The Ludhiana Municipal Corporation’s (LMC) waste processing plant at Jamalpur landfill site on Tajpur site was closed in February last year and the city now battles to manage a whopping 21 lakh Metric Tonnes (MT) of legacy waste that has been accumulated over the years. There have been allegations and counter allegations between the MC and Gurgaon-based A2Z waste management company, a private firm that was managing the plant but terminated the agreement midway in February last year.
An investigation by The Indian Express revealed that it was due to the tussle between the MC and A2Z, the waste processing plant was shut and heaps of 21 lakh MT legacy waste turned into a massive environmental hazard, polluting air, groundwater and soil, for the residents of Ludhiana.
While the MC and the company are now locked in an arbitration battle, the industrial hub Ludhiana — which is already among the most polluted cities in the world – is now beset with another environmental problem (i. e. more than 21 lakh MT legacy waste waiting for processing).
A2Z was roped in November 2011 for complete waste management in the city — from collection to processing. The MC says that the company had started “partial operations” of the processing plant only by the end of 2016 and it became fully operational “only by February 2020” where it was producing compost from biodegradable waste and residue derived fuel (RDF) from non-biodegradable waste. But according to MC officials, there was not only “an inexplicable delay” in setting up the plant but also it (the company) failed to run it. The plant “hardly ever functioned and mostly remained shut”, claims the MC.
“The initial period from 2012 to 2015 went in taking the required permissions. The plant was made partially operational in 2016 after a long wait and then fully operational only by February 2020, but even then it never worked properly or to its full capacity,” says Harpal Singh Aujla, MC’s solid waste management expert.
In the arbitration battle, while the company is now claiming Rs 187 crore from the MC for the “financial losses” it incurred because of the civic body, the MC is claiming Rs 1,082 crore from A2Z while blaming the company for failing to run the processing plant and thus creating a legacy waste of more than 21 lakh MT.
Amid claims and counter-claims, Ludhiana is now struggling to process 21 lakh MT of accumulated legacy waste, and to make things worse, 1,100 tonnes is being added to it daily — the highest among 13 MCs in Punjab.
But what exactly went wrong?
According to sources in MC, there were several issues from both sides. While the company was demanding an increase in rates of its monthly tipping fee which was fixed in 2011, it had also accused the MC of inexplicable delay in release of monthly payments and failing to create a market for RDF which it was producing at the plant as per the agreement.
On the other hand, the MC accused the company of dragging its feet in setting up the processing plant, letting the legacy waste to accumulate, failing to start door-to-door collection in all 95 wards and causing environmental degradation.
Even as the notice for terminating the contract was first sent by the company to the MC in December 2020, according to senior officials in MC, the decision to let the company go “without having any back-up plan” required reconsideration because the MC was “never self-sufficient and lacked resources to collect, transport and process 1,100 tonnes waste a day on its own”.
“The tipping fee for A2Z at the rate of Rs 395 per MT (Rs 1.15 crore to Rs 1.25 crore a month) for waste management was fixed in 2011 and the company was demanding a hike over a period of time. Even the current market rate is nothing less than Rs 1,000-1,300 per MT. While A2Z was allowed to go, the MC was forced to hire another company M/S Alliance Waste as a stopgap arrangement for lifting and transporting waste, but the processing of waste stopped because the plant was set up by A2Z and it was that company’s property,” said an official.
Dr Vipul Malhotra, municipal health officer, Ludhiana MC, however, says that despite the MC releasing a grant of Rs 20.12 crore to the company for setting up the processing plant, it was made operational only in 2016 and that too “partially”. “It was an under-capacity plant and the company had installed old and defunct machinery there. It was not even processing the waste regularly, and most of the days, it was non-functional. It is claiming that the MC did not create a market for the RDF it produced, but its quality was found below par with less than the required calorific value,” said Dr Malhotra.
Accusing the company of creating legacy waste which has led to financial loss for the MC and irreparable damage to the environment, he said: “The company itself is admitting that it had created over 40 lakh MT of legacy waste from December 2011 to February 2021 at Jamalpur site, which we have to clear now. It has to compensate the MC for such a huge loss. Its processing plant hardly ever functioned.”
In the notice of termination that was served by the company on the civic body on December 21, 2020, the company had accused the MC of delaying the release of tipping fee, not declaring ‘no development zone’ around the processing facility, not creating a market for sale of RDF, not issuing disposal completion certificate and failing to release the government grant, among others. In its reply to the notice on February 3, 2021, the MC while terming all allegations “false and baseless” said that in addition to Rs 12.23 crore released by the Government of India and Rs 4.89 crore by the state government, the MC had transferred another Rs 3 crore to the company (totalling Rs 20.12 crore) “in public interest in spite of non-serious attitude of the company”, but “no such utilisation certificates” were furnished for these grants by the company. It added that “Ludhiana MC awaited the completion of work by the company for more than five years.”
“The concessionaire was required to commence the processing plant within 526 days, but the company miserably failed in carrying out its contractual obligations. The plant was fully started as late as February 2020, but it was unable to produce RDF of the required standard and failed the analysis test,” reads the MC reply.
Advocate Nikhil Kohli, the legal representative of the Gurgaon-based company, in a statement to The Indian Express wrote, “Since the entire project was based on PPP model, therefore, the assistance of MCL (Municipal Corporation Ludhiana) and the government was of utmost importance. The company only agreed to build, operate and maintain the waste processing plant at Ludhiana on assurances provided by MCL for providing the necessary help.
“However, the MCL blatantly failed to fulfill its obligation under the concession agreement as the requisite support was not provided to the company. On account of abject failure on part of the MCL to provide the complete grant amounts, the company was left on its own to set up, build, operate and maintain the waste processing plant. To add to the miseries, the MCL along with other government authorities created various hindrances which adversely affected the smooth functioning of the waste processing plant.”
The statement added, “The MC not only failed to increase the tipping fee but also delayed payments, hence making it extremely difficult for the company to smoothly undertake the project. Moreover, the MC abruptly stopped paying the tipping fee to the company from September 2020 which is still due.”
The company wrote in the statement, “Despite delayed payments, the company was still producing RDF at the plant. However, the market for sale of RDF was limited and the MC was required to help in creating a market for consumption of RDF. The MCL shied away from its obligation and no steps were taken to create a market for RDF, which is an alternative fuel from renewable sources. The entire project was severely jeopardised by the MCL, thereby making it commercially and economically unviable for the company.”
A former employee of the company who looked after its Ludhiana project said: “Financial viability was the main reason why the entire processing plant project failed with the Ludhiana MC. Our tipping fee was further reduced from Rs 395 per MT to Rs 325 per MT, and the monthly payment was always delayed by 5-6 months from the MC’s side. Earlier we were using RDF manufactured in the plant at our power plant in Nakodar, but the MC failed to create a market for its sale as per the initial agreement. We spent Rs 49 crore for setting up the processing plant of which Rs 20 crore was given from government grants by the MC, but it failed to create a market for sale of RDF. How can we produce something that was not being sold.”
The company issued the agreement termination letter to the MC on December 21, 2020. The physical possession of the processing plant was handed over to the MCL on February 22, 2021, said the company. The company moved the district court Ludhiana under Section 9 of the Arbitration and Conciliation Act, 1996, thereby seeking restraining orders against the MCL with respect to the invocation of the bank guarantees submitted by the company with the MCL. An arbitration was invoked which is pending before the Arbitral Tribunal.
‘Environmental degradation of all sorts, we work in hell’
At the landfill site in Jamalpur on Tajpur road visited by the Indian Express team, the contractual employees, drivers and other staff – engaged for transporting, weighing and dumping 1,100 tonnes of waste daily – say they are living a life which is ‘nothing less than hell’.
Sitting amid mountains of waste, the stench of which is carried far and wide by the fly ash and dust blowing around, Vasant Singh, the Kanda operator, weighs a truck of waste and then guides the driver towards the dumping zone. So strong is the stench that he just swallows his food hurriedly and gets back to work. “We get at least 1,000-1,100 MT waste here every single day. Some days during festivals, it even reaches 1,300 MT. The processing of waste has been stopped and we are living in hell. There is dust, ash blowing all around and then things get worse when it rains,” he says. “There is no provision of even drinking water here and we just work amid hell every day,” said Balwinder Singh, a driver.
The Punjab Pollution Control Board (PPCB) has imposed an environmental compensation of Rs 2.20 crore on the MC for flouting solid waste management rules and failing to commence bioremediation of its legacy waste from April 2021 to February 2022. Earlier a similar penalty of Rs 1.80 crore was imposed for July 2020 to March 2021.
Sandeep Kumar, environmental engineer, PPCB Ludhiana, said that the Jamalpur landfill has become a major source of air, soil and water pollution. “There are frequent fires at the dump leading to air pollution. The leachate discharge from legacy waste has started polluting groundwater and soil both. The groundwater samples from the site have failed quality tests. We have imposed an environmental compensation of Rs 3.80 crore on the MC for failing to process its legacy waste and flouting solid waste management rules. The MC is yet to pay the Rs 3.80 crore fine.”
The Ludhiana MC has identified 31 bulk waste generators (BWGs) which are generating more than 100 kg waste a day and are required to have their own solid waste management mechanism.
These include MBD Mall, Wave Mall, Verka Milk Plant, medical colleges and hospitals such as DMCH, CMCH, Fortis Hospital, Khalsa College for Women, Hyatt Regency, Hotel Park Plaza, Sabzi Mandi, Silver Arc Mall, and Pavilion Mall, among others.
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Divya GoyalDivya Goyal is our Punjab correspondent. Follow her on <a href="https:... read more