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Market News

 July 05, 2006
Waste management in desperate need in the Ukraine

 Since the Ukrainian economy is highly dependent on the production of natural raw materials, mining waste (88%) dominates the waste that is generated, while all other types of industrial waste account for only 10% of total waste. Municipal waste is only about 2%. Municipal waste management represents a serious problem in Ukraine.

Every year, approximately 10 million tons of municipal solid waste (MSW) is generated. Most of it is disposed in 700 landfill sites. 90% of these sites do not meet basic environmental standards and are polluting air, water and soil. Paper, scrap metal, and glass are used as recyclable wastes, but the percentage of recovered/recycled waste is obviously not sufficient. Moreover, in Ukraine there is no system of separate waste collection, so sorting of waste at the collection stations or landfills is necessary.

Treatment or sorting is done at only a few sites. Two of four waste incineration plants are functional in Ukraine, but their equipment does not meet environmental standards, and the resulting ashes and slag are not disposed of properly. Demand is increasing for new waste-to-energy technologies. Economically it is driven by rising energy prices and decreasing landfill capacities. Due to the absence of a self-sufficient national infrastructure for waste management and disposal, many regions of Ukraine are experiencing difficulties with processing and disposal of hazardous waste. Most companies have to store hazardous waste on their sites in dangerous amounts. Only few companies' disposal facilities are properly engineered for this purpose. The number of specialized sites for centralized processing of hazardous waste is insufficient.

The legislative base for waste management activities in Ukraine is the National Law on Waste, initially adopted in 1998 and amended in 2001, and relevant national waste management plans and programs. Given the heavy reliance in Ukraine on dumping in poorly-controlled sites for solid waste disposal, the greatest practical benefit in terms of reducing threats to human health and the environment would ultimately be achieved by implementing the European Union's Landfill Directive, although this would be a long term goal.

Although significant, the waste management market in Ukraine cannot be calculated using traditional methods. The general tendency is waste growth, but hazardous waste is decreasing. Both the total amount and the percentage of recovered and recycled wastes are increasing. Significant strategic opportunities exist for companies in this emerging market, which should be studied on a case-by-case basis.

Best Prospects

The share of recycled materials in the total consumption of raw materials in Ukraine is steadily rising. The total amounts and the percentage of recovered and recycled wastes are increasing. The need for waste recycling equipment is growing. Introduction of new technologies in waste recycling is very important. The development of the market is hampered by the lack of funding for waste management projects. Demand is growing for new waste-to-energy technologies. It is driven by growing energy prices and decreasing landfill capacities.

The best sales prospects for equipment include: waste separation/sorting equipment, toxic waste treatment materials/equipment, waste fuel recycling equipment, on-site gasifiers for biomass, material reduction equipment, test/analyzing labware for toxic wastes.

The highest demand is for the following technologies: construction debris recycling, waste-to-energy, recycling of tires, waste fuel recycling, medical waste recycling.

Market Players

The market for waste recycling equipment in Ukraine is in the developmental phase. Most of the equipment available is of local or Russian production. The demand for new technologies and modern equipment is growing, but the main obstacle is lack of funding for waste management projects. There are several pilot landfill management projects in Ukraine. European companies from France, Italy and Spain are exporting waste sorting lines for these projects.Fifty Ukrainian PET recycling enterprises use mostly German, Dutch and Russian equipment, as well as locally produced recycling lines.

Municipal and private companies provide waste collection and transportation services. Municipal landfills are often operated by private companies. Most recycling companies are private. A network of centers for collecting and sorting waste paper, glass and other recyclable materials is growing, which will promote recycling practices in Ukraine. It will help the country solve its problem of waste recovery. Industrial enterprises typically use customized equipment for industrial waste treatment/ recycling needs.

The advent of self-accounting is forcing industries to earn a profit, to account for usage of budgeted funds, and to streamline production. Plant directors and managers with authority to install treatment and recycling equipment are often unwilling to risk a decrease in productivity and drain scarce capital by investing in something with no perceived short term economic benefits. Even the largest and most profitable enterprises often insist that they cannot afford to install, operate, or maintain treatment and recycling equipment.

Market Entry

Importers in Ukraine should expect the slow workings of the country's bureaucracy and a large volume of paperwork. Importers are required to complete a customs freight declaration for every item imported. Use of licensed customs brokers to navigate the often non-transparent and seemingly inconsistent customs regulations is recommended. Constantly changing regulations and, in many cases, the mood of the customs officer, may hinder the successful importation of a product. Imported equipment is subject to value-added tax (VAT), currently at 20 percent.

Mechanical equipment used for waste recycling is exempted from excise taxes and import licensing. Electrical equipment and control systems are subject to import certification in Ukraine. Ukraine employs a two-tiered system of general (full-rate) tariffs and preferential (partial-rate) tariffs. Imports from Western countries are usually assessed preferential tariffs, which vary according to the types of products imported. Import duties largely depend on whether a similar item to that being imported is produced in Ukraine.

In Ukraine there are no strict norms for waste handling. It was not until just recently that a state regime for handling household waste in populated areas was developed and coordinated with various ministries. The legislative base for waste management activities in Ukraine is the National Law on Waste, initially adopted in 1998 and amended in 2001, and relevant national waste management plans and programs. Given the heavy reliance in Ukraine on dumping in poorly controlled sites for solid waste disposal, the greatest practical benefit in terms of reducing threats to human health and the environment would ultimately be achieved by implementing the European Union's Landfill Directive, although this would be a long term goal.

The overall approach of the Ukrainian Government in solving waste management problems is a step-by-step action with clearly defined priorities.

Among the immediate priorities in Ukraine are:
  • Further development of supporting laws and regulations to help practical implementation of the National Law on Waste;
  • Introduction of mandatory waste accounting and certification procedures;
  • Development of regional and industry lists and classification systems for waste, based on a national classification system; and
  • Implementation of national programs on management of industrial, hazardous and municipal waste.