Preparations on for LWMC privatisation

Company owes Rs96b to provincial government

LAHORE:

The provincial authorities appear set to move ahead with a proposal to privatise the Lahore Waste Management Company (LWMC), which owes more than Rs96 billion to the Punjab government.

According to sources in the LWMC, despite the provision of resources and manpower, the way is being paved for foreign companies to take over the operational charge of the company. The sources said paper work in this regard had already begun and tenders were likely to be invited soon.

However, officials related to the sector expressed fear that the implementation of the decision might result in drastically raising the cost for waste management in Lahore.

LWMC Chief Executive Officer (CEO) Ali Anan told The Express Tribune that the company could be run in a better manner with less cost for the treasury if political interference was reduced.

“We will implement whatever policy the Punjab government makes regarding self-management or privatisation of the LWMC,” he added.

He said the company was carrying out the cleaning operation itself after the termination of the contract with foreign firms and its performance was gradually improving.

In response to a question, he said preparations had been made to issue tenders to privatise the LWMC and the situation regarding the future course would become clear soon.

The responsibility of cleanliness, garbage collection and placing bins in the city rests with the LWMC. Till 2003-4, the Lahore Metropolitan Corporation carried out cleaning and garbage disposal in the city with an annual budget of Rs.2.5 billion. Later, the work was assigned to foreign companies at a rate of $19 per tonne.

The work of cleaning, garbage collection and disposal in the 247 urban union councils of Lahore was handed over to the foreign firms

However, the work in areas falling under the rural union councils were undertaken by the LWMC itself.

The cost of washing roads by the foreign companies was separate from the contract. Thus, the expenditure on the sanitation services increased from Rs2.5 billion to almost Rs15 billion.

The Punjab government gives loan to run the LWMC, which has to be repaid by the company. The debt has now exceeded Rs96 billion and the amount is increasing.

After about eight years, the LWMC terminated its contract with the foreign companies because it was proving expensive.

The LWMC initially faced problems after taking over the sanitation work but improved with time and money was also saved.

Citing lack of resources, the company undertakes the work of primary garbage collection itself, while the secondary collection has been contracted out. The company collects about 6,000 tonnes of garbage daily while incurring expenses of Rs2,500 to Rs3,000 per tonne.

In contrast, foreign companies were working for more than Rs4,000 per tonne. The city's cleaning and garbage disposal operation, which previously cost about $325 million, will now cost more than $650 million if contracted out to private companies, an expert cautioned.

Former LWMC chairman Malik Amjad Noon said the company having about 10,000 employees should not be privatised after spending millions of rupees on purchasing vehicles.

If the privatization was necessary, then the operation in half the towns in the provincial capital should be given on contract in rupees rather than foreign currency and the remaining area should be served by the LWMC, he said, adding that this mechanism would help evaluate the performance of the contractors.

Published in The Express Tribune, January 30^th, 2023.