Riga has announced its next waste management tender for a seven-year period, and applications may be submitted until April 21. As before, Riga will have four waste management zones. Janis Aizbalts, Chairman of the Board of Eco Baltia Vide, noted in an interview with the LETA that the new tender includes a number of new requirements, so Riga residents should expect waste management fees to rise starting in 2027. Meanwhile, at the European level, the waste management sector is facing challenges related to insufficient demand for recycled materials obtained through waste processing.

The major event of the year in the waste management sector is the Riga City Council’s tender for the provision of waste management services for the next seven years, starting in 2027. Four management zones will be retained, and the regulations have already been adopted. Eco Baltia Vide currently manages the fourth zone, which includes the Vidzeme suburb and the Northern District of Riga. Will you participate in the new tender, and for how many zones will you bid for?

We will participate and also submit questions and proposals regarding the tender specifications. We submitted them already in January during the preliminary consultation. Most of them, however, were not taken into account.

We will definitely apply for our zone, since our containers are already located there and the infrastructure is in place. But we will certainly also evaluate one additional zone.

What questions do you have regarding the terms and conditions of the tender?

As you mentioned, this is the largest procurement in the sector. If we look solely at household waste, Riga accounts for nearly two-thirds of all waste collected in Latvia. Consequently, for some companies, losing this procurement could mean exiting the market, while others may enter the Latvian market because of it.

Therefore, allowing bids to be submitted without any financial guarantee for such a large procurement, which amounts to several tens of millions of euros annually, seems very strange. I have not seen this anywhere else. Even for much smaller procurements, local governments require financial guarantees to be submitted twice, and the first time is when submitting the bid itself. This is necessary to ensure that bids do not promise complete nonsense and that bidders do not later claim they have changed their minds. To put it bluntly, this can "screw up" the entire procurement process, because some unscrupulous businessperson might simply back out as the three-month deadline approaches, and in this case, they are not risking anything. Therefore, this seems strange and poses risks, and it simply does not meet market standards.

From a practical standpoint - the procurement requirements include a whole lot of everything, and the question arises as to whether residents were even asked if they need all of this, since residents will have to pay for all these things. For example, Riga wants to introduce 60-liter waste containers. We know where this idea came from - it stems from a procurement by Marupe municipality two years ago. Now Marupe municipality is evaluating whether to abandon this, since 60 liters is roughly the capacity of a standard kitchen trash can, and in Marupe municipality, only a very small number of households have signed up for this service, yet the financial proposal accounts for everyone. And there are several such items in Riga tender.

Perhaps the goal was to create a completely new level of procurement with many new requirements, but then one must understand that all of this will cost something. As I mentioned, there are several requirements for which it is not entirely clear whether residents will actually use them, but contractors will price them into their bids because we must anticipate that these requirements must be met throughout the entire managed territory.

If currently all buildings with at least ten apartments are required to have organic waste bins, starting next year this requirement will apply to all buildings. Will this also apply to buildings with gardens, where residents typically compost their organic waste?

No, if composting is practiced, the building will be exempt from this requirement. Moreover, composting is also the best option for organic waste, and, in my opinion, it is not promoted enough.

As for the broader use of these organic waste containers, I also have concerns that the intended effect may backfire. Unfortunately, we see that there are residents who do not want to sort organic waste; household waste is thrown into these containers, and as a result, fines are imposed on the buildings.

Are there any other requirements in Riga’s procurement process that raise questions for you as a potential service provider?

The decision for Riga to switch to single-color containers also raises questions. Historically, yellow containers were intended for plastic, and blue ones for paper. When operators introduced automated sorting, waste from the yellow and blue containers began to be collected together. Municipalities still have both yellow and blue containers, but both are intended for lightweight packaging. Now, Riga City Council’s procurement plan stipulates that blue containers must be used for glass packaging. It is unclear why this is necessary, as parallel changes have been made to the law and pictograms will soon be introduced everywhere - these will be uniform across all municipalities and indicate which types of waste can be placed in which container. Now, to replace several thousand containers in Riga just so they have a different color… That costs money again. Moreover, there is the question of whether this will cause confusion for residents who have been throwing paper in the blue container until now and will now have to put glass there instead. Regarding such requirements, the question is: why, is it really necessary, and how will it improve the system?

Have you calculated how the new requirements will affect the cost of your service?

Replacing the old containers due to their color will require a significant investment, and this will result in residents paying a few euros more for the removal of one cubic meter of waste.

Of course, there are other requirements as well, such as mandatory container washing twice a year. Likewise, the introduction of the aforementioned small containers. Operators are used to collecting, at the very least, 180-liter containers; now they will have to collect 60-liter containers. What we see in the Marupe example is not that people take this 60-liter container because they do not generate waste; they take it and call the garbage truck every week. And then there is the question of how "green" this requirement is if the garbage truck is driving around "empty," since, of course, the truck cannot be filled with such small-capacity containers. Instead, I would suggest considering the possibility of allowing those who actually sort their waste and therefore generate less waste to be collected to reduce the mandatory number of waste collection trips, which would be a bonus for them and lower their payments.

Operators factor all these new developments into their prices. Even now, waste management is becoming much more noticeable on residents’ bills than ever before, as the natural resources tax is rising and waste disposal costs are no longer low. Therefore, in my opinion, it makes no sense to raise costs even further with such requirements.

Given all of the above, what will your financial bid be for the Riga tender?

At least a couple of euros more per cubic meter of waste than the current rate. I will not go into details, though, because this information would also be of interest to our competitors.

However, it will be more expensive because the new requirements stipulate that new investments will have to be made and services introduced that were not previously mandatory, and all of this increases the cost of waste management.

What kind of competition do you anticipate in the procurement process?

Overall, there are only so many private waste management operators in Latvia as there are. Just as there were these three operators six years ago, these same three private operators essentially make up the market today. The others have either become even smaller than they were before, or have joined our group or Clean R group. Market consolidation has taken place, and no new players have emerged.

Since the conditions currently allow anyone to simply come in and "give it a try", I anticipate that companies currently not operating in the waste management sector may apply, as this procurement does not require extensive experience. This is also one of the issues we raised with the Riga City Council. Consequently, small regional companies can also apply, companies that have been involved in waste management at some point or are currently doing so in Estonia and Lithuania, and not necessarily in the largest cities there.

I anticipate that foreign businesses will also apply, as Riga’s procurement could be quite interesting to them. The largest operator in Lithuania is a company within our group and therefore will not submit a competing bid, but the second-largest player in the Lithuanian market has even publicly expressed interest in this procurement. There could also be companies from Estonia.

My biggest concern is not the competition itself, but rather that the tender requirements are such that one could submit unfounded bids and then simply walk away. There is already such an example in Vilnius, which had also established relatively open conditions for participation, and unofficial information indicates that companies from outside this sector have applied, and the municipality itself is now scratching its head, wondering how to evaluate them.

Sometimes you can go too far with openness, and it can end badly.

Regulations stipulate that by 2025, at least 55 percent of household waste must be recycled. According to information from the Riga City Council, only about 43 percent of waste is collected separately within the Riga municipality. Organic accounts for only about 5 percent of the total waste volume. Why are we failing to meet the requirements for sorted waste collection?

I would say that the situation regarding packaging sorting in Riga is good. The same applies to other types of waste. Riga has hazardous waste collection sites, and we have established electronic waste collection points. Textile collection is well-developed. But Riga is really struggling with organic waste collection. But this is not just a Riga phenomenon; the situation is similar throughout Latvia. Riga differs in that while home composting can be promoted very effectively elsewhere, Riga is dominated by apartment buildings, and very often the building does not own the surrounding land. Therefore, for example, there are buildings whose residents are environmentally conscious and would like to compost in their courtyard, but cannot do so because the building does not own the land. That is specific to Riga.

What about the quality of sorted waste? For example, it is very common to see organic waste placed in ordinary plastic bags, which should not be there. Household waste is also often found in containers designated for packaging.

Things are getting better.

For example, the Riga City Council will now also require that biodegradable bags be provided, but we must not forget that organic waste can also be placed in paper bags, since paper also decomposes, or simply emptied into the container from the trash can without any bags at all.

Quality is improving, but we really still have a lot to learn about sorting organic waste.

Moreover, while this does not work in Riga, a system of neighbors keeping an eye on each other works well in other cities. In Riga, it is very common to see people who do not realize that a fine is imposed on the building for spoiled sorted waste. Everyone just pays the fine and carries on with their lives.

For quite some time now, textiles have also been collected separately, and what is confusing are the labels on textile containers stating that they are intended for reusable clothing and footwear, because this immediately raises the question of what to do with torn socks, worn-out towels, and other textile waste that is no longer usable?

This is partly a problem on the operators’ side, and partly a problem with the regulations. It is encouraging that textiles are sorted very actively in Latvia and the containers are full. Another positive aspect is that a producer responsibility system has been implemented in Latvia, and consequently, there are targets that must be met. Since we are still one of only three European Union countries with a textile producer responsibility system, the government was very cautious from the start about setting targets, as there were doubts about how actively residents would sort textiles. To put it figuratively, if a sweater is sold in a store, the waste management sector receives money to collect back only a quarter of that sweater. For example, in the case of cardboard packaging, 85 percent must be collected back. This means that nearly all cardboard collection is covered. For textiles, it is only 25 percent, and it is currently evident that people are willing to sort much more.

In principle, according to the rules of the producer responsibility system, containers should not have labels saying "reusable only" or "clean only." Therefore, the problem this time is that operators do not want to collect, for example, dirty textiles, because no one pays them for it, but on the other hand, the regulations on producer responsibility systems stipulate that everything must be collected.

Packaging accounts for a significant portion of waste. This year, a new EU regulation on packaging comes into force, which tightens requirements for packaging recyclability, labeling, and reuse. Do you think this will change anything, and if so, how soon can we expect to see results?

Here, a brief explanation is necessary. Currently, a great deal of regulations is coming from Europe regarding what we should do in terms of recyclability, labeling, and many other matters. Operators can collect waste, recyclers can recycle it, but currently there are not many mechanisms in Europe that would compel anyone to actually purchase this recycled material. To understand the result: over the past three years in Europe, plastic recycling capacity cannot measure to the total volume of waste collected annually in the Baltic states. Recycling plants have simply gone bankrupt. The causes can be traced back to the pandemic and now also to the war in Ukraine.

Therefore, the biggest problem right now is not even that manufacturers produce multilayer packaging that is not recyclable, since both sorting and recycling technologies have advanced. Rather, the question is whether we will end up in a situation like that in southern Italy, where plastic waste is simply no longer collected because there is nowhere to recycle it, there is no demand in Europe for recycled plastic pellets.

Let us be honest: all of Europe is currently "sitting" on plastic pellets produced in China, which are made using Russian oil, and we imagine that we are not supporting the Russian war machine. Almost all the plastic packaging we currently buy in Europe is made from Chinese pellets and Russian oil. Because Russian oil is banned in many places, the pellets made from it are so cheap that no one is interested in pellets recycled from waste, and European factories are going bankrupt. Therefore, this problem must be examined more deeply.

Eco Baltia group also includes recycling companies. How are they doing?

If these companies were not a part of the group, they would be on the list of bankrupt firms.

Most of the recycling companies that have survived in Europe have done so because they are part of a larger group, which allows their operations to be supported, cross-subsidized, and supplied with more materials, regardless the overall market trends. But companies that stood on their own are mostly gone now. In Lithuania and Poland, too, several companies have closed down. There are some in Latvia as well, but their operations were already relatively small to begin with.

In Latvia, there is fierce opposition to the construction of waste-to-energy plants, which, despite their fancy name, simply involve the incineration of waste, and there is significant resistance from local residents in the areas where these plants are planned. Can Latvia manage without them at all, given that in the future only a relatively small portion of household waste will be allowed to be landfilled?

If household waste is sorted properly before disposal, then the set targets can be met. But then we will rely on incineration in Sweden, which is already being done. Everyone somehow thinks that Latvian waste is not currently being incinerated. Latvian waste is incinerated at Schwenk cement plant, where this can be done with high-quality, pre-treated waste; moreover, the cost of disposing of several types of waste is already so high that operators are exporting them for incineration to Scandinavia or Estonia.

However, this again raises the question of whether this is a ticking time bomb, as there is a trend in Europe toward countries beginning to ban import of waste for incineration. For example, Lithuania and Poland have already banned such imports. We are currently relying on Scandinavia and Estonia, which raises the question of what will happen if these countries ban import of waste for incineration. By then it will be too late, because it takes about six years to build such a plant.

One must agree with the view that waste incineration capacity in Europe is large - and even greater than necessary. But that is precisely why older plants in Europe are no longer being modernized and are gradually being shut down, with only new and modern plants being retained. However, it should be noted that as older plants are gradually phased out, the new ones very often correspond precisely to the volume of waste generated in a given country, and no additional resources are required.

Is Eco Baltia Group also considering a waste incineration project?

We are currently considering a project that would not involve waste incineration, but rather thermal treatment, which produces synthetic gas that can be converted into methanol. It is a more expensive process, but we also understand the "not in my backyard" attitude of Latvian residents.

Are you sure people would not have any objections to this technology?

The end product is not just heating and electricity. There is an end product that can be used in the energy sector, the chemical industry, and the military sector, and it could also support the establishment of other production facilities in Latvia, since we currently import all of our methanol.

But overall, in Latvia, every production facility, including a sorting plant, faces a high risk that local residents will say, "Not in my backyard."

Where do the materials you collect for recycling end up? Some go to your group’s recycling plants, but where do the rest go?

Latvia specializes in polymer recycling - both our group and other companies. We are quite strong in this area compared to the rest of Europe, both in terms of capacity and experience. In Lithuania, on the other hand, cardboard recycling is highly developed, and a very large portion of the packaging and waste paper we collect ends up there or in the Scandinavian countries. Glass recycling, on the other hand, takes place in Poland and Estonia. Therefore, it can be said that, with the exception of polymers, we export everything else.

We started our conversation with Riga procurement process, but how do you assess procurement in other municipalities?

The biggest problem concerns the companies owned by the municipalities themselves, which are granted the authority to manage waste without going through a procurement process. I am not saying that municipal companies are bad; for example, I really like how ZAAO has handled certain things. But the problem is that a municipality decides not to hold procurements in areas where private operators have been working for a very long time. Someone has been working there for ten years, built infrastructure, purchased vehicles, and then, for example, Jelgava municipality announces that starting this spring, the Jelgava municipal company will operate there, even though there have already been three tenders held there previously. This distorts the market and is not positive in any way. If a private operator has made investments in a certain area and then suddenly disappears from the market, that is not right.

But there are also good examples. Ventspils also has a municipal company, but procurement always takes place in both Ventspils and Ventspils municipality, and, for example, last year we won a procurement contract in Ventspils municipality. This means that the municipality is not afraid to let its company compete in the market. However, we do not have many municipalities in Latvia that are this brave.