The Ministry of Finance issued a Circular on the Further Promotion of Government and Social Capital Cooperation in the Field of Public Services, which is aimed at promoting the reform of the Government and Social Capital Cooperation (PPP) in an integrated manner in the field of public services, improving the quality and efficiency of the provision of public services in the country and consolidating and enhancing the momentum for sustained economic growth. The successful experience of the PPP project on waste incineration in the central city of Dalian is now being collated for study.
1 Pre-project preparation for 2 years
In contrast to other projects, the project on waste incineration in the centre of Dalian City has a long design and use cycle, with the chain chaining and mutual constraints, in particular the use of imported equipment, the establishment of projects after the completion of project proposals using imported equipment as a whole, the approval of pre-project reports, environmental reviews, sites, etc., and so forth, which takes several months. The international open bidding for the import of equipment also takes almost half a year, which means that it is only halfway through. Furthermore, the total equipment imported was identified for national production, and the process of re-tendering the national equipment took several months, after which the design work could be carried out for the project as a whole.
Once the total equipment has been identified, it will be followed by the selection of the supporting equipment, one step at a time, the main equipment cannot be determined and the design cannot be carried out, and the entire project will not be carried out. In this regard, the successful bidder has, to the extent possible, compressed the pre-preparation cycle, with each garbage generation project having a construction preparation cycle of 6 to 12 months by 2014, with construction being completed for almost 18 months as long as construction starts. Dalian belongs to the North, with 18 months spanning two winters, which is also a problem for the duration of the work.
After 2014, as the State regulates construction procedures, public participation has increased and now includes all projects implemented, with a two-year lead-up cycle in order to be fully prepared for full implementation. If this work is not completed, the next step will not be possible, which is a more troubling issue. It will now take about four to five years to complete the step-by-step regulation of waste incineration for power generation projects.
Improved system for setting technical requirements for solicitation
As cities develop, there is an increasing amount of waste in Dalian cities, and there is an urgent need to choose a newer and more mature approach to waste disposal. In 2003, Dalian City opened a public tender for a garbage incineration power project, which was followed by negotiations and consultations with the winner for more than a decade on the basis of the details of the specific terms, but due to the complexity of the previous PPP tender. Added to the fact that there was no solicitation experience for similar projects at the time, the lack of clarity in the terms and conditions of the project during the bidding process and the asymmetry of information during the negotiation process ultimately led to a stalemate in the project.
The selection of a professional consulting team and the setting up of well-structured technical requirements for bidding are a critical element in the preparation of the prior project.
Through the pre-preparation process, in July 2009, the Dalian Municipality identified the successful bidder through a public tender, and in March 2010, entered into a concession agreement with the successful bidder to formally start the pre-preparation process, in October 2010 construction began, and in July 2012 production began.
The project, which covers approximately 110 acres, was considered for expansion, with a build-up package, designed to treat 1,500 tons of domestic waste per day, and 550,000 tons of domestic waste per year, generating 160 million degrees per year. At that time, the domestic stove line was not too mature and invested a total of 680 million.
It was learned on the ground that the project had been implemented for more than three years now, from the signing of the project to the start of its construction, that it had taken a year and a few months, from the start of the project to the start of the project for 20 months, and that the project was being carried out as planned and that it was a project with a relatively short start in production in the country. The project is relatively regulated by pre-preparation, construction, post-entry operation management, bold adoption of new processes within the industry, and mapping of the operational experience of waste incineration in the north. According to the project data, 550,000 tons of household waste were designed annually, 600,000 tons in 2013, 640,000 tons in 2014, 140 million electricity generation, close to 160 million in 2015, essentially meeting the design target, while nearly 100,000 tons of waste were treated more than the design, meeting the waste disposal needs of central urban areas.
3 Projects need to balance forward-looking and advanced
A number of issues need to be taken fully into account in the implementation of the PPP project. For example, in the concession agreement, the improvement of this pricing mechanism, changes in the CPI, requirements for higher prices of materials, adjustment of personnel income, and the implementation of the project have resulted in significant increases in domestic prices, prices of raw materials and salaries. During the bidding process, the project budget was estimated at over $625 million and, after the project was implemented, the country faced an increase in materials and costs, but because of better cost control, the project was invested at 680 million.
The project company submitted that the portion of the concession agreement that agreed to exceed the amount was settled at 60 per cent, which was in some ways negotiable. In practice, the project company understands that the heat value of the waste disposal design will not normally reach it until seven to eight years later, and that the heat value of the waste available varies according to the standard of living, depending on the income group and level of income. In terms of 1,500 tons of waste disposal, the agreement understands 1,500 tons to be imported into the plant, the project design is 1,500 tons to the furnace, 16-20 per cent of the waste entering the plant is leachate, sewage and nearly 80 per cent of the actual input is made into the furnace. These also need further clarification.
At the domestic level, many of the burning plants are starting to bid for design based on existing collections of municipal waste, but after several years of observation, the collection of waste has a strong bearing on the urban economy, the number of people living in cities, the amount of waste, the part to be considered for expansion in the design of the incineration plant, the number of disputes that have arisen over the plant over the years, the location of the site is difficult to choose and the whole city will stink if it does not leave for three years. As city managers, it is likely that after this construction, it will be difficult to choose a site later, so that the site will be planned in three or five years.
There is also a problem with the setting of standards for process equipment, taking into account forward looking and advancedness. Since 2008, major operators have gradually moved towards European Union standards, and many projects, such as those in Beijing, Tianjin, Shanghai and Nanjing, that started production in 2008, are now largely aligned with European Union standards. At the national level, new national standards were issued in 2014, and new national standards are also aligned with European Union standards, which are similar to those applied by major operators in previous years.
Since 2013, domestic projects have been rigorous, namely, EU standards, project construction and investment operations, with full use of EU standards, existing systems being considered for adaptation of existing equipment, new equipment being considered and future requirements being met. It will be very difficult to build new plants, taking full account of changes in standards and making advance payments, otherwise the project will be completed, three years later a national bid will be issued, the built plant will not be changed or dismantled. Therefore, the standard setting for process equipment needs to be improved.