To alleviate the mounting trash disposal problem in Taiwan, the Taiwan Environmental Protection Administration (TEPA) drafted in 1996 the State-owned and Private Enterprise Waste Incinerator Construction and Operation Incentive Implementation Plan to encourage construction of refuse incinerators by state-owned and private companies. The Plan calls for the construction of 15 incinerators with an aggregate capacity of 8,500 metric tons per day. The two-wave construction process is expected to be completed by 2003. The plan adopts the build-operate-transfer (BOT) and build-operate-own (BOO) models. The sponsoring municipal/county authority will sign a 20 year service contract, which guarantees a fixed quantity of trash for processing. The company would receive a tipping fee based on the actual quantity of material processed. The company must comply with installation regulations and obtain an operation permit. TEPA has established comprehensive regulatory regime to ensure construction and operation quality of plants. This regime covers equipment items, construction quality, capability testing, regulations regarding environmental emissions and contracts containing strict oversight provisions.
BIDS IN PROGRESS
Bidding for one of the 15 incinerator construction projects, the Taoyuan southern incinerator, was completed on August 12, 1998. Evergreen Heavy Industrial Corp. was awarded the contract out of six qualified local and foreign bidding teams. Most of the incinerator projects in the first stage have finished the bidding process and are currently in the selection process, which usually takes about two months. The majority of the projects in the second stage are still in the process of issuing tenders, with the exception of the Taoyuan northern incinerator, which publicly announced bidding on June 30, 1999.
PROGRESS OF 15 BOO/BOT INCINERATOR PROJECTS
Incinerator site, model, capacity (mtons/day) and implementation progress:
Stage One
1. Taoyuan County, Southern District
Model: BOO
Capacity: 1,200
Progress: Evergreen Heavy Industrial Corp. awarded contract on August 12, 1998.
2. Hsinchu County
Model: BOO
Capacity: 300
Progress: Bidding documentation being readied, scheduled for public announcement in July, 1999.
3. Miaoli County
Model: BOO
Capacity: 500
Progress: Bidding procedures publicly announced on November 30, 1998. Bidding deadline on July 15, 1999. Decision expected in September, 1999.
4. Taichung County
Model: BOT
Capacity: 600
Progress: Bidding procedures publicly announced on December 2, 1998. Bidding deadline on June 2, 1999. Decision expected in August, 1999.
5. Nantou County
Model: BOO
Capacity: 500
Progress: Bidding procedures publicly announced on August 17, 1998. Bidding deadline on February 23, 1999. Currently in the process of selecting bid.
6. Changhwa County
Model: BOO
Capacity: 800
Progress: Bidding procedures publicly announced on May 12, 1999. Qualified minimum bidding deadline on July 2, 1999.
Decision expected in September, 1999.
7. Yunlin County
Model: BOO
Capacity: 600
Progress: Bidding procedures publicly announced on June 24, 1999. Bidding deadline on December 24, 1999. Decision expected in February, 2001.
8. Taitung County
Model: BOO
Capacity: 300
Progress: Bidding procedures publicly announced on July 23, 1998. Bidding deadline on January 25, 1999. Currently in the process of selecting bid.
8. Penghu County, Huhsi Village
Model: BOT
Capacity: 200
Progress: Selecting Engineering Consulting Firms.
COMMENTS
US firms are interested in investing in the BOO/BOT incinerator projects in Taiwan. However, the major issues such as obtaining a source of financing, contract terms and low qualification requirements need to be addressed for US firm to be more competitive.
US firms are required to provide a Corporate Personal Guarantee in order to receive loans from local Taiwan banks. However, since Taiwan banks are not familiar with the foreign companies, the banks refuse to accept corporate personal guarantees from foreign companies. Foreign companies will need to find well-connected local partners to provide Corporate Personal Guarantees in order to receive loans from local banks. The international banks in Taiwan request firms to show an acceptable contract, which includes source of capital cost payment, before giving the loan. In the BOO/BOT incinerator project, the contract does not include government payment of capital costs, which puts the contract in a higher risk bracket for international banks. American companies will have problems obtaining loans either with local banks, due to the lack of credibility, or with international banks, due to contract requirements.
US firms also have problems competing with local firms to win the bids. The requirements of bidding companies are set very low in order to include local companies. Most local companies do not have experience in building and operating incinerators. They tend to underestimate the cost of incinerator projects. On the other hand, US firms, generally with a strong background and operating experience, offer estimates that normally exceed the estimates by local firms.
The traditional bidding process in Taiwan requires firms to bid based on the equipment specifications established by engineering consulting firms, rather than equipment designing to meet performance specifications such as tons of refuse processed, energy produced, quality of ash, quality of air emission and tipping fees for the duration of the contract.
