Global Water Intelligence Magazine: Ethiopia looks for ways to make zero-liquid discharge ambitions cost-effective

Source: Global Water Intelligence Magazine, Vol. 22, Issue 1, 21 January 2021 (membership only)

The country’s industrial parks have led the way on ZLD treatment – can the authorities make it into a commercially sustainable business?

Ethiopia’s Industrial Park Development Corporation (IPDC) is preparing to roll out a series of measures aimed at improving the financial sustainability of its flagship zero liquid discharge (ZLD) wastewater treatment plants located in the country’s industrial parks.

Industrial parks form the cornerstone of Ethiopia’s industrial development strategy, attracting a mix of light industries, especially textiles. They are managed by IPDC, a state-owned corporation. Environmental and social impact studies carried out when the parks were first planned a decade ago recommended that IPDC use ZLD at four sensitive locations to minimise its impact. But the first of the four plants, the 11,000m3 /d Hawassa Industrial Park WWTP commissioned in 2016, has been plagued by poor cost recovery, with its income currently covering just 35% of operating costs.

With three more ZLD plants due to come online this year, IPDC commissioned the World Bank’s 2030 Water Resources Group (2030WRG) to help it address the financial shortcomings. “There are a lot of advantages to ZLD but being beginners in this field, we didn’t anticipate the operational challenges,” Mergia Kuma, head of IPDC’s Environmental and Social Compliance Directorate, told GWI.

“We had to incentivise investors to come here, and wastewater treatment is something that they need, but it cannot continue like this.”

The plants were all funded by the state and built by Indian ZLD specialist Arvind Envisol. The Hawassa plant been operated by Arvind since commissioning. IPDC is now about to take over the O&M of the plant: this will generate some immediate cost savings, notably with the reduction in the number of Indian expatriates working on site, but IPDC is likely have to make further adjustments to make them cost-effective.

Mekuria Tafesse, Ethiopia country coordinator at 2030WRG, told GWI there were two main issues. “The problem with the wastewater tariff is that it is low by international standards: $0.80/m3 . Also, the tariff only deals with the volume of effluSource: Alamy THE ZERO-LIQUID BUSINESS Ethiopia’s Hawassa Industrial Park has become the starting point for the country’s ZLD wastewater ambitions ents generated and not with the contamination load,” he said. What the study also found is that although industrial customers prefer the high-quality water produced by the ZLD plant, they have not been asked to pay for it. “They pay for water from the borehole, but they don’t pay for the recycled water at all. It’s a paradox,” Tafesse added.

In order to increase cost recovery to around 60%, the 2030WRG study recommends that IPDC should introduce a tariff of $0.37/m3 for treated wastewater. This tariff and the wastewater tariff should then be adjusted by 2% every year. The models also require that the plant increase water recovery to its design capacity of 85%, as opposed to 60% currently. To boost cost recovery closer to 100%, IPDC will also have to nearly double its wastewater tariff to $1.50/m3 .

IPDC has approved the cost recovery models as a decision-making tool; the board will now have to decide how far they want to take the cost recovery. This is a political decision and a sensitive issue for Hawassa Industrial Park, where tenants have enjoyed free water for the past four years. “We have had informal discussions already and they are positive,” said Kuma. “But they have emphasised that it should be reasonable.”

For the three industrial parks where the plants are approaching commissioning, IPDC will be able to make a fresh start. “We have already informed tenants at Adama Industrial Park [the most advanced] that they will have to pay for the treated water,” said Kuma.

Tafesse said that ultimately, the matter of how these plants are run was one of policy. “We need to pitch the problem at policy level because Ethiopia has adopted the Climate Resilient and Green Economy Strategy,” he said. “These plants perform an essential environmental function. Without them, international buyers will not be able to meet their strict environmental compliance standards either. So what is the government prepared to do in setting tariffs for wastewater treatment and for recycled water in line with the polluter-pays principle?”