Where the Money Goes: Top 3 Cost Drivers in Nepal’s Solid Waste Management Projects

The three major expenditures driving costs were related to indirect administration, recycling activities, and transportation activities, based on an analysis of actual costs in Madhyabindu Municipality over a three-month period.

In Madhyabindu Municipality, the cost structure showed that:

1. Indirect Operating Costs (Indirect Administration) accounted for the largest share of expenditures, totaling 42.42% of actual costs. The actual expenditure paid by the Municipality for Indirect Operating Costs was NPR 956,669.00.
2. Recycling Activities (CRecycling) represented the second largest expenditure, making up 26.50% of actual costs. The actual expenditure for Recycling Activities was NPR 597,546.00.
3. Transportation Activities (CTransport) constituted the third major cost driver, representing 15.24% of actual costs. The actual expenditure paid by the Municipality for Transportation Activities was NPR 343,620.00.

Collectively, these three categories accounted for 84.16% of the total actual costs of NPR 2,255,046.03. It is notable that while these activities drove high costs, no costs were recorded for landfilling during this three-month period, as the operation relied on pre-existing infrastructure. The high costs underscore the need for better cost control and efficiency to improve the low actual Benefit-Cost Ratio (BCR) of 0.409.

In the context of Birgunj Sub-Metropolitan City (BSMC), an analysis of the previous fiscal year's expenditure (2010/11) on solid waste management services showed a focus on labor costs:

1. Salaries made up the largest portion, accounting for 65.2% of the total expenditure.
2. Allowances and other benefits followed, making up 23.8%.
3. Fuel and lubricants accounted for 6.2% of the expenditure.