A New Way for Waste in Phnom Penh?
April 15, 2015
This February, the Cambodian Council of Ministers announced that they would review and possibly revoke the capital city’s contract with solid waste collector CINTRI. CINTRI has held the 49-year monopoly contract since 2003. Like growing cities throughout the developing world, Phnom Penh has struggled for years with dismally inadequate garbage collection. Waste management in most cities is an expensive, labor-intensive, low-margin business, one that is – literally and politically – dirty. Delivering effective municipal waste management is a challenge across the developing world, with expectations for public health, land values, and citizen satisfaction that waste contractors and city managers find difficult to meet.
The contract review opens the door for a rapidly urbanizing Phnom Penh to overhaul the framework for trash collection. CINTRI, which partnered with The Asia Foundation in 2013 on a pilot program to reform municipal waste collection, was the first company to create a self-sustaining waste collection business in the city. Several operators prior to 2003 who attempted to establish waste collection services failed to provide even a bare minimum of service. Under the current model, CINTRI collects revenues directly from the state-owned electricity company, with no municipal government intervention in the assessment of fees or the distribution of funds.
But while CINTRI achieved a self-sustaining operation at an acceptable level of service, public expectations, like Phnom Penh itself, have grown and developed beyond what the current model is able to provide. Perhaps the greatest weakness to emerge in the current system of privately outsourced collection is the link between performance and profit.
Any new solid waste management framework in Phnom Penh must address three main priorities: (1) it must more closely link the operator’s profit to performance; (2) it must create a fee collection mechanism that is independently reviewable, responsive, and light on data requirements; and (3) it must establish a framework that balances streamlined government management and efficient competition.
Like many developing countries, Cambodia is data-poor. Detailed, accurate, and regularly collected statistics are in short supply, and the solid waste sector is no different. Without data, evidence, or accepted models for comparison, establishing appropriate performance benchmarks or standards of service is nearly impossible. Developing a data-driven management system for the municipal government would mean creating an independent bureaucracy with the technical capability, legal authority, and political independence to make and implement management decisions. Needless to say, creating a bureaucracy in a developing country with any one of these traits – technically capable, legally empowered, or politically independent – is one of the primary challenges of the development industry, and not something for which a simple, universal solution has yet been found.
Introducing managed competition instead of monopoly might be one way to create an imperfect proxy for data-driven technical benchmarks. In a single-operator system, no comparative performance review is possible. In a framework with two or more operators, barring collusion, each can be compared to the other without an onerous level of data collection. While none of the operators may be performing at an ideal level, competition among the operators can drive continuous improvement.
In Phnom Penh, however, there are strong arguments against a perfectly competitive system with an unlimited number of operators. Solid waste collection is particularly sensitive to population density. Phnom Penh’s twelve existing districts are not created equal in this respect, and operators without territory in the denser city core will struggle to provide an adequate level of service in a financially sustainable manner. A city with 12 distinct operators in 12 districts will very likely see an improvement in the city core and a serious drop in performance in the outer districts. These outer areas of the city are home to many of the poorest, least powerful, and least served residents of the city, compounding the loss to social welfare.
To balance all of these needs in the absence of reliable, regularly collected data will be a major challenge. It may be that the best solution will involve some form of managed competition, with the city divided into three or four zones, each with a financial anchor in the more profitable city core. In such a scenario, companies might have regularly scheduled opportunities to compete for the market, rather than in the market, based on five-to-ten-year contracts ensuring an attractive return for investors. The potential end of the present, inefficient, monopoly framework in Phnom Penh will be just the first step in creating an equitable and efficient solid waste collection service for this rapidly growing city.
Jon Morales is a program manager for The Asia Foundation’s Urban Services Program in Cambodia. He can be reached at email@example.com. The views and opinions expressed here are those of the author and not necessarily those of The Asia Foundation.
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