Who will pay for Mexico City's waste-to-energy plant?

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Thursday, November 9, 2017

Funding to build the El Sarape waste-to-energy plant that the Mexico City legislative assembly approved this week will not require the capital to assume any debt, according to mayor Miguel Ángel Mancera (pictured).

Speaking to reporters, Mancera responded to claims of local opposition legislators who argued that the project would represent a 100bn-peso (US$5.24bn) debt for the city to be paid over 30 years. The mayor said that was the result of "confusion."

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Meanwhile, the director of local urban management agency AGU, Jaime Slomianski, who was also present at the press conference, said that building the facility will require estimated investment of around 11bn pesos.

According to the official, the total will be provided by Proactiva Medio Ambiente México and Veolia – the consortium awarded the 33-year service provision project (PPS) contract to design, build and operate the plant.

"The government of Mexico City will not pay a dime for the project's construction," Slomianski said.

He said that what the legislative assembly approved Tuesday was a financial instrument that ensures the city will pay the relevant fees for the services provided by the plant during the term established in the contract.

According to Slomianski, the payment of these fees will begin once the facility begins treating the 4,500t/d of solid waste necessary to generate the 965GWh/y of power the plant is expected to supply to the local metro system.

Construction of the facility is scheduled to be complete in about two years, the official said.

Where will the funds for the yearly service fee come from?

Based on official estimations, the service fee to be paid over 30 years will amount to 2.3bn pesos a year.

The funds will come from reallocating some of the local government's current expenses, including the 2bn pesos that the city pays to national power utility CFE every year to supply the metro system - a payment that will be no longer necessary.

In addition, the plant will free up part of the amount the city government spends to transport almost 13,000t of solid waste produced every day to private landfills.

"These are funds that are already earmarked for the city," Slomianski said. "The budget we spend will be the same, but it will be spent more efficiently and under a more responsible environmental policy."