50.0 60.0 60.0 70.0 70.0 80.0 p 5% 88% 3%

19 INR 50.0 60.0 60.0 70.0 70.0 80.0 p 5% 88% 3%

20 INR 50.0 60.0 60.0 70.0 70.0 80.0 p 5% 88% 3%

- 98 -

Exchange Rate USD/INR (1 USD = x INR) year Range 1 Range 2 Range 3

1 INR 35.0 40.0 40.0 45.0 45.0 50.0 p 7% 90% 3%

2 INR 35.0 40.0 40.0 45.0 45.0 50.0 p 7% 90% 3%

3 INR 35.0 40.0 40.0 45.0 45.0 50.0 p 8% 89% 3%

4 INR 35.0 40.0 40.0 45.0 45.0 50.0 p 8% 89% 3%

5 INR 35.0 40.0 40.0 45.0 45.0 50.0 p 8% 89% 3%

6 INR 35.0 40.0 40.0 45.0 45.0 50.0 p 9% 88% 3%

7 INR 35.0 40.0 40.0 45.0 45.0 50.0 p 9% 88% 3%

8 INR 35.0 40.0 40.0 45.0 45.0 50.0 p 9% 88% 3%

9 INR 35.0 40.0 40.0 45.0 45.0 50.0 p 9% 88% 3%

10 INR 35.0 40.0 40.0 45.0 45.0 50.0 p 9% 88% 3%

11 INR 35.0 40.0 40.0 45.0 45.0 50.0 p 10% 85% 3%

12 INR 35.0 40.0 40.0 45.0 45.0 50.0 p 10% 85% 3%

13 INR 35.0 40.0 40.0 45.0 45.0 50.0 p 10% 85% 3%

14 INR 35.0 40.0 40.0 45.0 45.0 50.0 p 10% 85% 3%

15 INR 35.0 40.0 40.0 45.0 45.0 50.0 p 10% 85% 3%

16 INR 35.0 40.0 40.0 45.0 45.0 50.0 p 10% 85% 3%

17 INR 35.0 40.0 40.0 45.0 45.0 50.0 p 10% 85% 3%

18 INR 35.0 40.0 40.0 45.0 45.0 50.0 p 10% 85% 3%

19 INR 35.0 40.0 40.0 45.0 45.0 50.0 p 10% 85% 3%

20 INR 35.0 40.0 40.0 45.0 45.0 50.0 p 10% 85% 3%

- 99 -

Default of Payment Payment Default

Municipality 99% 1% Government Grants 99% 1% Recycling Companies 95% 5%

Inflation Rate [%] year Range 1 Range 2 Range 3

1 % 8.0% 11.0% 11.0% 14.0% 14.0% 17.0% p 5% 90% 5%

2 % 8.0% 11.0% 11.0% 14.0% 14.0% 17.0% p 5% 90% 5%

3 % 8.0% 11.0% 11.0% 14.0% 14.0% 17.0% p 5% 90% 5%

4 % 8.0% 11.0% 11.0% 14.0% 14.0% 17.0% p 5% 90% 5%

5 % 8.0% 11.0% 11.0% 14.0% 14.0% 17.0% p 5% 90% 5%

6 % 8.0% 11.0% 11.0% 14.0% 14.0% 17.0% p 5% 90% 5%

7 % 8.0% 11.0% 11.0% 14.0% 14.0% 17.0% p 5% 90% 5%

8 % 8.0% 11.0% 11.0% 14.0% 14.0% 17.0% p 5% 90% 5%

9 % 8.0% 11.0% 11.0% 14.0% 14.0% 17.0% p 5% 90% 5%

10 % 8.0% 11.0% 11.0% 14.0% 14.0% 17.0% p 5% 90% 5%

11 % 8.0% 11.0% 11.0% 14.0% 14.0% 17.0% p 5% 90% 5%

12 % 8.0% 11.0% 11.0% 14.0% 14.0% 17.0% p 5% 90% 5%

13 % 8.0% 11.0% 11.0% 14.0% 14.0% 17.0% p 5% 90% 5%

14 % 8.0% 11.0% 11.0% 14.0% 14.0% 17.0% p 5% 90% 5%

15 % 8.0% 11.0% 11.0% 14.0% 14.0% 17.0% p 5% 90% 5%

16 % 8.0% 11.0% 11.0% 14.0% 14.0% 17.0% p 5% 90% 5%

17 % 8.0% 11.0% 11.0% 14.0% 14.0% 17.0% p 5% 90% 5%

18 % 8.0% 11.0% 11.0% 14.0% 14.0% 17.0% p 5% 90% 5%

19 % 8.0% 11.0% 11.0% 14.0% 14.0% 17.0% p 5% 90% 5%

20 % 8.0% 11.0% 11.0% 14.0% 14.0% 17.0% p 5% 90% 5%

- 1 -

Sample Project - MBT Plant in Aligarh - Detailed Cash- Flow Overview (µ = arithmetic mean, σ= standard deviation) (in Mio. INR)

in mio INR µ σ µ σ µ σ µ σ µ σ µ σ µ σ µ σ µ σ

Total initial CAPEX -2.242,8 188,2Total CDM Registration -1,2 0,4Total Gov Grant CF 1.992,9 256,6

Gate Fees 0,8 0,2 1,0 0,2 1,0 0,2 1,0 0,2 1,1 0,2 1,0 0,2 1,1 0,2 1,1 0,2Recycling Rev 13,4 8,2 18,5 8,6 18,6 8,6 18,8 8,7 18,7 8,6 18,7 8,6 18,6 8,6 18,7 8,8Total CO2 Rev 123,3 57,0 146,8 56,1 147,3 56,9 145,1 56,4 145,9 56,5 147,0 56,5 146,4 55,6 147,1 56,9

Replacement CAPEX -0,6 0,5 -1,3 0,7 -1,7 0,7 -1,7 0,7 -1,7 0,7 -1,7 0,6 -1,7 0,7 -1,7 0,7

Site Leases 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0personel expense -1,5 1,2 -1,7 1,2 -1,7 1,3 -1,7 1,3 -1,7 1,2 -1,7 1,2 -1,7 1,2 -1,7 1,3maintenance costs -0,7 0,1 -0,8 0,2 -0,9 0,2 -0,9 0,2 -0,9 0,2 -0,9 0,2 -0,9 0,2 -0,9 0,2fuel costs -4,8 0,9 -5,7 1,5 -5,9 1,5 -5,9 1,5 -5,9 1,6 -5,9 1,5 -5,9 1,6 -5,9 1,5disposal costs -0,2 0,0 -0,2 0,1 -0,2 0,1 -0,2 0,1 -0,2 0,1 -0,2 0,1 -0,2 0,1 -0,2 0,1admin costs -0,3 0,0 -0,3 0,0 -0,3 0,0 -0,3 0,0 -0,3 0,0 -0,3 0,0 -0,3 0,0 -0,3 0,0inflation adjustment -0,7 1,1 -1,2 1,1 -1,1 1,1 -1,1 1,1 -1,1 1,1 -1,1 1,1 -1,1 1,1 -1,1 1,1

After Tax CF -251,1 261,5 130,2 56,6 157,4 61,4 157,2 62,3 155,2 61,3 155,9 61,6 157,0 61,7 156,3 60,9 157,1 62,2

in mio INR µ σ µ σ µ σ µ σ µ σ µ σ µ σ µ σ

Total initial CAPEXTotal CDM RegistrationTotal Gov Grant CF

Gate Fees 0,9 0,2 1,0 0,2 1,0 0,2 1,0 0,2 1,0 0,2 1,0 0,2 1,0 0,2 1,0 0,2Recycling Rev 16,4 9,7 16,9 10,0 17,0 9,7 17,0 9,3 18,8 10,1 19,2 9,9 19,1 9,9 19,6 9,4Total CO2 Rev 132,4 55,4 131,8 56,2 139,2 57,8 136,8 56,1 136,1 56,0 139,8 55,2 141,5 56,7 146,1 56,8

Replacement CAPEX -1,0 0,7 -1,0 0,7 -1,0 0,7 -1,0 0,7 -1,2 0,7 -1,2 0,7 -1,2 0,8 -1,2 0,8

Site Leases 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0personel expense -1,6 1,2 -1,6 1,2 -1,6 1,2 -1,6 1,1 -1,6 1,1 -1,6 1,2 -1,7 1,2 -1,7 1,2maintenance costs -0,8 0,2 -0,8 0,2 -0,8 0,2 -0,7 0,2 -0,8 0,2 -0,8 0,2 -0,8 0,2 -0,8 0,2fuel costs -5,3 1,4 -5,4 1,5 -5,4 1,5 -5,5 1,5 -5,5 1,5 -5,6 1,5 -5,6 1,5 -5,8 1,5disposal costs -0,2 0,1 -0,2 0,1 -0,2 0,1 -0,2 0,1 -0,2 0,1 -0,2 0,1 -0,2 0,1 -0,2 0,1admin costs -0,3 0,0 -0,3 0,0 -0,3 0,0 -0,3 0,0 -0,3 0,0 -0,3 0,0 -0,3 0,0 -0,3 0,0inflation adjustment -1,0 1,2 -1,0 1,2 -1,1 1,2 -1,0 1,1 -1,2 1,2 -1,3 1,2 -1,3 1,2 -1,3 1,1

After Tax CF 133,0 44,0 132,9 44,5 138,2 45,4 136,4 44,1 137,1 44,7 140,0 43,7 141,1 44,5 144,5 44,5

Year 11 Year 18Year 12 Year 13 Year 14 Year 15 Year 16 Year 17

Year 6 Year 7 Year 8Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

- 100 -

- 101 -

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- 107 -

Affirmation

I.

Benjamin Borngraeber

Matriculation number 2010 4 054

affirm that I completed the Master’s Thesis with the title

Evaluating Investment Opportunities in the Municipal Solid Waste Management Market

in India – A Case Study

without unauthorized help and that I did not use any other materials other than those cited in my

master’s thesis. Any information that I quote or on which I base any passages is clearly and

correctly cited.

Further. I have neither submitted this or a similar work to fulfill the requirements for another

course or program nor published this or a similar work.

July 22, 2011

Date Signature (Benjamin Borngraeber)

Documents

Evaluating Investment Opportunities in the MSWM Market in ... · stock) are not considered to be an investment. James S. Sagner, “Capital budgeting: Problems and new approaches,”