Lagos – Olalekan Owojori, the Director Wellbeck Consulting Limited and consultant to the Association of Waste Managers in Nigeria, speaks about the challenges faced by private waste operators in Lagos, government’s failed interventions, and the recent move to replace the local waste collectors with some foreign investors
PT: What is the position of the Association of Waste Managers with regards to the outcome of the meeting with the Lagos State Commissioner of Environment?
Olalekan: As you are aware, at the last court hearing, the judge ordered us to find alternative dispute resolution which is the meeting where we tried to resolve matters between the government and the association. We have had two meetings to that effect, the commissioner was not present at both meetings, but the legal counsel of the government, our legal counsel and our members were present. At the two meetings, we laid down our position with regards to what we are looking for. Just to remind you, the government’s position is they want to take away the residential waste collection from the existing PSP operators and offer it to foreign investors and we feel that’s unfair because that is going to affect our livelihood. The government pointed out that they are giving us the commercial waste collection and that they are going to increase the value of that collection. We pointed out to the government that we are already carrying out the commercial waste collection. So you are only giving us what we are already doing.
Having said that, we recognise that the government is now saying that instead of sharing the money, the revenue from commercial waste collection 60-40 in our favour, we are going to keep ninety-nine percent of that money and only pay one percent in form of royalty to the government. While that is a welcome development, the total value of that is still not enough to take care of the existing operators because what that will mean if we accept, is that a lot of businesses will fold up, a lot of businesses will have to suffer downsizing of both their staff and cost, because the cost structure that we have is around the residential.
What I mean is that, an operator has to have an office in the area in which they are operating, so an operator in Oshodi has to have an office in Oshodi to service the residential clients in Oshodi. He may have one or two commercial clients but his cost structure is not based around commercial clients but the residential clients in other to give customer service. We have 377 local government and local council development areas political wards in Lagos and in each of these political wards there is an office of PSP operator to service the residential clients.
So if you move us away from the residential clients, those costs will no longer be incurred by us. Those who have built offices will have to give up those offices, those who have rented offices will as well give up their rented offices. They will have to reduce their staff and face the commercial operators and it’s going to result to downsizing invariably and that’s what we made clear to the government so, that to us does not change our position with regards to that.
The government, on the other hand, is very adamant that they have done a deal with this foreign company, they signed a contract, therefore there is no going back on that. So at this stage, I think we are on an impasse and we are due to go back to court on April 6.
PT: The government said they don’t want to tax the people and that they don’t have the funds to put into waste management. Do you think they will go ahead and tax Lagosians to fund this scheme?
Olalekan: I don’t understand what they mean by that because Lagosians have come to acknowledge and accept that waste collection is a service and a service they need to pay for. The government is now proposing to introduce a Public Utility Levy and this when introduced will be paid annually, similar to the Land Use Charge. So that to me is a form of tax. This will be based on the property and location of that property similar to the land use charge.
So the public utility levy as far as I am concerned is going to be compulsory and that to me is like taxation. So I don’t understand when the government says they cannot tax the people because they are still going to tax the people even with the arrival of the foreign investors, because somebody has to pay for it.
With this foreign investor what the government is doing is that they are providing them with what I will call a luxury red carpet treatment. You are offering this company a ten years irrevocable service contract. That means in the next ten years they will be collecting the residential wastes of Lagos state and their payment is guaranteed by the government.
In the executive bill that was passed to the state House of Assembly, it was stated in there that there will be a first line charge on the income of the state. What that means is that before the governor even pays his own salary, they will pay this foreign company for the services they have provided. That is a guaranteed income, guaranteed by the state. With such instrument, anybody can raise funds in the international market with such guarantee. We don’t have such guarantee, we are the local investors, we have invested over N6 billion in this industry and we were not given such condition and terms and the government is going to recoup the money from the public utility levy.
PT: How much will the new public utility levy be?
Olalekan: I am not quite sure exactly what the actual levy will be, but as it says, it’s going to be on property charge, so people living in Ikoyi will pay more than people living in Mushin. Now what the rate is, is yet to be determined. The truth of the matter is that government can afford to come in low in terms of charges and use the economic scales, it’s just robbing Peter to pay Paul, they can do that. So that’s what the taxation is all about and there is nothing wrong with that so long as it meets the objective.
We had an initial objection to that because what we were saying is that since over the years we have tried this method and it’s failed. They brought in the revenue collection, it failed twice, they brought in the banks, it failed twice. As at the last result, they said to the PSP operators, you’re the ones investing in the trucks, you are the ones providing the service, go and collect your revenue. So when that reform came we were reluctant saying, you the government could not collect the revenue, why do you expect us to collect the revenue?
They insisted we do that and we have done that successfully, because about 65 percent of the people are actually paying. So now going back to a system that didn’t work in the past, obviously we are sceptical. Having said that, if the government agenda is that they want to collect these revenues and pay us for the services rendered, yes we will accept that, so long as we are providing the services, but giving a foreign company a ten-year irrevocable contract and a first line charge at the revenue of the state?
You can raise any amount of money in the foreign market with that kind of condition and recouping that money through the public utility levy is a challenge the government is ready to take that risk. What’s the success rate in collecting land use charge? If you go round the streets of Lagos, you have houses pasted with the land use charge and that’s what will happen with the public utility levy. So why destroy a system that is working for a system that is yet to work and has failed in the past? That’s taking risk with the environment. The most important thing for us is that we have successfully cleaned up Lagos and if Lagos is going to be cleaner we should not be discriminated against.
PT: Having already signed a $135 million agreement with a foreign firm as part of its new waste management policy, do you think there is still any chance of agreeing to your proposals?
Olalekan: On the issue that the contract has been signed, I don’t know about the contract but what we read on the pages of the newspapers, the MOU seemed to have been signed that will attract N86 billion. As far as I am concerned the reason why we are in court is because the government did not carry us along, inform us, did not communicate to us and as critical stakeholders, our livelihood is at stake.
So having failed to listen to us, we had no other option than to go to court and we are going to court for justice and I want to believe in the legal system, in the separation of power, that the common man can still find justice in the court no matter what contract may have been signed. I don’t believe the contract was signed in good faith and that’s why we are going to court and I will leave that for the court to decide.
We are saying right now that if you are insisting on getting the foreign investors, then let’s share the market, give us the same conditions as them and let’s share the market 50-50. I think that’s fair enough.
PT: Justice Oyekan Abdullahi recently said refuse heaps had found their ways back into Lagos. Is this as a result of negligence on the part of waste managers?
Olalekan: Going about the fact that there are heaps of refuse around Lagos, we are very concerned and these are the reasons. We need to be very critical about the reasons. We believe that this is an attempt by the government to give the PSP a bad name in other to hang them.
Firstly, the state of the dump sites, you don’t need to take my word for it, go to the dump sites. It is the final resting place at the moment for our refuse. It takes sometimes two to three days for a truck to dump its waste at the dump site. While waiting to dump its waste, the truck goes back to collect waste, because the ones that have been evacuated have not been dumped. Over time, we have written to the government on this, we have written to LAWMA on this and we have made so much noise on this to say let’s sort out the dump sites and nothing has been done.
Recently, the government is telling us that they are working so hard to sort out the dump site and we are very sceptical about that because sooner or later they want these foreign investors to take over the waste collection service. So they are fixing the dump sites in other for them to have a soft landing. The dump sites we have been clamouring for ought to have been sorted over the years and, in the last one year, government have been neglecting the dump sites.
The monthly expenditure for the dump site is about N300 million but in recent times it has been reduced to about N100 million and that means the dump site management is suffering and that’s affecting our effectiveness. We are not responsible for the dump sites management, that’s the LAWMA and the government’s responsibility. So they have failed in that responsibility and that means if we can’t dump the waste there is a backlog as a result of that.
Secondly, on the highways, our public roads are meant to be taken care of by LAWMA and not the PSP. Because of the lack of capacity in terms of trucks on the part of LAWMA, we have sub-contracted it to some of our PSP members to evacuate wastes on the highways. This is the issue, most people instead of them waiting for the PSP operators to come and evacuate their wastes they bring their wastes on to the highways, the local markets, the informal markets and that’s unaccepted practices and because the government is not enforcing that, you now have a lot of wastes coming onto the highways and that’s the ripple effect as a result of lack of enforcement.
Again, the public enlightenment programmes the government used to do like two years ago have stopped. Hardly do you hear any jingles or programme talking about waste management and this basically means that Lagosians have gone back to their old habit of not containerising their wastes. Basically whatever waste is generated on a daily basis, they take it to the high road, expecting someone to cart it away. Meanwhile that waste is meant to be carted away weekly which entails bagging the waste and putting it into a container. If you don’t enforce that, then you will always find heaps of waste around the place.
Lagos state government is owing PSP operators for commercial waste for up to five months. Recently they have tried to clear the backlogs and as I speak to you now we are still expecting Novembers’ payment. So the work done for November and December is yet to be paid and this is the cash needed for the PSP operators to fix their trucks and to reinvest in their trucks.
So the dumpsite is bad, you are not paying us on time for services we have rendered for commercial entities that you have collected the money for and you are not enforcing. What that simply means is that Lagos is getting back to what it used to be, which is a dirty city.
PT: Do you think the cancellation of the monthly sanitation has contributed to the increased dirt across the metropolis?
Olalekan: I don’t think the cancellation of the monthly sanitation contributed to this. What happened was that immediately government announced its reforms, some residents in Lagos said okay, now we have been told you guys are going to be out of business so we don’t have to pay for the services you are offering because you will soon be out of business. So the number of defaulters have increased as a result of that announcement.
We have been around for 18 years and every government comes in with their own reforms, all Lagosians know is that they receive better service because reforms have always been done in consultation and the implementation have always been seamless.
But on this particular case what has happened is that on the 16th of August, 2016, we opened the pages of the newspapers and we saw that our jobs have been advertised. That we need to tender for our jobs and the minimum requirement is that you have to have one hundred employees which basically means that no existing operator will meet that criteria and we only have eleven working days to meet such conditions.
So the government had planned what they were going to do and more or less trying to cross their T’s and dot their I’s. That level of uncertainty means that a normal investor will not invest in such uncertainty. We have situations where our members had bank loans, a second hand, Tokunbo compactor costs N8 million, a brand new one at the moment costs about N40 million.
Some of our members have brand new compactors and some have Tokunbos. When you are faced with such uncertainties, would you put in your money to buy more trucks when your job is at risk? That’s the uncertainty that has been created in the market.
So operators right now are providing the service because that’s the only way they can get the money. We have told our members to continue providing the service and that we are not striking, not because we don’t know we could strike and hold the government to ransom, but we believe this is what we have been doing and that this current government and Lagosians will appreciate what we are doing and empower us to do more.
For example, in 2011, the government acquired 100 brand new trucks on our behalf through one of the banks in Lagos and gave it to us on a lease agreement which most of us have paid back that money. Immediately that 100 trucks hit the roads in Lagos, our level of efficiency increased almost double. Why? Because we spend less on downtime, spend less on repairs, a brand new truck will have no major repairs in the first two years.
That improved the services Lagosians got, and that was 100 trucks out of four hundred that was meant to be rolled out by the government. It has worked let us build on it. We are not saying we are perfect, we claim we are evacuating 85 percent of the waste generated, there’s still 15 percent that’s not been evacuated. There is still more work to be done and that work should be done and can be done if this current government works with us.
The government was recently saying they can’t wait for us, no we have been the ones waiting for them. They are meant to fix the dump sites. If the dump site is not effective you will need more trucks to evacuate waste and if the dump site is ready, six hundred or seven hundred trucks are enough for the streets of Lagos.
But if you don’t have an effective dump site that you can dump refuse at least two or three times a day, you will need two thousand trucks and that will cause more traffic and pollution. So, it’s environmentally friendly to fix the dump site and have less trucks on the roads.
PT: What new policies and technologies have you put in place in the collection of wastes in Lagos, especially as the governor had said you were lacking the capacity to do it?
Olalekan: The government has rightly said that they don’t have the financial capacity to invest in a land field and therefore they are bringing in a foreign investor that has the technology and finance to manage the land field. We welcome that.
But we are the current PSP, our area of expertise is in the collection and transportation of wastes and the biggest asset we need to acquire are the compactor trucks. So what do we need from the government? We need a contract from the government, a ten years contract, a bankable contract. We can then use that contract to raise the necessary finance just like this foreign company is doing.
It’s not as if they have N86 billion that they have saved up and want to invest, no, that money is being raised on the strength of the irrevocable contract and the first line charge to the revenue of the state and that’s what they are using to raise the finance. So what do we need as PSP operators? Very simple, we need a long-term contract so that when we go to the banks, they will say yes we are ready to finance your trucks, because you have a contract that will cover the duration in which you are going to pay back and that’s what we consider to be bankable. If we have such similar contract, we will bring in the trucks.
Under hard conditions we have gotten brand new trucks, when we only had five years contract, we brought brand new trucks, some with the government’s help and some without their help. If we had been asked by the government what we need, we would have simply told them to first give us a good bankable contract and secondly fix the dump site.
Because a brand new truck that goes to the dump site under two months becomes a rickety vehicle, because it takes a caterpillar to push the truck into the dump site to dump the refuse and takes another to pull it out which dents the body of the truck. On average, we buy tyres every two months and a tyre cost about N85,000.
So even the brand new trucks we bought, if you look at them today, they are in such a mess compared to the Tokunbos that come into the market because of the state of the dump site. These are the real issues and the government has ignored us as far as I am concerned.
What technology are we looking for? There is only one vehicle meant for waste collection and that is the compactor. We have compactor manufacturers, who are assembling here locally and we already have an established relationship with them and it’s just about enhancing that. So we have a system that works.
The problem area in waste management is in the disposal of waste and in the material recovery. What do we do with these waste that is collected? How do we recycle them? How do we turn them to energy? That’s where we need investment, that’s where we need foreign investors to come in and the government has rightly done that. Unfortunately, in addition to that, they have taken away what currently works, 350 businesses are currently at stake. Local economy is now going to suffer by this new policy.