1

SPDC

Outline

– Concept Definition – Models of PPP– Risk Classification– Hazards and Effect Management process (HEMP)– Risk Assessment– Management of Hazards to ALARP– Development Poles Approach Towards PPP– Leveraging PPP for Environmental Hazards Management– Conclusion

2

SPDC

PRIVATE-PUBLIC-PARTNERSHIP AS A VERITABLE MODEL FOR ENVIRONMENTAL HAZARDS

& RISK REDUCTIONPaper Delivered At The 1st Annual Conference of Emergency,

Crisis & Risk Management Institute.

at CMD Shangisha, Lagos

On December 2, 2011By

Paul Akporowho mnes, mnitp, rtp

3

SPDCConcept Definition-I

1.0 Introduction

Typically, public-private partnership (PPP) is a concessionary accord between the public and the organized private sectors. The public sector could be government at any level (Local/ Municipal, State/ Region or Centre/ Federal). The public sector role is usually that of providing land, enabling environment and some times market while the private investors provide the funds, technicality/ technology and assume the role of facility operator/ manager with a view of providing affordable and competitive public services/ goods.

The merits of PPP includes but not limited to the following:

• Reduce operational and overhead cost for public products/ services

• Enhance risk allocation;

• Timely delivery of public infrastructures/ services;

• Improve quality of public products and services;

• Improve revenue generation.

4

SPDCConcept Definition-II

. PPP is essentially aimed at circumvent the inherent bureaucracy

that makes the public sector less efficient while taking advantage of the efficiency and management qualificationsof the organized private sector without compromising quality and standards of outputs,The private sector is profit oriented unlike the public sector that is essentially driven by social and political forces. The PPP arrangement tends to identify the party that is better suited to bear the risk and allocate such risk accordingly. Consequently, loss is minimize while return on investment is better assured.

5

SPDC

Examples of Public-Private Partnership includes but not limited to the following:Build-Operate Transfer (BOT), Build-Own-Operate Transfer (BOOT), Rehabilitate-Operate Transfer (ROT) and Joint Venture Development (JVD)The preceding tabular presentation is an overview of the basic features of the various models.

Models Features Examples Risk Allocation

Contractual Schemes Marginal involvement of the private sector

Printing and sales of bus tickets by private firm.

Minimal risk borne by private sector

Build –Operate Transfer Leasehold & facility mangers scheme

Recreational facilities Minimal risk to Public sector

Build-Own-Operate Transfer

Leasehold Shipping/ Air line Minimal risk to public sector

Rehabilitate-Operate Transfer

Highly technical/ financially demanding infrastructural schemes

Upgrading of market/ shopping centres

Risk distributed between Beneficiaries and investors with the public sector guaranteeing the loan.

Joint-Venture Development Jointly held Corporative Oil field exploration and exploitation.

Risk shared & Responsibilities are spread across board.

Models of PPP

6

SPDCWhy PPP?

Public-private partnerships are becoming highly valuable in the provision of a wide range of public services and infrastructures. The transportation and communication sector has received much attention due to the failure of the public sector to meet the growing demand in this sector. Another sector that is clamoring for the attention/ adoption of the PPP is the energy and environmental management sectors. The energy and environmental management sectors are often perceived as social responsibilities because they are characterized by externalities which makes it very difficult/ costly to exclude others from benefiting from such services and products. For instants, it is very difficult or almost impossible to exclude others from benefiting from a cleaning and healthy environment. Pricing/ willingness to pay makes the environment unattractive to investment because investors often find it difficult to recoup their investment in a project where the willingness to pay is minimal or non-existence. It is only with special intervention such as provision of a concession agreement that will protect and empower private investors to recoup their funds that will attract such investors to contemplate venturing into such sectors. Special strategies such as erection of toll gates and other barriers can ensure that only those who pay for such services benefit directly from such services/ products.

7

SPDC

The guiding principle of PPP is to reduce and manage risk with a view of ensuring value for money.The primary responsibility of the private party is to evolve and adopt strategies that will improve service delivery within project delivery schedule without overrunning the cost. The public sector on the other hand is to create appropriate incentives and motivation that will attract the appropriate demand and patronage that will sustain the scheme.

Objective of PPP

8

SPDC

• Construction risk This risk is directly associated with design and construction phase of the scheme/ project, i.e. the risk of poor project conceptualization, definition, costs overruns, late delivery of the asset• Financial risk This risk is related to the charges of interest or exchange and offshore financiers are usually more exposed to changes and factors that can influence the cost of financing a project;• Performance/availability risk This risk is associated with the delivery/availability of the asset against contractual specification, i.e. the failure to meet quality standards or to ensure the continuity of service provision;• Demand riskThis risk is linked to the actual need for the service, i.e. the risk that the overall demandfor the service/asset concerned turns out being lower than initially expected;• Residual value This risk has to do with the future market price of the asset; it is particularly relevant if property/ asset must be transferred back to the public entity at the end of the contract.

Risk Classification in PPP

9

SPDC

Activities Environmental Hazards

Impacts Consequences RiskClassification

Oil Exploration & Exploitation

Oil Spill Soil & Water Contamination/ pollution

Destruction of aquatic/ marine life

Lumbering & Urbanization Deforestation global warming Climate change & epidemiological related issues

Dredging & land reclamation Salinization & flooding Coastal erosion, Settlement displacement

Lose of habitation, fatality & Siltation

Mining Erosion & landslide Landscape degradation

Settlement/ community displacement

Transportation, waste incineration & power generation

Emission of greenhouse gases

Ozone layer depletion & acid rain

Loss of biodiversity & epidemiological related issues

Commercial & mechanized farming

Deforestation & land contamination

Erosion and soil quality alteration

Desertification & Biodiversity loss

Hazards and Effective Management Process (HEMP) in Perspective

10

SPDCEnvironmental Hazards

Environmental Hazard are mainly man induce circumstances, phenomenon,

situation which result in undesirable occurrence and substances with potential

to cause harm either directly or indirectly. This is not say that Environmental

Hazards do not occur naturally but their impact and effect are usually

aggravated by human activities.

The scale and consequences of such occurrence may range from minor to

catastrophic in nature depending on several factors.

HEMP is highly valuable in identification and evaluation of environmental

hazards. The severity of impact and likelihood of occurrence are employ in

combination with other parameters in the determination and classification of

risk level.

Potentially impacted target (persons/ objects) are also very critical in this

analysis.

11

SPDC

• “Environmental Hazards” is any condition, situation or source of physical or other nature, that causes or may cause undue negative consequences; in terms of human injury, damage to property, or a combination of these.

• “Hazard Identification" is the process of recognizing that a hazard exists and defining its characteristics.

• "Hazard Assessment" is the overall process of determining significant level of Hazards.

• "Significant hazard" means a hazard that is an actual or potential cause or source of

Serious harm (that is more than trivial) the severity of the effects on any target depend on the extent or frequency of the target's exposure to the hazard

"Harm" means “ illness, injury or both". The term is only used in the context of harm that is more than trivial.

• “Environmental Impact” -Any change to the environment, whether adverse or beneficial, wholly/ partially resulting from human activities.

Key Component of HEMP

12

SPDCRisk Assessment Rating

(a) A potential Severity RatingWhat degree of injury or illness could occur? 1 Negligible2 Minor3 Major (includes possible long term disabling effects)4 Fatality (Resulting to loss of life)

(b) A probable Frequency RatingWith this hazard how likely is it that an injury/ illness/ damage will occur? 1 Remotely possible2 Known to have happened in the past3 Strong possibility of it happening4 Has happened before within the company5 Happens all the time

13

SPDC

A risk assessment number for each hazard is compiled by using the table below. Hazards with the highest rating are given priority.

Severity 4 3 2 1

Frequency

5 20 15 10 5

4 16 12 8 4

3 12 9 6 3

2 8 6 4 2

1 4 3 2 1

Risk Assessment Table

Each hazard is weighted/ scored and entered in their respectful column on the hazards register/ table where further can be taken on how to control and manage such risk to an ALARP level.

14

SPDC

"Significant Hazards" are identified according to the definition above. Where a significant hazard is to be controlled, this must, if practicable, be by elimination. Where elimination is not practicable then the hazard must be isolated. Only where both elimination and isolation are not practicable are methods of minimization to be applied. Environmental Management Programme (EMP) are developed and implemented towards controlling of significant hazards that have been identified, but have not been permanently controlled. Information on this control programme must be made available to responsible parties and affected stakeholders, and should include:

•the nature and location of the significant hazard; •the preferred method of control and steps to be taken; •the date by which work is to be completed; •the person(s) responsible for the work; and•the date the action was completed.

Management of Hazards to ALARP

15

SPDCKey Stages to the Environmental Risk Analysis

• “FISH BONE” Option/ Methodology

• Identify the key Environmental Impacts

• For each Impact, map out each of the processes using a Ishikawa-diagram

• Identify the key environmental Impact within the process

• Complete a risk assessment for each Impact

16

SPDCStructure causes: Ishikawa-diagram

environmental problem

people equipment

material external conditions

methods

17

SPDCStructure causes: Ishikawa-diagram

high Energy consumption

people equipment

material external conditions

methods

Uninformed &

Non-sustainable attitude

poor vehicle & equipment maintenance

Obsolete vehicles

& equipments

Obsolete spares

Substandard materials

Poor road network

High population pressure on facilities

Inefficient transport policy & transport mgt. procedures

18

SPDC The Criteria for Assessing Risk

Legal (A) Impact (B)

The nature of the pollution

agent/waste/ natural resource (D)

Quantity of pollution

agent / waste /

natural resource (C)

A x B x C x D = ENVIROMENTAL RISK

19

SPDCThe Criteria for Assessing Risk

LEGAL (A)

1.The impact is not limited/ controlled by legal or other environmental requirements

2.The impact is limited/controlled by mutual parties requirements only

3.The impact is limited/controlled by environmental authorization and/or by environmental legislation

IMPACT (B)

1. The impacts occurs during emergency situation

2. The impact occurs during abnormal functioning only

3. The impact occurs during normal functioning only

20

SPDCThe Criteria for Assessing Risk

Quantity of pollution agent / waste / naturel ressource (C)

1. Concentration of pollution agent generated is below alert level indicated by legislation in use. Monthly waste quantity generated is lower than 1000 kg*. Natural resource consumption is below planned consumption

2. The pollution agent concentration occasionaly equals the alert level. Waste quantity is between 1,000 and 10,000 kg/month*. Natural resource consumption is frequently at the planned level

3. Concentration of pollution agent is between alert and action level or overshoots the action level. The waste quantity is higher than 10,000 kg/month* Natural resource consumption is higher than planned specific consumption

•NB. * Waste quantity is determined in accordance to the level of waste generated.

21

SPDCThe Criteria for Assessing Risk

The nature of the pollution agent/waste/natural resource (D)

1. The major pollution agent is harmless to human beings and to the environment. Waste is recycled waste. Naturel ressource is not regulated

2. The major pollution agent is hazardous (flamable, corrosive, carcinogenic, oxidizing). Waste is assimilated to garbage although it does not belong to this category. The affected natural resource is monitored through oranization’s regulations only

3. The major pollution agent is toxic/banned/global environment impacts generator. The waste is toxic and hazardous. The affected natural resource belongs to the organization’s priorities

22

SPDCEnvironmental Improvement Measures

PRODUCT CHANGE

• Substitution of the product

• Extension of life cycle

• Change of materials

• Change of product design

• Improved recovery possibilities

SUBSTITION OF RAW AUXILIARY MATERIALS

• Substitution of organic solvents

• Substitution of petrochemical (non-renewable) materials by biochemical (renewable) materials

• Use waste as raw material

• Use biodegradable materials

• Reduce number of components

• Use alternative energy sources

23

SPDC

Incineration

Global Warming Ozone layer depletion

GreenhouseGases

NOX

?C02

CFC’s

Acid Rain

CH4, CO2

Landfill

ProductsWastes Land

Contamination

Discharge/Drains Sewers

River / Marine pollution

Energy

Raw Materials Transport

StationsMining etc..

Power

Impact of Development

24

SPDC

Pollution

Cause - Dissolution of SO2 and NOX in moist air- Gases originate from fossil fuel combustion & transport.

Effect - Sterile lakes and rivers, damage to buildings & trees.

Pesticides

Fertilizers Sewage Toxic Substances

Oils

Wastes

25

SPDCDevelopment Poles Approach Towards PPP

The establishment of development centres using settlement profiling evaluation approach can aid optimising scarce resources. Such investment in public goods will transform into promotion of regional development centres which will serve as focal point and incentive for private investors to enter into partnership arrangement for further development. Concentration of facilities will also enhance interdependence such that provision of stable electricity supply can enhance water supply and waste management plants, thereby reducing environmental hazards to ALARP.Technologically, external economies can induce and attract further growth for entrepreneurs.This theory is a sort of 'regional unbalanced growth theory' which uses temporary regional imbalances to initiate desirable development without compromising the ability of future generation to meet their own need. The demerit is that it gives little or no attention to equity; the process which is necessary to ensure a spread or linkage from the centres to the hinterland without which the poles may transform the economy of the region into a dual economy.

26

SPDC

“Meeting the needs of the present without compromising the needs of the future”

Public Private Partnership

BOT, Bonds, Grants, etc,

Budgetary Allocation

Infrastructural Related Taxes and Charges

Utility Bills

Land and Property Processing Charges

Promoter Funds/ Self Raised Funds

Angels Investors

Sources of Fund For

Infrastructural Development

Leveraging PPP for Hazard Management

There are various models available for fund Environmental Hazard Management

27

SPDCImpacts of Industrialization

Emissions into the atmosphere

Odor

HeatRadiation

Solid, liquid,dangerous waste

Soil

water,sewer system

Eco systems

Noise

Dust

• Normal

• Abnormal

• Accidents, emergencies

yesterday today tomorrow

28

SPDC

• Efficient use of input materials and energy (Renewable energy/ Materials)

• Minimization of Environmental impact • (Reduction of emission & Discharge)• Sustainable utilization of Resources (Adopt Recycling & Reuse

Strategy)• Action plan towards Legal Compliance (Compliance

enforcement)• Facilitating the attainment of permits and authorizations • (Stick/Carrot policy)• Increasing liability through prevention of incidents • (and Emergency Preparedness)• New perspective on cost control (Waste Reduction Strategy)• Enhancing image and market share • (Promote Best Practices Through Public Awareness/

Networking)• Maintaining good public / community relations • (Popular Participation/ Communication/ Stakeholder

Consultation)• Reduction of insurance premium (Risk Evaluation & Mitigation Plan)

Green Economy Development Approach Towards PPP

29

SPDCEnvironmental Improvement Measures

PRODUCT CHANGE

• Substitution of the product

• Extension of life cycle

• Change of materials

• Change of product design

• Improved recovery possibilities

SUBSTITION OF RAW AUXILIARY MATERIALS

• Substitution of organic solvents

• Substitution of petrochemical (non-renewable) materials by biochemical (renewable) materials

• Use waste as raw material

• Use biodegradable materials

• Reduce number of components

• Use alternative energy sources

30

SPDC

CassavaRoots

Storage

Dry Cleaning

WetCleaning Peeling Rasping

TuberProcessing

InitialLiquefaction

Final Liquefaction

Distillation Decantation

Storage

Evaporation

Water Water

Dry /LooseSoil & Mud Soil & Mud

Peel with Sandand some Starch ~ 4-5%w/w

Slurry toLiquefaction

Cassava

Saccharification&

Fermentation

Bio Methanation

DWGS

Product Al cohol

Syrup

Slurry Mash CO2

ThinSlops

Example of Green Project/ Processes of Cassava Ethanol

31

SPDC

The high technological and financial requirement needed for the development of

Environmental Management Project makes the role of PPP almost inevitable. For

instance a sugar cane/ cassava-based Ethanol scheme with high level potential

towards reducing the generation and effect of greenhouse gases with the potential of

qualifying the nation for carbon credit is beyond the threshold of the public sector.

Aside from the production of fuel ethanol, biogas -a basic by-products from the

process could be used to generating electricity.

An integrated ethanol plant with a feed stock capacity of 20 metric tones per annum

could generate as much as 2,000 kilowatts/day of electricity, 20,000 metric liquefied

food/ beverage and 30,000 metric tons/year of bio fertilizer. Such integrated scheme

can attract as much as N4 billion Naira as initial capita requirement. A PPP

arrangement can secure the huge fund and provide the high level technology while

helping to reduce poverty via improve crop yield, provision of employment and

reduction of environmental hazards to ALARP.

Conclusion

32

SPDC

THANK YOU