Financial Daily from THE HINDU group of publications
Wednesday, Sep 04, 2002
Industry & Economy
First BoT project future uncertain
THIRUVANANTHAPURAM, Sept 3
THE first build-operate-transfer (BoT) project in the State is threatening to prove a wasted effort, with Poabs Enviro Tech Ltd, the joint venture partner of the Corporation of Thiruvananthapuram in the pioneering Rs 9-crore garbage treatment plant, making known its intention to exit the project unless the State Government fulfils its ``contractual obligations''.
In a communication, the Poabs group has ventured to propose that the State Government take over the plant at Vilappil in the suburbs after reimbursing its capital investment and interest arrears due to the bank.
The stand-off was created due to the piling up of huge stocks of biomanure produced from municipal solid waste (MSW) processed by the plant after the buyback arrangement for the same entered into with the State Government failed to materialise.
Speaking to Business Line, Mr Abraham Jacob, Managing Director, Poabs Enviro, said that the biomanure was a by-product of MSW at Poabs and it could not hope to compete with the same product from ordinary producers who did not incur the overheads applicable for an MSW treatment plant.
The Government had relaxed para 14 of the Stores Purchase Manual, enabling its agencies to purchase the Poabs product at Rs 4.50 per kg when competing products were available for Rs 3.50 per kg.
All departments, quasi-Government institutions and local bodies were advised to procure the Poabs product at Rs 4.50 per kg.
Poabs found it tough to take up the marketing of the product all on its own and the unsold stock had collected in huge quantities at the plant premises.
Matters came to a head when the company refused to entertain garbage-laden lorries on grounds that accumulated stock of biomanure left little scope for processing incoming loads.
The lorries had since stopped plying, leaving the city roads pockmarked with mounds of garbage which had piled up over a period of the last two weeks.
The project was executed through a BoT agreement between the Poabs group and the Corporation of Thiruvananthapuram two years ago.
However, the smooth functioning of the plant - with a built-up area of 1.2 lakh square feet and full asbestos roofing - has largely remained a pipedream thanks to a combination of adverse factors.
Protests triggered by alleged threat to public health and failure of the buyback arrangement with the State Government have been the two main issues that have dragged the plant into controversy.
Poabs had notified the Corporation on August 19 that it would not accept fresh garbage loads unless the State Government provided marketing support for the biomanure.
The Corporation authorities now fear that the situation would lead to re-enactment of ugly scenes of protests mounted by Vilappil villagers at the time of the very inception of the plant.
Efforts by the State Government to get the Agriculture department to purchase the manure have apparently failed.
Sources in the Agriculture Department said that a private company should not be seen as being promoted when, for instance, the public sector Agro Industries Corporation was willing to supply the same product at lower prices.
As per the terms of agreement, the entire land for the project was provided by the City Corporation. Poabs was contracted to pay a lease rent of Re 1 per square metre and two per cent of the turnover as royalty.
The Corporation is legally bound to supply 300 tonnes of garbage daily to the project site. Under the agreement, the local body will have to pay a penalty up to Rs 49,000 for failure to supply the requisite quantity of garbage.
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