Revenue Generation Plan LAHORE WASTE MANAGEMENT COMPANY

Policy Statement LWMC shall implement a system to collect revenue from all segments of society receiving services from LWMC to ensure sustainability of optimum operations under the LWMC charter .

Financial Streams Streams of funding for LWMC: CDGL (after signing of SAAMA) Receipts against approved budgetary expenditures Receipts against approved budgetary receipts Finance Department, Government of Punjab; Commitment of support on case to case basis SWM Service contracts Ring Road Lahore Metro Bus Service Lahore

Rationale Subsidized SWM Services: Presently subsidized SWM services are being provided to all areas, full cost recovery is essential to maintain desired level of services. The full cost of SWM services should be charged to; Commercial and Industrial Users

Cont’d… Financial Sustainability: LWMC is meeting deficit in operational expenditures through loans from F.D, GOP. Total loan from FD, GOP has been accumulated to Rs. 7 billion up till FY 2012-13. Observation of Statutory Auditors regarding the “going concern” in absence of revenues/grants.

Cont’d… Financial Sustainability: The percentage of loans from the FD to meet the expenses of modern SWM system will gradually be reduced. Additional funds are required to meet social and environmental obligations.

Cont’d… Pricing of SWM services; The adequate recovering of costs incurred on SWM services to inculcate responsible behavior in citizens and to create a demand for improved service delivery. Level of Service Delivery; Enhanced level of SWM services can only be maintained in the presence of continuous stream of revenue generation.

Existing Revenue Generation Mechanism Basis of charging user fee User charges from Households, and Commercial & Industrial Units at the rate of: Commercial unit Rs. 50 per month per unit Industrial unit Rs. 100 per month per unit

Commercial & Industrial Units Cont’d… Methodology & Tariff: Household Units Collection through WASA 30% of water bills as per notification Notification# supdt/ZN/2557 08/11/2006 Currently charging 21% (No documentary evidence provided by WASA on change of collection rate WASA charging 15% of total collection as service chares. Commercial & Industrial Units Collection through own departmental recovery Commercial Rate: Rs. 50 per month Industrial Rate: Rs. 100 per month

Current Revenue Generation System Note:- % is based on total targeted amount Rs. 120 million (Rs. 100 million of households and Rs. 20 million of commercial & industrial units)

Existing Revenue Generation Situation Cont’d… Year Receipts from WASA Revenue from Commercial & Industrial Units (Rs in million) (Rs in million) 2001 14.9 2002 6.6 2003 11.7 2004 89 8.1 2005 83 4.2 2006 79 6.1 2007 72 13.7 2008 59 16.8 2009 55 14.6 2010 52 13 2011 23 (115%) 2012 22 (110%) 2013 (Expected)   30 (120%)

Existing Revenue Generation Situation Cont’d…

Targets vs. Recovery from WASA Year Budgeted Targets (Rs in million) Actual Recovery Receivable from WASA 2004 100 89 11 2005 83 17 2006 79 21 2007 72 28 2008 59 41 2009 55 45 2010 52 48 2011 - 2012 Total 900 489 411

Contracts with autonomous bodies Proposed Revenue Generation System Commercial Units Industrial Units Household Units Sources Sale of waste RDF Contracts with autonomous bodies Recycling Waste to Energy

Basis of Data Collection Cont’d… Basis of Data Collection LESCO consumer base Bureau of Statistics, Government of Punjab Own Surveys (Contractor, LWMC, Third party) Election Commission data base Any other Govt. Dept.

Cont’d… Description As per LESCO data As per BS,GOP data Household Units 849,580 750,064 Commercial Units 171,788 146,400 Industrial Units 40,535 36,000 Total Units 1,061,904 932,464

Proposed Tariff Rates Proposed method of tariff setting for households, commercial & industrial will be area based on the DCO designated values of different areas. The proposed user charges are area based on the basis of rich and poor areas. Unit(s) Rate P.M. (Rs.) Household 100-600 Commercial 525-2000 Industrial 700-5000

Proposed Method & Rates of Tariff Setting Proposed method of tariff setting for households will be area based on the DCO designated values of different areas. DCO Property value (Rs.)  Rate charged Rate P.M (Rs.) 30000-150000 0.10% 100 150001-300000 0.08% 180 300001-600000 0.06% 270 600001-1000000 0.05% 375 1000001-1500000 0.04% 480 500001-2600000 0.03% 600

Cont’d… Proposed method of tariff setting for Commercial units will be area based on the DCO designated values of different areas. DCO Property value (Rs.)  Rate Charged Rate P.M 60000-250000 0.30% 525 250001-600000 0.25% 1,125 600001-1000000 0.20% 1,600 1000001-1500000 0.15% 1,800 1500001-2600000 0.10% 2,000

Cont’d… Proposed method of tariff setting for Industrial units will be area based on the DCO designated values of different areas. DCO Property value (Rs.)  Rate Charged Rate P.M 60000-250000 0.40% 700 250001-600000 0.33% 1,500 600001-1000000 0.30% 2,400 1000001-1500000 0.25% 3,000 1500001-2600000 0.20% 4,000 2600001-4000000 0.17% 5,000

DCO Property value (Rs.) Potential Revenues from Households DCO Property value (Rs.)  Rate charged Rate P.M No of units Value per Month Value per Annum 30000-150000 0.10% 100 82,541 8,254,125 99,049,500 150001-300000 0.08% 180 322,661 58,079,025 696,948,300 300001-600000 0.06% 270 165,083 44,572,275 534,867,300 600001-1000000 0.05% 375 105,053 39,394,688 472,736,250 1000001-1500000 0.04% 480 52,526 25,212,600 302,551,200 1500001-2600000 0.03% 600 22,200 13,320,000 159,840,000 Total    750,064 2,265,992,550  Recovery 80% 1,812,794,040

Potential Revenues from Commercial Units DCO Property value (Rs.) Rate Charged Rate P.M No. of Units Value per Month Value per Annum 60000-250000 0.30% 525 27,000 14,175,000 170,100,000 250001-600000 0.25% 1,125 84,000 94,500,000 1,134,000,000 600001-1000000 0.20% 1,600 18,000 28,800,000 345,600,000 1000001-1500000 0.15% 1,800 12,600 22,680,000 272,160,000 1500001-2600000 0.10% 2,000 4,800 9,600,000 115,200,000 Total   146,400 2,037,060,000 Recovery 80% 1,629,648,000

Potential Revenues from Industrial Units DCO Property value (Rs.) Rate Charged Rate P.M No.of Units Value per Month Value per Annum 60000-250000 0.40% 700 9,000 6,300,000 75,600,000 250001-600000 0.33% 1,500 18,000 26,997,300 323,967,600 600001-1000000 0.30% 2,400 4,200 10,080,000 120,960,000 1000001-1500000 0.25% 3,000 9,000,000 108,000,000 1500001-2600000 0.20% 4,000 1,200 4,800,000 57,600,000 2600001-4000000 0.17% 5,000 600 2,999,880 35,998,560 Total   36,000 60,177,180 722,126,160 Recovery 80% 577,700,928

Revenue Potential (Households, Commercial & industrial Units) Revenue Collection Potential in (%) Household Units (Rs. in million) Commercial & Industrial Units (Rs. in million) Total 100% 2,266 2,759 5,025 80% 1,813 2,207 4,020

LWMC Revenue/Receipts vs Govt Support * Year 1 is starting from 2011 & year 1 & 2 contains actual figures

Revenue Collection System Options and Recommendation Billing and Collection Third Party as an outsourced Contractor Through LWMC (own sources) An existing platform such as cell phone service provider Government agency such as LESCO, SNGPL ( capacity to enforce the writ) An integrated system for charging City Government provided services through a smart card product (Municipal Services Card) Recommendation : User collection system may be outsourced to third party. Later on collection system may be switched over to smart cards (Municipal Services Card).

Pre-Requisite Political Commitment User Charges Levying, enforcement and administrative support from CDGL Implementation/Action Plan- Service Delivery

Time lines Sr. No Activity (Months ) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15   Legislative Approval Survey and data collection Planning & Designing of system for collection of user charges Commencement of collection of user charges in Phase A (25 UCs) Commencement of collection of user charges in Phase B (25 UCs) Commencement of collection of user charges in Phase C (25UCs) Commencement of collection of user charges in Phase D (25UCs) Commencement of collection of user charges in Phase E (25UCs) Commencement of collection of user charges in Phase F (25 UCs)

Current Status Summary to the Chief Minister for approval of User charges and Revenue Plan on Oct 30, 2012 Direction by the Chief Minister Punjab to the Secretary LG&CDD for analyzing Revenue Plan and submission of recommendations Secretary LG&CDD held two meetings for finalization of Revenue Plan Matter is pending with Secretary LG&CDD

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