Waste Disposal Organizations Fear Interruption of Urban Cleaning Amid Crisis

RIO DE JANEIRO, BRAZIL – Organizations representing companies in the urban cleaning and waste collection sector estimate that the increased default of municipalities may lead to the interruption of services in the midst of the coronavirus pandemic.

In an interview, representatives of the National Union of Urban Cleaning Companies (SELURB) and the Brazilian Association of Public Cleaning Companies and Special Waste (ABRELPE) pointed out that the companies were already dealing with high default levels and had increased costs with worker protection.

According to the president of SELURB, Márcio Matheus, there are now cities alerting outsourced companies that there will be no funds in May for payment of services rendered in April. Matheus explains that approximately 70 percent of municipalities have outsourced urban cleaning, and there are few cases in which a specific source of revenue was established to support it.

In the vast majority of cases, he says, the payment of contracts is made with funds from the municipal budget, which at this time needs to meet other urgent demands, such as the prevention of Covid-19 and the protection of health professionals.

On the other hand, companies in the sector have accumulated R$18 (US$3.6) billion in outstanding payments from the municipalities. Default ranges from 15 to 18 percent, according to the SELURB. “We have a chronic default pattern. It’s a structural deficiency of the municipal budget,” says Matheus, adding that costs have increased more than ten percent with the dismissal of risk group workers and the purchase of individual protection equipment.

Even cities with state companies in charge of urban cleaning may be affected by the crisis, he cautions, since these companies often outsource part of the waste management, such as its final disposal in landfills.

“Worldwide, this service is considered a health barrier to prevent the spread of coronavirus. And not only from it but from other diseases”, he says. “We are anticipating a problem and we are preparing for it”.

Regarding the increase in costs during the pandemic, the director president of the ABRELPE, Carlos Silva Filho, adds that urban cleaning companies also began to perform disinfection services of equipment and public areas, which were not included in their contracts.

With these expenses, he believes that the companies’ ability to survive the [payment] default is at its limit. “As far as possible, the companies always try to schedule, but at the current stage, I would say that, yes, it is an imminent risk [the interruption of services].”

To estimate the burden of the R$18 billion default accumulated up to the end of 2019, he explains that contracts with municipalities add up to R$28 billion per year. “It is a very significant figure, and, as we have had increased service costs since the start of the year, any new default will greatly impair the very execution of services”.

The closure of establishments due to social isolation measures also contributes to financial hardship, as many companies also have clients in the private sector. The reduction in demand for these services is as high as 40 percent.

Another fact of concern to the ABRELPE is the demand for hospital waste collection, which dropped 17 percent in the first half of April compared to the same period last year. Considering the private market, the drop is over 40 percent.

“This goes against all international trends, which are that, during a pandemic, the generation of hospital waste increases,” he says, adding that the ABRELPE is studying the causes behind this drop with companies since there is an increase in the use of personal protective equipment and growing numbers of hospitalizations.

“The drop is surprising and should not be in this proportion, even considering the cancellation of elective surgeries, other emergencies, and other hospitalizations”.

The association fears that the reduction in demand may point to a deficiency in the segregation of these infectious materials and their destination to inadequate locations, entailing several risks for workers, the environment, and likewise for the population.

Help to municipalities

To prevent complications in the urban cleaning sector from escalating, the union and the association are seeking dialogue with the federal government and Congress, to ensure that the municipal rescue package includes a requirement for cities to maintain urban cleaning services in operation.

In addition, the organizations are calling for the establishment of an automatic financing line for municipalities at the federal level to pay for these services, and the creation of a credit line with state-owned banks for the companies’ working capital.

The Ministry of Economy said that potential crises in state and municipal public services are being addressed in PLP (Complementary Bill) 149, which is under discussion in the Federal Senate and is scheduled to be voted on this Saturday, May 2nd.

“The federal government proposed the transfer of aid to states and municipalities, which aims to supply such emergencies caused by the pandemic. Each organization has its specific needs, some in the health system, others in the transport system, others in the cleaning system. That is why a good part of the transfer will be of freely available funds, to help in the specific needs of each one. Thus, the federal government’s help is being built with Congress through the discussion of this bill,” answered the Ministry.

According to the Federal Constitution and current legislation, the responsibility for basic sanitation, including collection, management, and treatment of urban solid waste, is local, and therefore it falls on the municipalities and the Federal District.

The services declared public and the related essential activities cannot be paralyzed during the restrictive measures due to the Covid-19 pandemic. The primary goal of continuing such services is to prevent the interruption of activities and the provision of supplies and materials needed for the survival, health, supply, and safety of the population.

Local authorities, therefore, have the discretion to determine the conditions under which systems should operate in their respective territories.

With regard to companies operating these services, the edition of Provisional Measure No. 936, published by the Federal Government in early April, will have a positive impact on the survival of these companies during the pandemic period, since the fixed cost of the payroll represents a large part of the total cost of operation.

In addition, the Ministry of Regional Development, together with other federal bodies, checks potential measures to assist and support the solid waste sector.

Source: Agência Brasil