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Waste to energy: task force pitches for tax incentives

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K Kasturirangan
K Kasturirangan

Kasturirangan panel seeks 40% viability gap funding for PPP projects

The task force headed by K Kasturirangan has proposed a target of setting up 215 Waste to Energy plants by 2031 to generate 1,075 MW of power and has strongly pitched for setting these up through public-private partnerships (PPPs) with viability gap funding of up to 40 per cent. 

Viability gap funding is a form of capital subsidy provided by the Government to make the projects financial feasible for private entrepreneurs.

The task force, which submitted its report to the Planning Commission on Monday, also calls for an integrated approach towards municipal solid waste management, stressing the need for segregation of waste at source with private sector help. Since the urban local bodies (ULBs) lack the financial and institutional capacity necessary for integrated management of municipal solid waste, which requires investments, especially for ‘Waste to Energy’ projects, “it is appropriate to transfer the commercial risks to the private sector in order to ensure an efficient system for collection, transportation and processing of waste for generation of electricity,” it says.

Urban India currently generates 1,70,000 tonnes of municipal solid waste a day. Only 19 per cent of this waste is treated and rest (81 per cent) goes to dump sites causing serious problems to health and environment.

City projects

In this backdrop, the report proposes that ‘Waste to Energy’ projects can be set up in cities with population above two million, generating more than 300 tonnes per day or more of combustible waste.

The report proposes a model scheme for such projects and proposes exemption from corporate income tax for the first five years, immediate refund of value-added tax and a feed-in tariff, which means higher price for renewable energy, among other things.

Business model

Taking a cue from China, the task force also proposes a ‘tipping fee’ for a private operator who undertakes the responsibility of processing the waste and in the process deriving some useful products to meet part of the cost.

It says the gap (30-50 per cent) between the amount spent by the concessionaire on processing the waste and the income derived from the products, should be partly bridged by payment of tipping fee by the ULBs and the rest by 40 per cent viability gap funding.

Besides this, the report suggests involvement of civil society, resident welfare associations and NGOs to raise community awareness on waste minimisation and also calls for integration of kabadiwalas and ragpickers into the municipal waste management system.

(This article was published on May 14, 2014)
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