Secondary Materials and Waste Recycling Commercialization - Actors, stakeholders and interested parties

AFR: Alternative Fuels & Raw Materials, a term used in cement and incineration industries.

CIM: Center for International Migration

Collector: As used in this report, an individual or public or private company that collects recyclables, and who may provide further processing such as sorting, washing and/or producing an intermediate such as granulated or shredded plastic.

CRDA: Community Revitalization through Democratic Action, a $200 million USAID project implemented throughout Serbia by five partners working in five geographic regions from 2001-2007.

CRT: Cathode Ray Tube (video monitors before LCD).

DOO: Drustvo s Ogranicenom Odgovornoscu, or LLC (Limited Liability Company).

EC: European Commission, now the Delegation of the European Union to the Republic of Serbia.

EBRD: European Bank for Reconstruction and Development.

EPS: Elektroprivreda Srbije, Serbian public enterprise for electricity supply.

GTZ: Deutsche Gesellschaft fur Technische Zusammenarbeit, the German international cooperation and development enterprise.

HW: Hazardous Waste.

IFC: International Finance Corporation, a member of the World Bank Group. IFC provides investments and advisory services to build the private sector in developing countries.

IPA: Instrument for Pre-Accession, the sole EU funding instrument for beneficiary and candidate countries.

IPPC: Integrated Pollution Prevention & Control, a directive on industrial emissions,

ISWA: International Solid Waste Association.

JKP: Javno Komunalno Preduzece (Public Communal Enterprise); public or publicly-funded enterprise in Serbia working at the municipal or regional level responsible for city and municipal maintenance, including waste collection.

LED: Local Economic Development, a development strategy that facilitates public, private and civil society partners working together to improve economic conditions.

LEDIB (Danish): Local Economic Development in the Balkans, a five-year Danish-funded project supporting LED, SME development and employment creation.

LLC: Limited Liability Company.

MEGA: Municipal Economic Growth Activity, a $24 million USAID LED project implemented in targeted Serbian municipalities from 2005-2010.

MESP: Serbian Ministry of Environment & Spatial Planning.

MoU: Memorandum of Understanding.

MSME Development: Micro, Small and Medium Enterprise Development, a set of development strategies that seek to strengthen existing and startup enterprises so they operate more efficiently and are better able to grow.

MSW: Municipal Solid Waste.

NGO: Non-Government Organization.

OEM: Original Equipment Manufacturer (warranty).

PMU: Program Management Unit of MESP.

PPI: Producer Price Index; measures average change over time in the selling prices received by domestic producers for their output; in the US PPIs are collected and reported by the US Bureau of Labor Statistics; PPIs are aggregated and reported for virtually all industrial materials and sectors, including all recyclables.

PPP: Public-Private Partnership; in the context of this report to indicate partnership arrangements between municipalities and a private strategic waste management partner.

PRO-Europe: Packaging Recovery Organization Europe.

PWW: Porr – Werner & Weber, a strategic waste management partner with waste management contracts in Jagodina and Leskovac.

REAP: Recycling & Employment Alternatives Program; program implemented by Mercy Corps in southern Serbia under the USAID CRDA project; program invested in 23 municipal and private-sector collectors and recyclers in 2007.

Recycler: As used in this report, a company that is producing a consumer product from recycled materials.

RSD: Republic of Serbia dinar, at the time of this writing: €1.00 = $1.44 = 96.3 RSD.

SDC: Swiss Development Cooperation.

SEPA: Serbia Environmental Protection Agency.

SIDA: Swedish International Development Agency.

SIEPA: Serbia Import-Export Promotion Agency.

SRF: Solid Recovery Fuels, a term used in cement and incineration industries.

SZR: Samostalna zanatska radnja, a business registration for a type of sole proprietorship “workshop” business.

TA: Technical Assistance.

TAM-BAS: Turn-Around Management and Business Advisory Services program implemented through EBRD, EAR and Netherlands funding. TAM targets consulting services to medium to large enterprises, while BAS targets micro to medium enterprises.

TSR: Thermal Substitution Rate, a term denoting the caloric value of a material relative to the conventional fuel used. A TSR of 5% means that 5% of the conventional fuel was substituted by some volume of alternative fuel.

UNDP: United Nations Development Program.

USAID: United States Agency for International Development, US Government agency providing economic and humanitarian assistance worldwide.

Plastic Acronyms

ABS: Acrylonitrile-Butadiene-Styrene; a resilient, low density, rigid, impervious plastic used for pipes, car bumpers, golf club heads and enclosures; when recycled, and the history of the material is unknown it is considered utility material and the original specifications may no longer apply; the three components of ABS are considered probable human carcinogens.

HDPE: High Density Polyethylene; a hard, opaque form of PE with a higher melting temperature; commonly used for beverage cases; also used for cell liners in sanitary landfills; recycling symbol number “2.”

LDPE: Low Density Polyethylene; commonly used for plastic bags and six-pack soda can rings; recycling symbol number “4.”

LLDPE: Linear Low Density Polyethylene, a linearmolecular form of PE that is advantageous because of it allows lower thicknesses; commonly used for stretch wrap and thin plastic bags.

PE: Polyethylene; most widely used plastic, with annual production of 80 million tons; primarily used for packaging materials, including shopping bags; see descriptions for specific types of PE;

PET: Polyethylene terephthalate; a rugged, lightweight plastic that serves as excellent liquid and gas barrier; commonly used for beverage containers; Mylar is a thin-film PET; recycling symbol number “1.”

PP: Polypropylene; a rugged plastic, unusually resistant to most chemicals; commonly used for beverage and food container caps (such as PET bottles), as well as most “living hinges” (such as on Tic-Tac containers) due to its fatigue-resistance; recycling symbol number “5.”

PS: Polystyrene; commonly used for disposable cutlery and CD cases; foamed polystyrene (Styrofoam) is common material used for coffee cups, insulation and packing peanuts; recycling symbol number “6.”

PVC: Polyvinyl chloride; third most widely used thermoplastic polymer after PE and PP; commonly used in construction applications as building materials that are cheap, durable and easy to assemble; typically not recycled due to prohibitive processing costs.

INTRODUCTION

Assessment Overview

Overview: This assessment was initiated and financed by the USAID Serbia Competitiveness Project. It is intended to present an overview of the waste management and recycling sector in Serbia from all relevant perspectives: Serbian Government and other national actors and initiatives; municipal governments and public utility companies (JKPs); private-sector actors working with eleven different materials and/or roles in the sector; and relevant development programs and donors.

The aims of this study are to:

 assess and present the Serbian recycling situation and actors, particularly those in the private sector;

 examine supply chain trends for different secondary materials from both industrial and communal sources;

 identify opportunities for Serbian companies to engage in public-private partnerships;

 provide a policy overview in Serbia and the EU; and

 identify leverage points for the USAID Serbia Competitiveness Project to support and develop the private sector.

Assessment Volumes: This report is the first of three volumes generated as part of this assessment:

Part 1: Secondary Materials & Waste Recycling Commercialization in Serbia: Assessment (this volume)

Part 2: Serbia Recycling Actors & Company Profiles

Part 3: Activity Programming Recommendations for the USAID Serbia Competitiveness Project

USAID Serbia Competitiveness Project: The USAID Serbia Competitiveness Project is a four-year, USAID-funded project aimed at generating rapid, sustained, and broad-based economic growth in Serbia targeting specific, high-potential economic sectors. The project aims to generate economic growth and development of targeted sectors; increase private sector capacity; improve the business climate and enabling environment; increase domestic, regional and international trade and investment; and increase employment opportunities.

Methodology: This assessment was compiled from interviews and meetings with 77 recycling actors all over Serbia (see Annex 1 for complete list). Interviews and information gained from the independently-conducted Treehouse Recycling Assessment for South-Central Serbia (2009) are also included. Interviews were made on-site, at the interviewer’s facility or office, and included a tour of facilities. Interviews were structured to provide a profile of the actor; supply and collection; markets and demand; finances; sector challenges and opportunities; and macro issues such as legislation and donor assistance. The table below lists the actors interviewed; each actor is profiled in detail in the order shown below in Part 2 of this assessment: Serbia Recycling Actors & Company Profiles.

Recycling Databases: At the start of the assessment recycling actors were identified through a number of sources and databases: IFC Recycling Linkages, US Community Connections Waste Management Study Tour, MESP database, Ekapija Business News Service, Serbia Yellow Pages, Ambalaza i Pakovanje, and a number of private contacts throughout Serbia.

Municipal Solid Waste: The diagram below presents a summary of municipal solid waste streams, breaking the overall waste stream into three major classifications: communal waste, industrial & commercial waste, and construction waste.

Communal Waste: Communal waste constitutes an estimated 63% of all waste; it is generally uneconomical to collect and recycle. At present most communal waste collection is managed by municipalities and JKPs, and a number of municipalities already manage recycling programs. There is a recent trend in Serbian municipalities and regions to contract landfill and waste collection services to independent international operators in 25-year public-private partnership (PPP) agreements.

Industrial & Commercial Waste: Industrial and commercial waste (i.e. factories, supermarkets, public facilities such as hospitals, and warehouses) is the most desired and demanded waste on the market. It can probably be said that without industrial or commercial waste, a private-sector operator cannot survive; all of the private collectors and recyclers interviewed in this assessment rely to some extent (in some cases exclusively) on industrial or commercial waste.

Packaging Waste: There are an estimated 334,000 tons of packaging waste generated in Serbia per year. Packaging waste is covered under the Law on Packaging & Packaging Waste and has recovery targets established for coming years, beginning with 5% recovered and 4% recycled in 2010, increasing to 30% recovery and 25% recycling in 2012. PROEurope (Packaging Recovery Organization Europe) is the umbrella organization for European packaging and packaging waste recovery and recycling schemes; Seko-Pak is the sole PRO-Europe operator in Serbia. National PRO-Europe organizations like Seko-Pak essentially relieve industrial companies and commercial enterprises of their individual obligation to take back used packaging through the operation of a scheme that fulfils these obligations on a national basis on behalf of their member companies. The aim is to ensure the recovery and recycling of packaging waste in the most economically efficient manner. The Green Dot trademark is a financing symbol that indicates companies have signed a license agreement with a packaging recovery organization.

Construction Waste: Recycling of construction waste falls into two categories: i) construction material salvaging; and ii) concrete (and other materials) recycling. Salvaging (undamaged and reusable materials) is typically handled by the owner; if left to the construction contractor, materials are typically disposed of in the landfill. The recycling of concrete waste, including reinforcement metal, bricks and stones, is typically not an economical process except on very large demolitions. In this case, the materials are pulverized, often together; the metal is removed; and the chunks are sorted by size and used as aggregate base gravel. Typically, the chunks cannot be added to new concrete mixes.

Serbia Initiatives and Interests

Interests & Initiatives: Now is a crucial and interesting time in Serbia with respect to waste management and recycling. There are large, and sometimes competing, forces at work that are likely have profound and longlasting implications in how waste is managed in Serbia in the coming years and decades. Key legislation has been and is being drafted and approved that will bring Serbia’s laws into compliance with EU standards. Some of the key factors faced in Serbia today are outlined here and shown in the diagram.

 Waste Management Plans: Municipalities have until May 23, 2010 to develop municipal waste management plans, form themselves into regions, and develop regional plans. Many of the regions, perhaps a majority, will choose a private strategic waste management partner, one of a number of international companies currently promoting and competing for 25-year waste management contracts for landfill and/or waste collection services.

 Eco-Tax: A “Producer Pays” Eco-Tax will be applied to goods marketed and sold in Serbia and used to finance an Eco-Fund that will reinvest revenues into collection, transport, consolidation, treatment and disposal actors.

 PRO-Europe Operator: The Serbia PRO-Europe operator Seko-Pak will compete for waste management agreements with generators, collectors and treatment operators.

 Recycler Registration: Companies working in the recycling field have until May 23, 2010 to register under the new law. Waste movement manifests will track movements and allow MESP to record quantities of waste managed by all registered recyclers; this data will help determine where Eco-Fund investments are needed.

 Recycling Backyards: The “Recycling Backyards” concept is being considered for support by the Eco-Fund; the project could dramatically increase municipal recycling program outreach and construct a network of collection and sorting centers in larger cities across Serbia; the project could impact the dynamics of various interests.

 IPA Funding: IPA funding for Serbia under Components 1 and 2 will increase to €198.7 million in 2010. Serbia is expected to be eligible for Component 3 (Regional Development) funding beginning in 2011 (€202.7 million total projected funding).

Secondary Materials

Overview: Serbia has a fairly vibrant level of activity in the recycling sector, with actors working with virtually all materials. Collectors and recyclers share a number of challenges, including lack of State subsidies and investments as in EU countries; deflated prices brought on by the global economic crisis; undersupply brought on by lack of organized collection, deflated prices and other factors; and complex, cumbersome and expensive administrative procedures, sometimes more complex than those in the EU.

Historical Prices: The accompanying graphs show the Producer Price Index (US) for recycled plastics, wastepaper and ferrous and nonferrous metals since January 2000 (PPI=100). These data represent a composite of relevant materials and markets. Prices for all materials climbed steadily from 2002-2008; ferrous metals nearly doubled in a seven-month period from December ‘-07 and July 2008, when it reached levels 4.7 times higher than in January 2000. In autumn 2008, with the onset of the global economic crisis, the price of secondary materials fell dramatically, disrupting supply chains and sharply reducing collection. Individual collectors stopped or focused on other materials. Paper collection, which had been quite efficient, suffered as Roma collectors were not willing to collect for the low prices. Large quantities of materials were stockpiled to prevent selling at a loss, which many consolidators were forced to do in the end. Demand was driven down throughout the supply chain, forcing some actors to make desperate transactions; some did not survive.

Recovery: Price recovery is underway for most materials. Actors agree that ferrous metals were selling for unsustainable prices, and collection efforts have resumed to normal levels; similarly for nonferrous metals. Roma have not yet fully resumed communal cardboard collection; collectors can be seen, but quantities remain uncollected and buyers still cite lower recovery levels. Plastics are recovering more slowly, but the large actors in Serbia all survived the crisis and there have recently been several important investments.

Collectors vs. Recyclers: For the purposes of this assessment, a distinction is made between the terms collector and recycler. The term “collector” is used to describe a company or individual that is limited to collecting, sorting and low levels of treatment such as washing or grinding. “Recycler” is used to describe a company that is producing a final product (e.g. hose, folio, fruit trays) or a high level intermediary such as granulate or fiber. The distinction can be subtle and at times a judgment was made regarding their classification.

Social Consciousness: An interesting observation during this assessment is a level of social consciousness of the private-sector actors. Nearly all practice some form of corporate responsibility (e.g. cleanups, education, campaigns, advocacy) and express a degree of insight and perspective on environmental issues and their role in the community.

Currency Conversion: The relevant currency exchange rates used in this report are €1.00 = $1.44 = 96.3 RSD.

Republic Government

Summary: This section provides an overview of key actors in the Serbian Government. All actors are profiled in detail in Part II of this assessment: “Serbia Recycling Actors & Company Profiles.”

Republic of Serbia Environmental Protection Fund (Eco-Fund)

Profile: The Environmental Protection Fund (Eco-Fund) is responsible for financing priority environmental projects on the Republic level through the collection of fees and taxes. In 2009 the Eco-Fund budget was about €15 million and is expected to take in more than €30 million in 2010 (the Croatia Fund takes in more than €150 million per year). So far, direct investments in private-sector recyclers have been limited, though the Eco-Fund has financed a number of waste management initiatives. The Eco-Fund revenue structure consists of four sources, to which will be added a tax on goods marketed and sold in Serbia under the “Producer Pays” principle.

1. NOx, SOx, and particulate air emissions, plus disposed waste fees; based on emission data;

2. Motor vehicle registrations; based on engine displacement;

3. Ozone-depleting compound use; based on quantity used;

4. Wild flora and fauna use & marketing; based on collection permits;

5. “Producer Pays” tax; applied to goods marketed and sold in Serbia. Under this principle, the producer bears the cost of its activities, so waste treatment and disposal is included in the price of a product. The tax is paid when the producer places a locally produced or imported product on the market. (Products manufactured in Serbia but exported are not subject to the Serbia Eco-Tax). The intention is that the tax be used to help manage the waste at the end of the product’s life. It is not clear as to how and whether the Eco-Tax will apply to packaging; various sources say that this has not yet been resolved, but it appears that producers will be responsible for recycling their own packaging waste or alternatively financing Seko-Pak or other PRO-Europe operator to recycle target quantities in their name.

Priorities: The main priorities of the fund to date have been in the waste sector, primarily related to closing and constructing new landfills and transfer stations. No new calls are anticipated until spring 2010. At the time of the interview (Dec. ‘09), the Eco-Fund was developing its strategic plan, expected to be completed in March 2010.

Municipal vs. Republic Funds: The Law on Environmental Protection, passed in May 2009, establishes that all municipalities establish a Municipal Environmental Protection Fund. All municipalities are required to submit an annual plan to MESP for approval of the use of their funds. The municipal funds have no affiliation with the Republic Eco-Fund but are financed by the same resources (Republic Fund 60%, municipalities 40%). Municipalities are also eligible to apply to the Republic Eco-Fund for projects. There have apparently been some issues over which fund should be used for certain projects (e.g. Ambrosia and sewage problems).

Serbia Environmental Protection Agency (SEPA)

Overview: SEPA is mandated to collect, analyze, tabulate and report all data and information related to the environment, pollution and polluters in Serbia. SEPA has a large collection of publications and resource materials on all types of waste, waste collection and municipal and national statistics, plus a host of EU reports and documentation. They manage all of the data on noise, air, water and soil quality and pollution, including 50 air quality stations throughout Serbia, one of which is at their Belgrade office. One of their main publications is the annual State of the Environment Report in Serbia, a well-organized and presented resource covering all sectors of the environment. Most of the former staff members of the Agency for Recycling (see below) now work at SEPA.

Permitting & Registration: Under the new Law on Waste Management, companies working in waste management have until May 23, 2010 to register their company and apply for an operating permit. The application process will be used to construct the new database of recyclers. Companies may apply for a permit in one of five classifications: i) collection; ii) transport; iii) consolidation; iv) treatment; or v) disposal. Companies working in more than one of the areas will be covered by a single permit. (The situation is not clear for companies who are producing a finished product from a recycled material; according to several such companies, they were not required in the past to be registered as a recycler.) There are 16 different secondary materials classifications to be covered by permit. Under the new law, beginning with the generator, all waste handlers will be required to complete manifests that document all movement and transfers; data will be used by SEPA for statistical purposes. At the time of the interview (Dec. ‘09), no companies had registered under the new law; it is expected that most will wait until the deadline. The database will be published on the SEPA website )(www.sepa.gov.rs) once compiled.

Information Management System: In September 2009 SEPA installed an information management system that will soon be placed online. Currently most of the data is submitted from the field on handwritten tables, and then tabulated for analysis on simple spreadsheets.

MESP Program Management Unit (PMU)

Overview: The mandate of the MESP PMU is to prepare projects and designs for current and future IPA, NIP, Eco-Fund and international donors. The PMU is currently preparing projects for IPA Component 3 (see inset) in the areas of waste, water and air; the total value of the current project portfolio is €100 million. Some of the projects include Kalinic landfill (an open lignite mine near Obrenovac); Halovo landfill serving Zajecar, Bor and other municipalities; and the Nova Varos landfill. The PMU attends donor coordination meetings, organized twice per year; USAID is a participant.

Projects: The PMU provided an overview of their current project portfolio and initiatives for various waste streams including old vehicles, lead, aluminum, tires, used oils, paper, plastic and communal waste.

MESP PMU versus Eco-Fund: Though some of the projects described by the Eco-Fund and the MESP PMU are similar, the two are different in several ways: i) the PMU only designs projects, while the Fund both designs and implements projects; ii) the PMU is financed from the State budget and has significantly less financial resources than the Eco-Fund; iii) the PMU focuses on external funding sources, primarily IPA.

Serbia Chamber of Commerce

Overview: The Serbia Chamber of Commerce has Board for Environmental Protection with 25 members representing chemical, petroleum, paper, wood processing and other sectors; they also cooperate with MESP and international donors and organizations. The interest of the Chamber is to help the business sector to develop capacities to implement and adopt environmental laws. Activities related to recycling have been limited since their scope of activities is broader than recycling and waste management; they do, however, recognize the potential for developing recycling businesses. In the area of waste management, they organized a study tour to Slovenia in spring 2009; cooperated with GTZ to develop an on-line secondary material trading site where buyers and sellers could locate materials and make trades; (according to GTZ, it was developed in cooperation between the Chamber and the Agency for Recycling, but a conflict over ownership prevented it from becoming operational); and cooperated with the IFC Recycling Linkages project.

Integrated Pollution Prevention & Control: At present the Chamber is working with companies on Integrated Pollution Prevention & Control (IPPC), a directive on industrial emissions, and were in the process of organizing an event for the board in Valjevo at the time of our visit (Dec. ‘09). The Gorenje factory in Valjevo is the first company in Serbia to be issued an IPPC compliance permit.

MESP Advisor to Minister, former Agency for Recycling

Overview: The Serbian Agency for Recycling, formerly an agency within MESP, was abolished under the new Law on Waste Management and ceased working on May 23, 2009. The agency’s former responsibilities were assigned to new entities within MESP. The part of the Agency related to recycling and tasked to maintain the database of Serbian recyclers was transferred to SEPA. Ms. Gordana Perovic remains as an Advisor to the Minister and provided an informative review of current policy and legislation, which is used throughout this report. A summary of the permitting process and waste movement requirements are summarized in the following paragraphs.

National Private Sector Actors

Seko-Pak (PRO-Europe)

Pro-Europe System: PRO-Europe (Packaging Recovery Organization Europe), founded in 1995, is the umbrella organization for European packaging and packaging waste recovery and recycling schemes that use the "Green Dot" trademark as a financing symbol. It acts as the common policy platform representing the interests of all packaging recovery and recycling organizations founded and run by or on behalf of industry. These national organizations essentially relieve industrial companies and commercial enterprises of their individual obligation to take back used packaging through the operation of a scheme which fulfils these obligations on a national basis on behalf of their member companies. The aim is to ensure the recovery and recycling of packaging waste in the most economically efficient and ecologically sound manner. Apart from requiring the coordination and alignment of individual members, they safeguard common interests and project a coherent, unified policy and image to the outside world. PRO-Europe is a limited liability company registered in Belgium.

Seko-Pak: Seko-Pak is currently the sole national recovery organization in Serbia (most countries have multiple providers; Austria, with whom Seko-Pak seems to be working most closely, has only one). As Seko-Pak is just beginning operations (Jan. ‘10), any of the details related to their operations in Serbia have not been defined and released. There are currently nine industry stakeholders in Seko-Pak (e.g. Coca-Cola, Ball Metal, Tetrapak, Calsburg), though Seko-Pak is not limited to the beverage sector and will represent any company, offering solutions for all packaging waste. Seko-Pak is intended to be non-profitable with all income used to subsidize and facilitate collection (less an administrative fee); potential surpluses will be used for further reinvestment or to lower founder/client fees. It should be noted that Seko-Pak is a limited liability company; and that they will not be owners of waste.

Recycling Investments: Revenues are collected through a price per ton of waste paid by founders and clients (specific details are still not defined). Subscribing to Seko-Pak’s services is voluntary and may be through ownership shares in the DOO company (founders) or as a client. Seko-Pak is currently planning to enter 7-10 municipalities, helping them to establish primary collection programs. According to Seko-Pak, their short-term goal is to stabilize collection through subsidies and investments targeting collection. Preparing citizens through education campaigns is seen as a constraint, since communal waste accounts for a high percentage of packaging waste, but it is not clear if Seko-Pak intends to finance public education campaigns.

Policy Influence: Seko-Pak provided input into the Law on Waste Management and By-Law on Packaging & Packaging Waste, which essentially put the obligation on the generator to treat their waste. Seko-Pak opposed a deposit system on the basis that only 5-12% of waste is accounted for by beverage containers, and they believe that consumers are hurt by deposit systems. Seko-Pak also opposed individual targets for different materials (the by-law specifies 5% recovered, 4% recycled for 2010) since some materials will be more difficult, and they can therefore focus on the difficult targets in the short term while being relieved of increasing collection of materials that are currently recycled at high levels. They are using these early years to construct a plan to meet more ambitious 2012 targets: 30% recovery, 25% recycling.

Serbia Plastic Recycling Association

Overview: The Serbia Plastic Recycling Association, founded in 2006, is a citizens association aimed at promoting and undertaking recycling initiatives in cooperation with the private sector, Government and donors. The goals of the association are to i) organize recyclers so they can better cooperate and have opportunities to work toward common goals, and ii) provide non-profit opportunities through access to public and international resources. The main founder of the association is Brzanplast and the association is supported financially by the company (rent and other expenses). Mr. Rade Simic, Director of Brzanplast, is the President of the association; Mr. Milan Ilic is the President of the Board and manages the association’s office in Belgrade. The association employs five to ten employees who work voluntarily. There is no membership fee, and it has around 50 members. The association is a member of the European Association for Recycling and has received technical assistance and advice on collection methods and planning.

Projects: The recycling association is a partner in the Clean up Serbia! campaign, a 4 M RSD project financing a public campaign and recycling equipment. They cooperated with the IFC Recycling Linkages project and together completed a business plan of recyclers and a feasibility study for one member, “Eva” in Kladovo. ACDI/VOCA, through the USAID CRDA project, procured some containers and milling and baling equipment from the association or Brzanplast; municipal/JKP clients contributed a matching contribution in recyclable materials equal to 30% of the project value. The association also provided input into the Law on Waste Management and had some contact with UN and World Bank.

Recycling Backyards: The “Recycling Backyards” concept aims to cover the territory of Serbia with recycling containers and strategically-located sorting lines for separating recyclable waste, relying on existing Serbian companies as markets for the collected materials. The concept’s developers are promoting it to the Eco-Fund and advocating MESP to procure 7,500-11,000 containers, presses for each municipality (150); and around 27 sorting lines in major Serbian municipalities (see inset). According to Brzanplast, financing the concept would cost €2 million and would be sufficient to collect 20,000 tons/year of baled, recycled plastic, reaching a target of 20-30% recycled plastic, plus other materials. The current concept and earlier versions are presented in a series of short publications prepared by Brzanplast.

Challenges: Lack of Government assistance, lack of a defined national strategy, and competing interests in waste and recycling were identified as the main obstacles; at present, the association says that the majority of problems are currently being solved piece-meal by the private sector. With respect to the association itself, some members don’t fully understand, and perhaps expect too much, from the association in terms of donations and assistance; the association should increase its profile and visibility; and members are unwilling to contribute.

KOMDEL, Association of JKPs

Overview: KOMDEL, founded in 1998, is the national association of JKPs; membership is voluntary and includes 94, or roughly half, of JKPs. Its interests are not limited to waste management but also include cemeteries, water and heating companies, plus 24 industry members. The association receives no public funding; there is a small “token” annual membership fee. According to KOMDEL, less than 20% of Serbian municipalities have some form of communal recycling program, though there are some good examples and citizens are becoming increasingly aware of the need.

KOMDEL and TTI Group: Since KOMDEL is essentially not financially sustainable, the association is affiliated with a private consulting group, TTI Group; the management of KOMDEL and the consultants of TTI Group are the same individuals. KOMDEL and TTI Group together provide consulting services for communal infrastructure and waste management; they share information and resources, including the website: http://ttigroup.co.rs. KOMDEL/TTI has produced a number of documents and resources addressing waste management issues and advocating at the national level for planning and implementation of a waste management strategy.

Donor Initiatives

Summary: A number of donors and internationally-funded development initiatives related to recycling and waste management were interviewed. In the interests of brevity and to eliminate any potential misrepresentations of their programs and initiatives, only brief summaries of some relevant programs are provided; full profiles are presented in Part 2 of this assessment, “Serbia Recycling Actors & Company Profile.”

Recycling Linkages, International Finance Corporation: The goal of Recycling Linkages was to improve the performance of the recycling industry in the region by creating strong economic, social and environmental impact, resulting in significant increase of the volume of collected and recycled scrap across the region. The project supported SMEs, national and local government structures, individual collectors (mainly Roma) and business associations. Activities focused on improving the regulatory framework, strengthening operational capacities and access to finance of private sector recycling actors, and increasing public awareness on the benefits of recycling. The project worked in all sectors of recycling and was implemented from Jan. ‘06 through Dec. ‘08.

Integrated Solid Waste Management Project, International Finance Corporation: The Integrated Solid Waste Management project began in 2009 following Recycling Linkages. The project was originally designed to help implement Serbia’s waste management strategy through public private partnerships in waste management in some of the 27 designated geographic regions. The project has since evolved to a broader focus, and now deals not only with waste management but with the more general topic of municipal infrastructure. Specifically the project helps municipalities prepare and organize tenders for private partners in municipal services (including but not limited to waste management). The municipalities of Subotica and Smederevo are currently participating in the project.

Municipal Economic Growth Activity (MEGA), USAID: MEGA is providing waste management consulting services to municipalities and JKPs, helping them to prepare solid waste projects in accordance with the national law and EU directives. Their services include technical assistance on landfill design and site selection; facilitating municipal and regional waste management plans; and facilitating the planning and procurement process for engaging strategic waste management partners through PPP agreements (similar to the current IFC Integrated Solid Waste Management project). MEGA organized four workshops in 2009 on these topics, plus sessions on project financing, public-private partnerships, and recycling. MEGA officially works in 32 municipalities but covers all regions and municipalities with their consulting services; with respect to waste management they are currently focusing on Nis, Valjevo and Timocka Krajina.

Socially Responsible Waste Management, Netherlands: The aim of Fair Waste Practices is to improve the capacity of all stakeholders to assure the sustainability, effectiveness and fairness of local waste management and recycling practices and national waste policies and legislation in Serbia. The 30-month project, started in late-2009, is targeting the municipalities of Prokuplje and Pirot; it is being implemented by a host of local and Dutch organizations.

Plastic Recycling Project, USAID Macedonia: The aim of the USAID Plastic Recycling Project was to establish an efficient and economically viable plastic recycling program in Macedonia. The $1.3 million project, implemented from Sept. ’05 through Dec. ‘09, was comprised of six components: i) develop and certify collection and recycling companies; ii) implement PET collection programs in municipalities; iii) conduct public awareness campaigns on national and local levels; iv) strengthen municipal capacities in waste management, including applying for IPA funds; v) establish Plastic Recycling Association PETRA; and vi) assist the Ministry of Environment and Physical Planning to develop and implement a Law on Packaging Waste to institutionalize the recycling industry.

Strengthening of Local Self Government & Modernization of Communal Services, GTZ: GTZ is a good technical resource on issues related to waste management, landfills and the Serbian Waste Management Strategy. They are working to apply successful German experiences and successes in Serbia. They believe that Serbia should focus on expanding recycling initiatives and that the number of landfills planned (27) is too high a figure. They argue that landfill costs are high, European landfills are closing and consolidating while Serbia is planning to build an excess, and that the PPP model for waste management may ultimately prove not to be cost-effective. GTZ is interested in strengthening cooperation between international and national actors, and believes the Standing Committee for Towns & Municipalities should be involved more in donor coordination. In a previous project, GTZ worked with the Agency for Recycling and Serbia Chamber of Commerce to develop an online trading system for recyclables in Serbia. The system was completed before a conflict developed over ownership of the system and data; as a result the system was never made operational; GTZ may try to reintroduce the system. Conclusions from a Waste Management Working Group in June 2009 are presented in Part 2: Serbia Recycling Actors & Company Profiles.

JKPs and Municipalities

Collection Programs

Municipal Collection Programs: Thirteen JKPs and municipalities were interviewed in this assessment (including those in the Treehouse Recycling Assessment for South-Central Serbia); of those, nine had received a USAID donation to start or expand a recycling program. Of the nine, five currently manage a recycling program; two started and discontinued their efforts (Ivanjica, Priboj); and two never utilized their donations (Nova Varos, Tutin). Municipalities typically focus on plastic (PET) collection, to a lesser extent on paper and cardboard, and a few on all kinds of materials; few collect glass. The accompanying chart shows the average monthly collection of plastic and paper among the 13 municipalities surveyed. Annex 2 presents a basic overview of each municipality surveyed, including a summary of materials, collection methods, sorting & separation, and markets. The reader is also referred to Part 2 of this assessment for a detailed profile on each program.

Types of Collection Programs: Of the municipalities who manage a collection program, each program is unique in some way, but in general three types of programs, or some combination, emerge: i) container collection, ii) bag (household) collection, and iii) wet-dry model.

Container Collection: Traditional container collection, with containers designated for specific materials, was the most common approach, implemented solely or with other initiatives in eight of the nine collecting municipalities (Cacak uses the wet-dry model). Most commonly, municipalities designated plastic containers, and to a lesser extent paper; in a few cases containers for other materials are also placed. In Indjija, all businesses are required to purchase two 140 L containers for plastic and paper.

Bag (Household) Collection: Indjija and Cacak manage collection programs where they distribute recycling bags to households in targeted areas. In houses, the bags are placed in front of the house on pickup day; in apartment buildings, the bags are picked up door-to-door. In both programs full bags are replaced with new bags at pickup. While these two programs do rank among the highest in terms of quantities collected (though not necessarily per capita) they are also the most management-intensive and probably costly to manage as well.

Wet-Dry Model: Of the municipalities surveyed, only Cacak relies on the “wet-dry” model for recyclable collection. In this system, wet waste is placed in one bag or container, and dry waste is placed in a separate one (of different color). Wet waste is disposed of at the landfill (Cacak JKP Javna Zelenila also operates a pilot composting facility where a small amount of the wet waste is sent); dry waste is sent for sorting (in the case of Cacak, to a privatelymanaged line at the municipal waste management complex). Seko-Pak seems to endorse the wet-dry model.

Advantages & Disadvantages: It cannot be generalized which of the three models is best; largely it depends on the human and material resources that the JKP, municipality and other actors are willing to contribute. It should be noted that none of the programs surveyed are covering their expenses.

 For a municipality that wants to get started, or one that lacks the resources, containers are probably the best solution: it is relatively simple, inexpensive, easy-to-manage, and can easily be increased by adding containers.

 Bag collection results in better separation since citizens are collecting in their households; citizens dispose of the wet waste themselves while the dry bags are picked up at their door, typically weekly, so that they are diligent in placing only dry waste in the bags. Bag collection is inherently more labor-intensive since bags are picked up at the household (or flat) level.

 The wet-dry model is designed to be the most simple for the citizen; it also allows the highest degree of sorting and maximizes the number of materials that can be sorted. On the other hand, it requires the most investment and labor on the part of the municipality or other actor. First, there must be a sorting line and facility to separate, press and store the materials. Second, the waste on the line must be sorted manually, requiring a number of workers depending on the capacity. Finally, the entire system must be managed, an operation that requires a degree of hands-on supervision.

Local Public-Private Partnerships: Given the high number of private collectors and recyclers throughout Serbia and the number of JKPs starting or managing a recycling program, there is minimal cooperation between the public and private sectors. Many private collectors and recyclers cite repeated and failed attempts at gaining approval or agreement to manage a collection initiative or scheme targeting specific materials or areas. At the same time, many municipalities are entering into 25-year contacts for an international company to manage their waste collection and/or landfill. In terms of this, Cacak is an excellent example of a strong and effective local public-private partnership that could be considered by more municipalities.

Financial Performance: None of the municipalities/JKPs surveyed are able to cover their expenses by recycling, but they state that reduced landfill demand is a benefit. Brdja in Trstenik is a company that in part serves the role of JKP through communal collection, but does so profitably with no local government subsidy or assistance. Brdja succeeds by collecting recyclable materials in public containers in addition to purchasing commercial and industrial waste. Brdja also attributes their profitability to better separation by their workers than by public employees, as well as to general private sector efficiencies not achievable in the public sector.

Material Theft: Several interviewees face the problem of theft of materials from containers, generally in the case of paper and cardboard. While most JKPs view this as a problem, others such as Zitoradja view it positively as the materials are being recycled regardless, as well as providing income for unemployed Roma. Blace JKP sells the small amount of paper and cardboard it collects to a Roma firm in Prokuplje, one example of a positive local partnership.

General Success: Despite the collection model used, interviewees commonly repeated that many citizens want to recycle, and will participate if given a relatively convenient opportunity. That said it can also take only a few citizens to disrupt a program by not sorting properly. Some of the key success factors identified include:

 Geography: Remote municipalities face more difficulties in identifying buyers, transportation and recycling economics. Expanding around existing “hubs” or clusters of recycling programs, and establishing and supporting regional sorting lines, may help to overcome this challenge.

 Will & Initiative: The will and initiative of municipalities and JKPs ultimately determines the success of a public recycling program. The actors must be diligent in introducing and promoting the initiative to the public, persistent in their efforts despite potential early setbacks, and committed to achieving their goal and targets.

 Citizen Behavior: Citizen behavior can be influenced by an effective media campaign to introduce recycling, encourage citizens to recycle, engage the private sector, and provide ongoing information about the program to the public. Media coverage can also help eliminate wrong impressions and opinions among the public; for example, that JKPs are not recycling collected waste but rather sending it to the landfill along with the rest.

 Politics: The relations and cooperation between the municipalities and JKPs vary between municipalities. It might be generalized that smaller municipalities have better cooperation than larger ones; larger municipalities may have an opposition party in charge of the JKP, further complicating the issue. Regardless, the politics of the relation play a key role in success, as recycling impacts waste management contracts and agreements.

Source Separation: Related to source selection, a number of other best practices are noted:

 Separation of plastic is better in smaller cities and even villages than in many urban centers. This runs counter to what might be expected, though some interviewees explained that it may be because waste disposal problems are more evident in villages due to the high number of visible illegal landfills.

 Wire containers (those whose contents can be viewed from outside) have far better separation than closed (solid) varieties. There appears to be a clear psychological effect in citizens’ ability to view the contents of the container.

 Recycling containers should be accompanied by general waste containers nearby. Recycling containers by themselves attract general waste, as citizens simply dispose of their waste in the most convenient container. Interestingly, many plastic recycling containers in the small towns and villages had excellent separation despite not being placed near general trash containers.

 Recycling containers should be efficiently placed to maximize collection and minimize effort. Containers should be placed on an easily-traversed route; in quantities to meet the population and demands of citizens (so that they fill at roughly the same rate); placed to allow citizens the opportunity to recycle with minimal effort; and placed in public areas of high visibility, residential populations. foot traffic, and drink consumption.

Strategic Waste Management Partners (PPP)

Municipal and Regional Plans

Municipal & Regional Waste Management Strategies: The 2003 National Strategy of Waste Management stipulated the closure and rehabilitation of existing dumpsites and the construction of 29 regional sanitary landfills, with waste transfer stations and centers for secondary separation of recyclable waste. The Law on Waste Management directed that each municipality develop a municipal waste management plan; subsequently, municipalities must then organize themselves into regions (which can be different than the 2003 Strategy regions) and prepare regional waste management plans based on the local plans. The goal is to allow municipalities to plan how they will manage their waste in compliance with the law. Municipalities are allowed a number of options including retaining existing structures, outsourcing to a strategic waste management partner, establishing local public-private partnerships, or any combination of options. The deadline for the regional plans is May 23, 2010. According to the 2009 Strategy 25 regions have been organized (see Annex 3); the remaining municipalities had not yet reached an agreement at the time the strategy was released (June ‘09).

Landfills: European experts argue that the number of landfills planned for Serbia is too high and that the resources would be better utilized by investing in collection and recycling initiatives. They argue that landfills are the most costly form of treatment, require large capital investments, are opposed by local citizens, and are long-term obligations. In many European countries, they note, landfills are being closed and consolidated while Serbia is on a course to overconstruct which will lead to high municipal, citizen and business financial obligations. Some believe that ultimately the number will be lower, perhaps around ten. According to SEPA only six landfills in Serbia have scales (Nov. ‘09), resulting in large amounts of “estimated” data; there are 3200 wild dumps in Serbia. According to MEGA the current landfill fees charged by two private operators are ASA (Lapovo) €16/ton; and Porr-Werner & Weber €21/ton. The municipalities where the landfill is situated receive a €1/ton discount.

Partnership Agreements (PPP)

Strategic Waste Management Partnerships: As seen in the table of waste management regions, many municipalities in Serbia are or will be entering into long-term public-private partnership (PPP) agreements with a strategic waste management partner (typically an international company). Both IFC and USAID programs provide technical support to municipalities wishing to engage a strategic partner.

Type of Agreements: In general, there are two types of these agreements: i) waste collection and disposal, and ii) landfill construction and management. The first one generally establishes a joint company between the municipality and a private operator; typically 20% municipality and 80% private. The municipality’s 20% is invested in the form of assets: buildings, vehicles, containers and infrastructure, all of which is turned over to the new company to provide collection services. The private partner provides the remaining 80% in new equipment and assets. Most of the existing JKP workers are hired by the new company. To date, the second type, landfill management, is wholly owned by the international partner (excluding some cases where an international company was hired only for construction).

Advantages of PPP: There are numerous advantages for municipalities to engage a strategic waste management partner:

 Local government is relieved of costs and responsibility in communal waste management, leaving the responsibility to large companies with experience and financial resources.

 Assigns waste management responsibilities to the private sector, which is arguably more efficient and cost-effective than overstaffed public JKPs.

 Provides stability in management and operations by eliminating leadership changes of JKPs following political hanges.

 Waste management fees are calculated based on household member, not living area, making the system more compliant with the “polluter pays” philosophy and EU directives.

Disadvantages of PPP: Despite these attractive advantages, they can be offset by a number of other issues that municipalities should consider before ultimately deciding and signing an agreement:

 Agreements are typically signed for 25 years, a long period of contractual obligation, during which time many things can change; operators are likely counting on this and have a good idea of what to expect based on their experience and access to data and information.

 The operators are private, limited-liability partners; their operations will inherently earn a profit for their stakeholders. Their income is derived from collection and/or landfill revenues, meaning that businesses and citizens will pay the costs plus profits. There are clauses in some contracts that municipalities guarantee certain revenues. Because of this, Cacak municipality argues that collection should remain a public service.

 There are financial disincentives for recycling, especially primary (source) selection. Experts agree that recycling programs need to incorporate primary selection to reduce sorting costs and to collect cleaner materials with higher reusable content. According to PPP operators, however, their recycling operations operate at a financial loss (no different than the JKPs interviewed). As a result, they have little financial incentive to establish recycling programs. Of the two operators interviewed, both currently manage recycling programs with very limited outreach; many municipalities operate more advanced and effective collection schemes.

 Landfill operators are paid a gate fee; primary selection will reduce the gate fee by capturing recyclables before they reach the landfill. For this reason, some private operators favor secondary sorting facilities at the landfill so that the gate fee is retained. Most of the agreements include a secondary sorting line to be constructed at the landfill at some point in the future, though there appears to be little incentive by the private partners to expedite the activity. In addition, gate fees belong 100% to the operator, while recycling income is shared with the municipality. Source separation will be required by law so there should be some diligence on the part of municipalities and observers to watch how this plays out.

Competition for Industrial Waste: At least some waste management operators are counting on municipalities to force companies to turn their industrial waste over to the strategic partner, whose position is that by virtue of their contract, they own all non-hazardous waste generated in the municipality. This could be a controversial point as many companies already have agreements with local collectors to buy their waste. Industrial waste has a higher value than communal waste as it is more uniform in composition, in higher quantities, and cleaner and easier to sort. Operators admit that it is a form of monopoly and so far have not interfered with these contracts, but that will likely change in the future. Operators argue that all buyers will still have access to the materials, albeit from the operator. They see the only conflict as one between operators and collectors, who they admit will be hurt by the agreement. If operators can leverage secondary materials from industrial and commercial sources, they may effectively limit access to the materials not only from collectors but also from end users and other buyers and consolidators.

Note: Complete text is taken from the document-guide for investors Secondary Materials and Waste Recycling Commercialization in Serbia.

The project is implemented with the support of the USAID Serbia Competitiveness Project.