Material Recovery Facilities for Recyclable Solid Waste
Material Recovery Facilities for Recyclable Solid Waste
Business Model Description
Invest in building and operating Material Recovery Facilities (MRF) and collection infrastructure for Recyclable Solid Waste by partnering with existing players. The collection network for an MRF involves a drop-off bag network, drop-off bin network, local authorities and industries, existing collectors, door-to-door collection lorries, special waste management promotion events and a buy-back centre. Examples of companies active in the IOA space:
Eco Spindles Pvt Ltd is a leading plastic recycler and manufacturer of recycled yarn and monofilament. In June 2022, Eco Spindles and Coca-Cola launched an MRF Facility in Wadduwa. Its parent company BPPL Holdings, in May 2022, secured long-term funding of US$ 15 million from the United States International Development Finance Corporation (DFC).
Ceylon Cold Stores PLC and Cleantech recently partnered to operate another Material Recovery Facility (MRF). Located in Western Province, this MRF has the machinery investments to transform the collected plastic into value-added plastic waste to be supplied to the recycling companies.
Expected Impact
Improvement in waste recycling at municipal level to reduce environmental degradation and improve livelihood for waste workers, and contribute to the overall health of local communities.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Sri Lanka: Countrywide
- Sri Lanka: Southern Province
- Sri Lanka: North Central Province
- Sri Lanka: Eastern Province
- Sri Lanka: Northern Province
- Sri Lanka: Central Province
Sector Classification
Infrastructure
Development need
Sri Lanka faces challenges in managing its Municipal Solid waste, including plastic waste, with 10,768 tonnes of waste generated per day and only one-third of it collected (1). Interventions in the sector could see GHG emissions reduced by 11% in the 2021-2030 period against the BAU scenario (equivalent to an estimated GHG emissions reduction of 2,549,000 MT) (2).
Policy priority
National Environment Action Plan 2022-2030 theme 6 focuses on holistic waste management (2) and National Policy on Waste Management Policy of 2019 focused on the need for infrastructure development for waste recycling (3).
Gender inequalities and marginalization issues
In 2020, infrastructure which includes construction, water and waste management amongst others had close to 76% of employment in the informal sector of which only 4% were women (5). There is greater scope also for community participation to work with local authorities in ensuring a cleaner environment.
Investment opportunities introduction
Sri Lanka's current fiscal space will make it difficult for more expenditure on infrastructure and providing finance at the provincial level for waste management infrastructure. The Public Investment Programme has identified the need for solid waste management projects during the 2021-2024 period (6).
Key bottlenecks introduction
Further urbanization could rapidly increase the solid waste generated each day and may make it difficult for infrastructure planning. Improvement in collection, transport, treatment and suitable disposal sites are required to reduce the waste problem.
Waste Management
Development need
Per capita waste generation ranges from 0.2kg/person/day in rural areas to 0.85kg in urban areas, with only 60% of waste collected in the Western Province and 25% in other provinces, and less than 10% of it is recycled (2). Municipal solid waste generation is expected to increase in the next decade and current practices are not streamlined and modernized to manage this.
Policy priority
National Action plan on Plastic Waste Management 2021-2030 has specific goals related to waste management such as goals 3, 9 and 10 that prioritize collection and recycling targets (1). The Nationally Determined Contributions 2021 outlines steps to improve the circular economy of Municipal Solid Waste (4).
Gender inequalities and marginalization issues
Women in the waste sector are involved in the informal sector, primarily engaged in terms of waste collectors or recyclers. Female waste collectors or recyclers in particular those in the informal economy are overburdened and are not provided with adequate safety and childcare measures.
Investment opportunities introduction
Material Recovery Facility (MRF) is known to be a proven model to increase a country's financial, social and environmental sustainability and increase the recycling and reusing rate of a country. There is an opportunity to set up 15-18 MRFs across the country generating over 12,000 job opportunities.
Key bottlenecks introduction
There exist issues in waste management such as sorting, collection and waste disposal due to insufficient formal mechanisms and lack of awareness on health and environmental impacts. Managing e-waste also has been a concern due to insufficient regulation for lifecycle management of e-products. Lack of clarity in these areas has led to low participation for private sector investments (6)
Waste Management
Pipeline Opportunity
Material Recovery Facilities for Recyclable Solid Waste
Invest in building and operating Material Recovery Facilities (MRF) and collection infrastructure for Recyclable Solid Waste by partnering with existing players. The collection network for an MRF involves a drop-off bag network, drop-off bin network, local authorities and industries, existing collectors, door-to-door collection lorries, special waste management promotion events and a buy-back centre. Examples of companies active in the IOA space:
Eco Spindles Pvt Ltd is a leading plastic recycler and manufacturer of recycled yarn and monofilament. In June 2022, Eco Spindles and Coca-Cola launched an MRF Facility in Wadduwa. Its parent company BPPL Holdings, in May 2022, secured long-term funding of US$ 15 million from the United States International Development Finance Corporation (DFC).
Ceylon Cold Stores PLC and Cleantech recently partnered to operate another Material Recovery Facility (MRF). Located in Western Province, this MRF has the machinery investments to transform the collected plastic into value-added plastic waste to be supplied to the recycling companies.
Business Case
Market Size and Environment
< USD 50 million
Increase monthly PET collection from 175 metric tons (MT) in 2021 to 700 MT by 2025
Increase monthly PET recycling quantities to 700 metric tons by 2025.
Each MRF requires about USD 100,000 with a need of 30 MRFs islandwide. Presently there are 4 MRFs in operation with 8 more in the pipeline. Investment for about 15-18 additional MRF facilities are required.
Indicative Return
15% - 20%
> 25%
According to industry experts, a MRF could generate atleast USD 16,500 in Year 1 and scale by 50% each year till Year 4 where it reaches the maximum processing capacity for the plant.
Investment Timeframe
Short Term (0–5 years)
MRF takes about 6 months to setup and can be operational in about a year with collection infrastructure in place. It can generate profit within the first year of operation with profit scaling up with greater collection and a predictable pipeline of buyers.
Ticket Size
< USD 500,000
Market Risks & Scale Obstacles
Market - Highly Regulated
Stakeholder risk
Business - Supply Chain Constraints
Impact Case
Sustainable Development Need
Sri Lanka is facing challenges to manage its Municipal Solid Waste including plastic waste with 349 open dumpsites where uncollected waste is currently being dumped. There is a need to cover the entire lifecycle of plastic waste management from collection, segregation, processing and final use (1).
The amount of waste being collected is increasing and the open burning of plastics including uncollected E-waste is on the rise. According to estimates, 48% of plastic waste is openly burnt on individual premises which has significant health and environmental concerns (1)
There is opportunity for local businesses/ regional authorities to collect revenue through recycling. This will have to be supported with the infusion of technologies in this space to replace incineration of waste that is a high emitter of GHG gases.
Gender & Marginalisation
The current disposal of waste including plastic is causing health issues due to marine pollution and microplastics (1). National Aquatic Resources Research and Development Agency reported the presence of polythene and plastic waste in yellowfin tuna caught by Sri Lanka boats (2).
Introduction of technology and new processes will ensure meeting of Goal 15 of the National Action plan on Waste Management which is to ensure occupational health and safety requirement are met for all plastic waste handlers of all genders by 2025 (1).
According to industry experts, presently MRF has a ratio of 30 women to 70 men employed in these facilities. Each MRF is expected to generate 400 job opportunities and the goal would be to have a ratio of 60 women to 40 men when all 30 MRFs are in operation.
Expected Development Outcome
The IOA can increase the rate of municipal waste that is being collected and recycled in each district and reduce the number of open dumpsites.This has both positive outcomes for public health and the environment.
The IOA relies on many collection partners including the public, community, volunteers and local authorities.This will enhance public awareness and the need for waste management including recycling of plastics.
Gender & Marginalisation
The working conditions of the waste collectors will improve by providing them with access to tools and technology for segregating waste and through the provision of capacity building measures.
The job opportunities created by setting up an MRF mandates the workforce ratio to be 60 women to 40 men. This will improve the role of women in the waste sector by formalizing their participation and thereby improve their economic prospects. Indirect impact on their social mobility is also anticipated.
Primary SDGs addressed
11.6.1 Proportion of municipal solid waste collected and managed in controlled facilities out of total municipal waste generated, by cities
11.6.2 Annual mean levels of fine particulate matter (e.g. PM2.5 and PM10) in cities (population weighted)
Only 3,458 MT/D is collected by local authorities of the 10,768 MT/D waste generated.
PM 10: Colombo - 57.0 , Kandy - 38.73
Under the National Action plan on Plastic Waste Management: Goal 3 - Achieve 80% collection of recyclable and non-recylable plastics and e-waste, Goal 10 - Increase PET bottle collection and recycling from 27% to 100% by 2025.
Not available
12.5.1 National recycling rate, tons of material recycled
% of waste recycled on a collection basis is 2%.
Target of 7% in Western Province and 5% in other provinces by 2030.
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Public sector
Outcome Risks
Risk of low uptake by households and people since benefits from improved waste management is intangible and requires behavior change and regulations to govern waste disposal.
Outcomes may get impacted if MRFs do not have a predictable pipeline of buyers for segregated waste for recycling purposes indicating a need for end to end pipeline development.
Gender inequality and/or marginalization risk: In the absence of systematic decision making to ensure safety of waste workers and improved economic benefits, they may continue to be marginalized and negatively impacted despite scale of businesses under this IOA.
Impact Risks
Efficiency Risk given the heavy involvement of ande dependence on local authorities in waste management.
Execution Risk: Scaling up business models without adequate safety, capacity building and income security measures for the collection network can lead to further marginalization challenges.
Impact Classification
What
Increased capacity for waste recycling and reduction in percentage of waste that ends up in dumpsites and/or is incinerated.
Who
Communities in all regions will benefit from proper waste disposal mechanisms with positive health outcomes. The waste workers will benefit from new technology, training and improvement in livelihood opportunities.
Risk
There will be a significant involvement with local authorities to ensure the success of waste collection. A network of collectors will ensure that there is an adequate waste to be recycled.
Contribution
Increase the ratio of Municipal Waste that is being collected daily from one-third and reduce the number of dumpsites.
How Much
The domestic plastic processing capacity is nearly 140,000 MT per annum with annual average growth rate of around 10-12%. 30 MRFs can increase this capacity by another 1,500 MT.
Impact Thesis
Improvement in waste recycling at municipal level to reduce environmental degradation and improve livelihood for waste workers, and contribute to the overall health of local communities.
Enabling Environment
Policy Environment
The National Action Plan on Plastic Waste Management 2021-2030 (1) is a national policy that sets out actions Sri Lanka needs to follow based on the principle of the 3R (Reduce, Reuse and Recycle) related waste hierarchy.
The National Environmental Action Plan (NEAP) 2022-2030 is the 4th NEAP in the series since 1990s and aligned to the National Environment Policy of 2021. Section 6 of the NEAP covers a section on holistic waste management.
The National Policy on Waste Management 2019 provides coherent and comprehensive directions for waste management in the country covering all forms of wastes including solid waste management.
Financial Environment
Enhanced Capital Allowances (ECA) are granted to an entity in addition to depreciation allowance. For investments more than USD 3 million and less than or equal to USD 100 million, ECA is 200% for Norther Province and 100% for other Provinces for a period of 10 years (7).
Corporate income tax for manufacturing firms are at the lower rate of 14% (7).
Regulatory Environment
The National Environmental Act No. 47 of 1980 as amended by Act No. 56 of 1988 and (amendment) Act No. 53 of 2000 provides legal framework for plastics and plastic waste management in Sri Lanka.
Local authorities regulations are: Municipal Council (No. 16 of 1947 Municipal Council Ordinance- Chapter 252), Urban Council ( No. 61 of 147 Urban Council Ordinance sections 118,119 and 120) and Pradeshiya Sabha (No. 15 of 1987 Pradeshiya Sabha Act sections 93 and 94 ).
Provisions under provincial statues: Western Province Waste Management Authority (WPWMA) No. 01 of 2007, North Western Province Environmental Statue No 12, 1996.
Regulation related to Waste Management - National Environmental (Municipal Solid Waste) Regulations, No. 1 of 2009; National Environmental (Protection and Quality) Regulations, No. 1 of 2008; and Regulations on Polythene and Plastic Management 2017.
Marketplace Participants
Private Sector
Key MRF Stakeholders: Eco Spindles, Coca-Cola, Cargills, Unilever, C.W. Mackie PLC, Edinborough, John Keells Holdings PLC, Decathalon, Primal Glass, Decathalon, Alumex, Cleantech.
Government
Ministry of Environment, Central Environment Authority, Urban Development Authority, Marine Environment Protection Authority, All local authorities, Western Province Waste Management Authority.
Multilaterals
USAID, GIZ, World Bank, Asia Foundation, IUCN Sri Lanka.
Non-Profit
The Ceylon Chamber of Commerce
Target Locations
Sri Lanka: Countrywide
Sri Lanka: Southern Province
Sri Lanka: North Central Province
Sri Lanka: Eastern Province
Sri Lanka: Northern Province
Sri Lanka: Central Province
References
- (1) Ministry of Environment, Sri Lanka.2021. National Action Plan on Plastic Waste Management 2021-2030. https://www.env.gov.lk/web/images/pdf/policies/National_Action_Plan_on_Waste_Management.pdf
- (2) Ministry of Environment, Sri Lanka.2022. National Environmental Action Plan 2022-2030: Pathway to Sustainable Development. http://env.gov.lk/web/images/pdf/policies/National_Policy_on_Waste_Management_English.pdf
- (3) Ministry of Environment, Sri Lanka.2020. National Policy on Waste Management. http://env.gov.lk/web/images/pdf/policies/National_Policy_on_Waste_Management_English.pdf
- (4) Ministry of Environment, Sri Lanka.2021. Updated Nationally Determined Contributions. https://www.env.gov.lk/web/images/pdf/policies/NDCs_of_Sri_Lanka-2021.pdf
- (5) Department of Census and Statistics.2021.Labour Force Survey-Annual Report 2020.http://www.statistics.gov.lk/LabourForce/StaticalInformation/AnnualReports/2020
- (6) Department of National Planning. 2021.Public Investment Programme 2021-24. https://www.npd.gov.lk/images/publications/PIP_2021_2024.pdf