The Russian invasion of Ukraine led to a massive disruption of value chains and the destruction of infrastructure. However, Ukraine’s Recovery Plan presents a unique chance not only to repair the damage caused by the war but to accelerate economic growth and improve the quality of life in Ukraine, including enhancements in the municipal solid waste (MSW) management sector.
According to the Materials of the working group “Construction, urban planning, modernization of cities and regions of Ukraine”, included in Ukraine’s Recovery Plan, which was presented on July 4, 2022, during the Ukraine Recovery Conference, URC 2022: in 2021, more than 10 million tons (51 million m3) of MSW (municipal solid waste) were generated in Ukraine. 79% of the population benefit from MSW disposal services. The introduction of separate waste collection in 1725 settlements, the operation of 34 solid waste sorting lines, 1 waste-to-energy plant and 3 waste incinerators, allowed to process and dispose of only around 7.64% of MSW.
One of the key challenges in this area nowadays is the inefficiency of the MSW waste management system, the low percentage of MSW recycling, the industry being ill-equipped, as well as the damage and/or destruction of the MSW infrastructure (landfills, waste sorting plants, garbage trucks, containers, container sites). The predicament that has arisen with the MSW accumulation, the reduction of its processing and proper disposal, inhibits the realization of its economic potential as the resource of recyclable materials.
The draft of Ukraine’s Recovery Plan calls for structural modernization of the waste management system and its alignment with European standards, including via restoration and construction of waste management facilities (waste sorting, waste transhipment, waste processing, waste-to-energy plants and landfills). This will enable us to recycle and dispose of 15% of the total volume of MSW by the end of 2032, as well as to recycle and dispose of 60% of the total volume of construction and demolition debris. It will also become a basis for implementing a circular economy as a part of the European Green Deal.
The new law “On Waste Management” will become the foundation for this systemic transformation of the industry, as well as for the development of waste recovery and disposal processes and the initiation of new PPP projects in Ukraine.
New Law “On Waste Management”
On June 20, 2022, the Verkhovna Rada of Ukraine adopted the Law of Ukraine “On Waste Management”, reg. No. 2207-1-d, which was prepared by the Committee on Environmental Policy and Nature Management. On July 7, 2022, the law was signed by the President of Ukraine. [1]
The purpose of the Law is to improve the MSW management system; ensure legislative and regulatory regulation of relations in the MSW management sector, while following the requirements of the relevant European directives; determine the legal, organizational, economic foundations and mechanisms for preventing or reducing waste generation; facilitate its preparation to be reused and recovered as a source for secondary raw materials and energy; create MSW management facilities and infrastructure; attract investments ensuring regional and local development; improve the state of the environment and the health of the population.
The Law of Ukraine “On Waste Management” allows:
- To implement the European waste management hierarchy, organize the development of the waste management system at the national, regional and local levels (in compliance with the principle of “territorial proximity”, when waste treatment is carried out at the nearest construction or waste treatment facility, or the place of waste disposal, taking into account their environmental and economic efficiency, according to regional and local waste management plans); close the old landfills, and bring those that remain to European standards;
- To create conditions for the construction of modern waste processing infrastructure in Ukraine following the European legulations and open borders for investors (including public-private partnerships);
- To establish the polluter pays principle (the maker or owner of waste covers the costs of the waste generation prevention, waste collection, transportation and treatment, including the costs of creating and maintaining waste treatment facilities);
- To introduce extended manufacturer responsibility, meaning that the product manufacturer will be obliged to ensure complete disposal of the packaging that was released on the market along with goods.
Municipal solid waste management services (ukr. “Послуги з управління побутовими відходами”; a new term that will replace “Municipal solid waste handling services” (ukr “Послуги з поводження з побутовими відходами”)
– operations related to the collection, transportation, recovery and disposal of MSW, as well as activities related to the organization of the MSW management system, which is carried out by the provider of the MSW management service.
Municipal solid waste management system (conceptually new definition)
– a set of activities ensuring the collection, transportation and processing of MSW, including the creation and maintenance of MSW facilities, their supervision and further care, as well as the activities of business entities that perform separate MSW management operations within a territorial community or several territorial communities.
Ownership of waste
According to Article 11 of the Law of Ukraine “On Waste Management”, the subjects of waste ownership are physical and legal entities, territorial communities, and the state.
Foreigners and stateless persons can acquire waste ownership according to the law.
Territorial communities are the owners of waste, transferred by its creators or previous owners to MSW management systems. Waste ownership can be transferred to other entities based on a contract. Organizations of extended manufacturer responsibility are the owners of waste received, collected or otherwise obtained as a result of the activities of such an organization.
The provisions of Article 11 and the second part of Article 31 of the Law of Ukraine “On Waste Management” are supposed to solve the problem of demand risk in PPP projects as according to the new Law, MSW makers are obliged to ensure the transfer of municipal solid waste to the MSW management system and the waste owners are territorial communities (which are public partners according to the legislation regulating PPPs).
The next steps in the implementation of the European hierarchy of waste management, the organization of the development of the waste management system and modern waste processing infrastructure in Ukraine
At the national level:
- The development and ratification of the National Waste Prevention Program and the National Waste Management Plan by the Cabinet of Ministers of Ukraine;
- The development of a new set of Rules for the Provision of MSW collection and transportation services by the Ministry for Communities and Territories Development to replace the existing ones, approved by the Resolution of the CMU of December 10, 2008 No. 1070;
- The development of a New Procedure for conducting a tender for MSW collection and transportation by the Ministry for Communities and Territories Development to replace the existing one, which was approved by the Resolution of the CMU of November 16, 2011 No. 1173;
- The development and administration of a waste management information system by the Ministry for Communities and Territories Development. Business entities that intend to conduct or already conduct activities in the waste treatment sector will be obliged to create accounts in the system.
At the regional level — by the Council of Ministers of the Autonomous Republic of Crimea, regional, Kyiv and Sevastopol city state administrations:
- regional waste management plans must be developed and approved following the Procedure for Developing and Approving Regional Waste Management Plans approved by the CMU;
- conditions must be created for the organisation and construction of waste treatment facilities.
At the local level — by village, settlement and city councils:
- local waste management plans must be developed and approved following the Procedure for the Development, Authorization and Approval of Local Waste Management Plans which was approved by the CMU;
- issues regarding the placement of waste treatment facilities on the territory of the respective territorial communities must be resolved;
- points for the separate collection of MSW must be created.
Local self-government bodies ensure the MSW management, taking into account a settlement’s rules for the improvement of public spaces as well as regional and local waste management plans. They provide every MSW maker with MSW management services.
Territorial communities can cooperate and jointly finance the construction, reconstruction and/or maintenance of MSW processing facilities. They can implement joint projects, jointly finance (maintain) enterprises, communal institutions and organizations, form joint communal enterprises, institutions and organizations, or a joint management body. The procedure for organizing the cooperation of territorial communities is determined by the Law of Ukraine “On Cooperation of Territorial Communities”.
The design, construction, reconstruction and maintenance of MSW treatment facilities can be carried out by local self-government bodies under the public-private partnership model following the Law of Ukraine “On Public-Private Partnership” (part six of Article 30 of the Law of Ukraine “On Waste Management”).
Operations performed by the municipal system of MSW management (new concept)
The operations performed by the municipal system of MSW management are organised by the MSW management administrator, determined by the city, village or settlement council.
MSW management administrator can only be a municipal enterprise.
MSW management administrator:
- Ensures that the municipal system of MSW management operates properly.
- Enters into contracts with business entities on behalf of the local self-government body for individual MSW management operations.
- Enters into contracts with consumers to provide them with MSW management services.
- Creates a single information base for consumers to bill them for the provided MSW management services, record payment statuses and debts.
- Conducts claim-lawsuit work with debtors and information campaigns on consumer compliance with the requirements of regulatory documents in the MSW management sector.
- Calculates the weighted average tariff and submits it to the local self-government body following the established procedure.
The general process for providing MSW management services
The MSW management service is communal. It is provided following the legislation on housing and communal services and the rules established by the Cabinet of Ministers of Ukraine, taking into account regional and local waste management plans and settlement rules for the improvement of public spaces.
MSW management services include MSW collection, transportation, recovery and disposal (Article 33 of the Law of Ukraine “On Waste Management”). MSW management service provider is either a business entity that collects and transports MSW following the procedure established by the law or the MSW management service administrator.
| Business entities that collect and transport MSW are selected by local self-government bodies via tender, following the procedure established by the Cabinet of Ministers of Ukraine. Business entities that conduct recovery and disposal of household waste [2] are selected by local self-government bodies according to regional and local waste management plans following the procedure established by the Cabinet of Ministers of Ukraine. |
MSW management service provider enters into contracts with business entities that conduct the recovery and disposal of MSW. If the administrator is the provider of the MSW management services, they also enter into contracts with business entities that collect and transport MSW.
MSW management service provider enters into contracts with service consumers.
Economically justified tariffs
The fee for the MSW management services is determined based on the tariff for the MSW management service and the service provision norms.
The tariff for the MSW management services is a weighted average tariff formed based on the tariffs for collection, transportation, recovery and disposal of MSW.
The tariff for the MSW management services is calculated by the service provider. The tariffs for the collection, transportation, restoration and disposal of household waste are calculated by business entities that perform corresponding operations (Article 34 of the Law of Ukraine “On Waste Management”). The tariffs described in Article 34 of the Law of Ukraine “On Waste Management” can not be set lower than it is economically justified for the provision of relevant services.
Investment programs
Investment programs are developed to update fixed assets, conduct construction, reconstruction, modernization and technical re-equipment of MSW processing facilities.
The local self-government body, acting as the customer of the investment project included in the investment program, sets the tariff and ensures that MSW is received by the facility in the volume, determined for the project. The volume must be sufficient to offset project costs within the established period necessary for the implementation of the investment project. Alternatively, the local self-government body sets tariffs, the level of which ensures the implementation of properly approved investment programs.
Therefore, the new law “On Waste Management” allows to organize the development of the waste management system at the national, regional and local levels, as well as to create conditions for the construction of new MSW processing facilities under the PPP model. It ensures that local self-government bodies set economically justified tariffs for MSW management services (including tariffs for the recovery and disposal of MSW) and that the facility receives MSW in volume determined for the project.
Examples of new sustainable PPP projects for the construction of MSW processing facilities can be the international case studies of Waste-to-Energy (WTE) projects, which contribute to the development of a circular economy.
One of the first large-scale, bankable Waste-to-Energy (WTE) projects in emerging markets with private sector participation was the comprehensive Waste-to-Energy PPP project implemented in Belgrade (Serbia).
The private partner was required to design, build, finance, operate for 25 years, and transfer to the City thereafter:
- a greenfield waste-to-energy facility producing district heat and electricity;
- new sanitary landfills for municipal waste and inerts;
- a construction and demolition waste recycling facility and storage area;
- a leachate treatment plant; and
- a ~3 MW landfill gas-fired power plant.
- as well as to close and rehabilitate the existing landfill.
You can learn more about the PPP preparation process on our website: https://pppagency.me.gov.ua/the-virtual-workshop-solid-waste-sector-and-opportunities-for-public-private-partnership-has-taken-place/
[1] This Law enters into force 12 months after its publication, except for:
- Paragraph 1 of the third part of Article 10 of this Law, which comes into force seven years after the law establishes the extended responsibility of manufacturers for waste generated as a result of the consumption/use of certain products;
- Article 40 of this Law (in terms of financial guarantees), which enters into force simultaneously with the Law on financial guarantees.
[2] Business entities to perform waste treatment operations are required to obtain a permit for waste treatment operations before starting their activities (part two of Article 41 of the Law of Ukraine “On Waste Management”).