Wastewater Treatment Facilities and Technologies

March 2021

Indicative Return:

20% – 25%

Investment Timeframe

Short Term (0–5 years)

Business Model Description

Investments in constructing and operating wastewater treatment facilities and innovative wastewater treatment technologies

Expected Impact

Investments in this IOA can reduce the deterioriation of surface water quality due to insufficient pollution control.

Regions

Marmara Region, Mediterranean Region, Black Sea Region, Central Anatolia Region, Eastern Anatolia Region

Sector
Infrastructure > Waste Management

Direct Impact SDGs:

Indirect Impact SDGs:

Sector
Infrastructure

Development need: Turkey’s performance on SDG 9 (Industry, Innovation and Infrastructure) exhibits major challenges, and significant challenges still remain for SDG 12 (Responsible Consumption and Production) according to the Sustainable Development Report 2020. (1)

Policy priority: The New Economy Program covering 2020-2022 emphasizes that projects on the “Zero Waste Initiative” will be extended. (2)

Gender inequalities and marginalization issues: Within the infrastructure sector, there is a high rate of informality among solid waste collectors. Workers in this area suffer from poor working conditions and a lack of social security. In terms of the provision of utilities, households with lower income levels face the risk of energy poverty. Fair employment practices and pricing mechanisms need to be implemented to address the issues of marginality within this sector. Investments in this area need to generate job opportunities within the green economy and promote energy-efficiency measures to decrease the household consumption costs.

Investment opportunities: The government has planned the following public investment amounts for urban infrastructure areas for 2020: 198 million TRY (29 million USD) for urbanization, 152 million TRY (22 million USD) for communication infrastructure, 71 million TRY (10 million USD) for environment and 67 million TRY (10 million USD) for municipal services. (3)

Key bottlenecks: Given high investment and operations costs, human capital and technology resources and governance needs, some urban infrastructure services such as wastewater treatment facilities cannot reach the desired efficiency levels. New models are needed to improve efficiency in urban infrastructure. (4)

Subsector
Waste Management

Development need: Turkey is a water-stressed country. The annual per capita water supply is 1,365 cubic meters. Taking the negative impacts into consideration, this figure is projected to drop to 1,120 cbm in 2030. (5) Population access to wastewater treatment plants increased from 42% to 79% over 2005-16. (6)

Policy priority: The 11th Development Plan prioritizes provision of safe, clean drinking water and minimizing the negative effects of wastewater on population health. 11.7% of all wastewater was discharged as untreated in 2018. (7)

Gender inequalities and marginalization issues: There is a high rate of informality in the waste management sector of Turkey. Waste-pickers suffer from poor working conditions and a lack of social security. It is estimated that the informal recycling sector could be responsible for up to 30% of solid waste management. This is a key area of income for the urban poor and ethnic minorities. (20) (21)

Investment opportunities: Despite remarkable progress in wastewater management, 14% of residential wastewater is discharged without treatment. (6)

Key bottlenecks: Household water and wastewater tariffs exceed affordability limits in many provinces. Only a small number of Turkish water utilities have potential for tariff increase to finance new investments without harming the poorest households. (6)

Market Size and Environment
Critical IOA Unit

1422 wastewater treatment facilities are planned to be built between 2017-2023. (8)

Approximately 27.6 billion TRY (4 billion USD) is allocated to wastewater and sewage investments by 2023. (8)

Indicative Return

20% – 25%

Based on interviews with active operators, returns from the construction of wastewater treatment facilities vary between 25-30%, while operating these facilities are associated with 10% losses. The overall return from investments in constructing and operating wastewater facilities is appr. 20%.

Investment Timeframe

Short Term (0–5 years)

The planning, design and construction phases of a wastewater treatment facility is completed between 2-5 years. (9)

Ticket Size

More than USD 10 million

Market Risks & Scale Obstacles

Market – Highly Regulated
Local governments/municipalities lack the financial and technical capacity to establish and operate wastewater treatment facilities, which result in non-profitable business models in wastewater treatment. (8)
Capital – CapEx Intensive
The national technology and R&D contribution to wastewater treatment is low. (8)

Sustainable Development Need

Turkey is a water-stressed country facing the risk of water scarcity in the near future. The annual per capita water supply is 1,365 cubic meters (cbm) in Turkey. Taking the negative impacts into consideration, this figure is projected to drop to 1,120 cbm in 2030. (10)

Population access to wastewater treatment plants increased from 42% to 79% over 2005-16. (11)

Despite remarkable progress in wastewater management, 14% of residential wastewater is discharged without treatment. (11) 11.7% of all wastewater was discharged as untreated in 2018. (12)

Gender & Marginalisation

Industrial sites and mining zones discharge wastewater without treatment, which exposes communities living (particularly in rural areas whose livelihoods depend on wetlands) to health and economic risks.

Investments in this IOA can reduce the deterioration of surface water quality due to insufficient pollution control.

Expected Development Outcome

Investments in this IOA can reduce the deterioriation of surface water quality due to insufficient pollution control.

Investments in this IOA can improve watertreatment infrastructure to ensure that sewage and wastewater treatment services are provided at 100% by 2023. (8)

Gender & Marginalisation

Wastewater treatment is especially important for rural communities whose livelihoods depend on the sustainability of wetlands.

Primary SDGs addressed

6 – Clean water and sanitation

6.3.1 Proportion of domestic and industrial wastewater flows safely treated

6.3.2 Proportion of bodies of water with good ambient water quality

6.5.1 Degree of integrated water resources management

Current Level6.3.1: 35.03% (13) 6.3.2: N.A. 6.5.1: 70% (13)

Target Level6.3.1: Turkey’s long-term objective for this indicator is 100%. (14)

11 – Sustainable Cities and Communities

11.6.2 Annual mean levels of fine particulate matter (e.g. PM2.5 and PM10) in cities (population weighted)

Current Level41.97 mgr/m^3 (11)

Target LevelN.A.

12 – Responsible Consumption and Production

12.4.2 (a) Hazardous waste generated per capita; and (b) proportion of hazardous waste treated, by type of treatment

12.5.1 National recycling rate, tons of material recycled

Current Level12.4.2: b) 6,623,186 tonnes (11) 12.5.1 – 151505.1 tonnes (11)

Target LevelN.A.

Secondary SDGs addressed

Directly impacted stakeholders

People
inhabitants living close to water resources where wastewater is discharged without treatment
Gender inequality and/or marginalization
population whose livelihoods depend on clean water resources where wastewater discharge without treatment is polluting
Planet
Water quality particularly in areas close to industrial sites
Corporates
Organized Industrial Sites
Public sector
1397 municipalities of which 30 are metropolitan.

Indirectly impacted stakeholders

People
Taxpayers
Planet
Overall marine ecosystem

Outcome Risks

There is a risk of overinvestment to reach stringent national effluent standards that go beyond EU standards for nutrient removal. (8)

As wastewater treatment technologies are foreign-dependent, expanding such facilities without improving local technology is likely to increase dependence on foreign technology. (11)

Impact Risks

Efficiency Risk given the heavy involvement of local authorities in waste management

Endurance Risk given that the investment timeframes are heavily dependent on the duty terms of municipalities

Impact Classification

B—Benefit Stakeholders

What

Increased access to clean water and enhanced marine ecosystems.

Who

People living in rural areas with limited access to wastewater treatment and sewage services will be served as well as life below water.

Risk

Involvement of municipalities in wastewater treatment facilities expose investments to uncertainty in terms of governance and leaves little governance capability for firms to maximize impact.

Impact Thesis

Investments in this IOA can reduce the deterioriation of surface water quality due to insufficient pollution control.

Policy Environment

(11th Development Plan): 2.4.5 Urban Infrastructure, 696. The main objective is to provide safe and clean drinking water access for all population and to minimize the adverse effects of wastewater on human health and environment through the effective management.

(11th Development Plan): 2.4.5 Urban Infrastructure, 697. Watershed planning, strategies and action plans will be implemented in an integrated way to address the protection, development and sustainable use of water resources.

(Policy document): 11th Development Plan, 2.4.5 Urban Infrastructure, 697.1. Regarding the protection and effective use of water resources, River Basin Management Plans, Sectoral Water Allocation Plans … will be completed in the 25 basins of the country.

(11th Development Plan, ): 2.4.5 Urban Infrastructure, 697.2. The reuse of treated wastewater safely for beneficial purposes, primarily in agriculture will be planned at the river basin level, thus reducing pressures on water resources.

(11th Development Plan): 2.4.5 Urban Infrastructure, 698.4. PPP model will be utilized to finance wastewater treatment needs, while at the same time some barriers, such as lack of technical skill, capacity and, control will be overcome quickly.

Financial Environment

Wastewater treatment facilities are eligible to apply for a reimbursement of energy costs up to 50% from the Ministry of Environment and Urbanization. (17) Appx. 30 billion TRY (4.3 billion USD) in financing will be provided to investments in wastewater treatment by 2023 by the government. (8)

Fiscal incentives: Firms in OIZs with central wastewater treatment facilities are eligible for wastewater fee exemption. (18)

Other incentives: The Industrial Development Bank of Turkey signed an agreement with the Asian Infrastructure Investment Bank (AIIB) in 2018 on the Sustainable Energy and Infrastructure Loan, worth 200 million USD, to finance investments in areas incl. wastewater treatment. (19)

Regulatory Environment

(Regulation): The ultimate regulator of wastewater management in Turkey is the Ministry of Environment and Urbanization.

(Regulation): Turkish Law on Environment no. 2872 creates the basis of the legal framework for wastewater and solid waste management practices in Turkey.

(Regulation): General Directorate of State Hydraulic Works’ Wastewater Department works on final design, application projects, adjudication, and construction of waste water treatment plants for the settlements having municipal administration. (15)

Prior to approval by Ministry of Environment and Urban., projects should obtain approval from Provincial Directorate. Standards are set out in the Water Pollution Control Regulation, Urban Wastewater Treatment Regulation and Technical Procedure Communication on Wastewater Treatment Facilities. (16)

(Regulation): The “Regulation on Wastewater Treatment Plants Technical Methods” published in the Official Gazette issue no. 27527 of 2010 establishes the standards for wastewater management in Turkey.

PRIVATE SECTOR

Mass Arıtma, Gezer Endustri.

GOVERNMENT

Ministry of Environment and Urbanization, municipalities, İlbank.

MULTILATERALS

EBRD, World Bank, EU through IPA funding.

NON-PROFIT

TAYÇED.