Solid Waste Management and Recycling

50 S. GALAB, S. SUDHAKAR REDDY AND JOHAN POST

As far as the operational performance of the service providers is concerned (produc-
tive efficiency) it appears that the average labour productivity of private sector
workers is slightly higher than that of MCH workers (0.24 and 0.19 tons of garbage
lifted per day per worker respectively; data taken for the year 1998-99). What is more,
the costs incurred to clean the streets and lift one ton of waste is invariably higher in
the MCH compared to the private sector. Furthermore, the costs of lifting one ton of
waste by local contractors has been declining over the years as a result of improve-
ments in the method of privatisation. The comparative advantage of the private sector,
however, largely results from the contract specifications set by the authorities. These
force private contractors to pay extremely low wages and to save on transportation
costs by using very old vehicles.

Despite the fact that their entrepreneurship has been subjugated and their profit
margins adapted downward, levels of satisfaction among local contractors were
remarkably high. SWC offers them a solid source of income^11. From the perspective
of productive efficiency, however, the current method of privatisation has two major
drawbacks. First of all, the requirements set in the contract are such that the entrepre-
neur is not at liberty to decide on the mix of production factors The system does not

Table 3.3. Expenditure incurred on SWC by the MCH and the private sector

1996-97 1997-98 1998-99

Description MCH PS MCH PS MCH PS

Expenditure on sweeping and lifting in
millions of Rs per month
Waste lifted in tons per month
Average cost per ton in Rs

16.21

25,506

636

6.00

7,200

833

17.79

26,550

670

14.00

29,400

476

21.25

27,210

781

12.85

30,240

423

Note:

• The year 1996-97 relates to the tender system of privatisation


• The year 1997-98 relates to the unit system of privatisation


• The year 1998-99 relates to the improved unit system of privatisation


• The figures relating to the MCH are estimates using salaries, fuel per vehicle, maintenance of vehicle
  and other related expenditure to calculate the costs of sweeping and lifting of waste by the MCH


• All the figures in the table are on the basis of data for one year. However, in the case of the private
  sector under the improved unit system the figures relate to only one month (Dec 1999-Jan 2000).


• The rise in the MCH cost per ton largely stems from increases in salaries and modernisation and
  strengthening of solid waste management infrastructure.

Source: computed on the basis of MCH figures

11. Of course, official profit margins only tell part of the story, as there are numerous ways of gaining
    more money, notably by underpaying labourers According to the labour unions this is common prac-
    tice among the contractors In order to avoid deductions as specified in the contracts they bribe the offi-
    cials charged to control their performance.