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Rdo Project

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Khurram Owais Shah

Joined: 07 Nov 2007
Last Visit: 09 Oct 2010
Posts: 45
Location: Karachi
PostPosted: Sun Jun 21, 2009 3:54 am    Post subject: RDO Project Reply with quote

Screener: Aisha Raees
Project Team: Waqas Satti, Izhar Siddiqui, Shafaq Varghese
Evaluation Committee: Tarim Wasim, Nosheen Ali, Mansoor Qureshi
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Tarim Wasim

Joined: 28 Jan 2005
Last Visit: 17 Apr 2011
Posts: 160
Location: San Francisco
PostPosted: Fri Jul 03, 2009 5:35 pm    Post subject: Reply with quote

Overall, this sounds like an intriguing project with some real potential. My major questions are in three areas:

1) Project Concept
a. Is this a good long-term solution to plastic bag pollution? Unless Iím missing something, it sounds like the plastic bags are processed into plastic goods, which eventually will also end up in the waste system. Is there any plan to recycle those?
b. Is there a better way to tackle this? For example, should the NGO be setting up a recycling plant to handle all plastic goods so that things can get recycled over and over again?

2) Financial Feasibility / Cost-Benefit
a. This is a very large project. The budget shows approx. Rs. 10 lacs to fund just 3 months of operations. That means the annual operating budget is about Rs. 40 lacs. This compares to annual revenues for the NGO so just Rs. 10 lacs per the project proposal form. I have real concerns around whether there is anywhere close to Rs. 40 lacs of demand for the products the recycling center intends to sell, and the NGO certainly doesnít have the wherewithal to fund a big operating losses going forward.
b. Even if we get comfortable with financial sustainability, we will need to discuss whether the cost-benefit of this kind of project is attractive relative to other uses for $10k.

3) Project Complexity
a. Unlike projects where we fund a single initiative/asset (water filters, hospital equipment, vocational training etc), this is basically a new business initiative. As a result, it comes with a fair bit of startup and execution risk and we will need to get comfortable that there is a market for the product, the business plan makes sense and the NGO can successfully execute all the details.
b. Fortunately, it sounds like RDO has an existing project in Faisalabad where they get the blueprint for the Toba Tek Singh project. It would be good to know whether RDO will be able to give us enough data from the Faisalabad project that validates the business plan for this project.

My suggestion would be that the PT discuss these high level points with the NGO on a call before sending a longer list of questions. That said, I have added my more detailed questions below for use by the PT as they see appropriate.

1) Please send us the financial history and any operating metrics on the Faisalabad project, including
a. Initial investment in including purchase of equipment

b. Annual financial statements including
i. Revenues
ii. Purchase of waste
iii. Staff salaries
iv. Recurring costs like rent, transportation etc.
v. Profit / loss[/list]

c. Operating metrics
i. Units of plastic products sold
ii. Tons of plastic bags processed

2) What are the key differences between the Faisalabad project and the Toba Tek Singh project?

3) Revenues
a. What are the annual revenues expected from the sale of plastic goods in years 1, 2 and 3 of the project
b. How many units will be sold to achieve these revenues?
c. How does RDO get comfortable that there is sufficient demand in the market to sell this many units?
d. How does the quality of the toys, plastic cones etc compare with those available in the market already?
e. What is the marketing and distribution plan? Will the finished products be sold by an RDO store or distributed to other shops?[/list]

4) Costs
a. Why has RDO only asked for 3 months of funding?
b. What is the capacity of the recycling unit (i.e. how many tons of waste can be processed per month)?
c. How did you arrive at the need to process 20tons of waste?
d. How does RDO get comfortable that it will be capable of easily collecting 20 tons of waste? How many plastic bags does that translate into?
e. Would it make sense to start with a much smaller amount to test demand for the final products?

5) Financial sustainability
a. How does RDO plan to continue to operate the plant after ADP funding runs out? The budget implies that RDO will need to spend approx. 40 lacs annually to operate the plant.

6) Safety
a. Are the finished products safe for people to use? Has RDO done any testing to ensure that, for example, the plastic toys are not harmful to children if they put them in their mouth?

Iíd encourage the Project Team to have a couple of good calls with the NGO before our EC call on the 12th. We can decide at that point whether, based on everything the PT has learnt to date, the project looks like it has the potential to be approved after further due diligence.

Best of luck. Iím excited to hear how the correspondence with the NGO goes!

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Mansoor J. Qureshi

Joined: 03 May 2009
Last Visit: 17 Apr 2010
Posts: 2
Location: Chicago, IL
PostPosted: Fri Jul 03, 2009 6:41 pm    Post subject: Reply with quote

Hi all, sorry for the delay. I liked this proposal a lot. It seems like an ingenious way to create economic development while cleaning the environment. The plan allows unskilled workers to earn money by collecting discarded plastic bags and selling them to the organization.

To be clear, there's great value in environmental cleanliness, but in terms of development, it seems a secondary concern. There are many countries that have advanced economically without concern for the environment, and though it's not the best way to do it, the welfare of the people probably should come first. I'm still in favor of the idea because it creates economic activity that also helps the environment.

There definitely seems to be potential for economic benefit in this industry. The United States Environmental Protection Agency found similar opportunities: "Markets for some recycled plastic resins, such as PET and HDPE, are stable in most geographical areas in the United States". (

Though I like the idea, I have some questions about the plan:

** Can 50 waste collectors collect 20,000kg of plastic bags in 90 days? If one bag weighs 0.01kg, it would take 2,000,000 bags to reach the target. It seems like each collector would need to return 40,000 bags in 90 days. Is this realistic, given that their method would be manual collection?

** At 11 rupees a kilogram, again assuming 0.01kg a bag, with 40,000 bags delivered in 90 days, the 90-day income of a single waste collector would be 4,400 rupees. Will that income be significant for the residents of Toba Tek Singh? How does this income compare to other income opportunities for unskilled workers in the area?

** The project mentions a goal of sustainability, but I agree with the project screening that the specifics seem a little vague. The budget provides information on the collection aspect (bags, scales, waste). Is there information on the production aspect, i.e. what goods will they make, and what price will they sell for? This seems especially important, given that the sale of goods is the financial basis for their sustainability claim: "The revenue received from the sale of Plastic Bag Recycled Items will be used to provide financial sustainability to the project."

** Is RDO expecting such a continuous stream of returns that they might need to use ten scales simultaneously?
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Tarim Wasim

Joined: 28 Jan 2005
Last Visit: 17 Apr 2011
Posts: 160
Location: San Francisco
PostPosted: Wed Jul 15, 2009 1:08 am    Post subject: Reply with quote

Just a quick posting on status. We decided in the EC call this past weekend that the team would try and answer the following key questions before holding our next call and doing more due diligence on the project feasibility:

1) Are competing products (e.g. hangers) currently made using recycled plastics or new plastic? RDO's plant would not remove plastic from the ecosystem if their products are taking market share from products that are already made with recycled plastics.

2) What is the minimum efficient scale for the plant to break even? Why does RDO need funds from us beyond those required to achieve this scale?

3) Are there better solutions to plastic bag pollution (e.g. initiatives that have cut down plastic bag usage) that have been tried successfully in Pakistan? Sources would be the EPA, other NGOs, media articles etc.


ps: I am posting e-mails and documents below that were sent around prior to the EC call since some of the team members had trouble accessing the forums.

Nosheen e-mail 7/4/09:

1) I really like the way the proposal is put together. I really appreciate that they are tackling a key problem related to the environment and health of Pakistan which needs to be integral to any approach for sustainable economic development (sustainable in the true sense, not just monetary one), instead of being considered secondary or peripheral.

2) Having said that, I think there are better ways to tackle the problem. Recycling plastics is an important part of the solution, but reintroducing them as household items laves the problem of plastics unresolved. Plastics are not just a threat to the environment, but also to the direct health of individuals. Some would call it strong, others would call it fringe -- but there is a growing awareness in the world for using metal and glass containers for storage, avoiding plastic toys for kids etc based on the harmful effects of plastic which is thought to effect the reproduction system and brain function in particular. See for example, "The plastic world: Sources, amounts, ecological impacts and effects on development, reproduction, brain and behavior in aquatic and terrestrial animals and humans" (Environmental Research Volume 108, Issue 2, October 2008).

3) I would favor a three-pronged approach:

a) First, gather the plastics so that they are not blocking sewerage, and perhaps recycle them into items that are at least not high-risk items such as toys and containers. Switches are better than anything that kids are likely to spend long times with, take in their mouth etc.

b) Simultaneously, an educational campaign is extremely important -- one that would educate citizens about not using plastic bags when other alternatives are available, and prevent the further use of plastics in shops and grocery stores. It is very important to stress that people should bring their reusable bags from home when they go shopping. I still remember the time when my mother used to always take the same "challas" (big basket, one for veggies, one for meat) to get groceries, and now this is touted in the U.S. as a "new" environmentally-friendly activity that has supposedly been invented here. While some items inside the basket might still be in plastic, at least there is a reduction in number.

c) This could be coupled with income-generating activities: producing cloth bags, reused paper bags and biodegradable plastics (as has become popular in the U.S./India) to replace plastics as alternatives, and find ways to mobilize the community towards this goal. It would be fantastic to have Toba tek singh as perhaps the first plastic-free place in Pakistan, at least in terms of consumer usage in shops. I think the cost-investment in producing the alternatives to plastics will be cheap and effective as well. Cloth bags dont have to be standardized -- there can be public awareness messages on them, kids' art etc to make them more exciting, and make the connection that plastics are hamful for the environment and for our health.

If addressing the problem of pollution is the key area of intervention for RDO, then prevention is as important as a half-cure.


E-mail from Waqas 7/10/09:

Hi all,

PT has had detail discussions with the RDO over the last week. Following
the discussion I have done some numbers (excel sheet attached).

Key takeaways from the discussions are (all numbers are quarterly):

1) RDO is quite keen on the project and have already agreed to reduce
fixed cost by PRs 141,000 to PRs 561,000.

2) At PRs 561,000 level of recurring cost, breakeven number is 45,000 kg
of waste.

3) Processing of 45,000 kg of waste does not look sustainable. However,
RDO has said they can reduce recurring costs by further 30% which could
make the project sustainable.

4) Faisalabad project has been running the project for 4 years now. They
required funding only once during the second year of operation from
Environmental Protection Agency for about PRs 150,000.

5) There is no major difference between Faisalabad project and Toba Tek
Singh project other then a) scale (Faisalabad proj processes about 5,000
KG per quarter) and b) no of products sold (Faisalabad project only
sells Hangers).

6) For Toba Tek Singh project, they use the same variable costs as

7) In terms of product pricing, all three 4 products will be priced
closely i.e. ~ PRs 70 per kg which makes margin calculation easy.

Cool In terms of -ve environmental impact, 3 important points to consider

a) The machine used for boiling creates smoke if the
one which is domestically manufactured is bought.

b) The toys for children seem to be most harmful
product, and they are willing to abandon it.

c) Plastic baby cone is used packaging material in
factories and will eventually find its way back to waste.

9)A rough calculation would should that at current project level, 1.5%
of the total plastic bags entering the system will be reprocessed.

10)Upon interrogating, that why have they chosen the number 20,000 Kg
per quarter, no satisfactory answer was received except that they plan
to setup 10 collection points and they think that minimum amount
collected should be 2,000 KG per region.

Hope this helps.

Waqas Ali Satti,
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Waqas Satti

Joined: 17 May 2009
Last Visit: 11 Dec 2009
Posts: 4
Location: Karachi
PostPosted: Mon Jul 20, 2009 11:22 am    Post subject: Latest Discussion with RDO Reply with quote

Just had a chat with Mr. Mohsin. Following are they key points of the conversation:

1) NGO's major criteria for this chosing this project was to clean the streets.
2) In terms of source of the problem, they say that its difficult to fight against large scale factories at this level although they are aware of the source.
3) Most such factories are situated in Faislabad region.
4) In terms of hanger used, 3 types are produced,
A) Plastic Hangers,
B) Silver Hangers,
C) Wood Hangers
However, plastic hangers are most in demand.

5) Raw material used for plastic hangers are (as you would have guessed it) mostly recylced plastic bag as it is cheaper, however some factories even use new one as cost of going to far flung areas for recollection can be significant. Therefore new plastic is also used to create plastic bags.

6) The exact mix between recycled and new plastic is not know.

7) Mr. Mohsin will get back to me on thursday after his research on what seems to the proportion.

In terms of porject cost, they under stand that it doesnt make sence to fund more then fixed cost and w.c requirements of the project so they will take it.

I will get back tommorow with NGO's research. Thanks.
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Tarim Wasim

Joined: 28 Jan 2005
Last Visit: 17 Apr 2011
Posts: 160
Location: San Francisco
PostPosted: Tue Jul 21, 2009 6:50 am    Post subject: Reply with quote

Thanks. Should we plan to have a team call this coming weekend?
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Waqas Satti

Joined: 17 May 2009
Last Visit: 11 Dec 2009
Posts: 4
Location: Karachi
PostPosted: Wed Jul 22, 2009 11:50 am    Post subject: Reply from RDO Reply with quote

I tried posting this earlier but got an error:

Attached please find RDO's recent research on the subject of raw materials used for plastic bag manufacturing.

Havent been able to independently verify the numbers as yet. But PT is trying to get in contact with some relevant people.

Im up for a conference call, but unfortunately i will be away on sunday to a village where my guess is there will be no signals ! So if possible lets do it on saturday ?

Or else you guys can proceed and i can share my input via email. Thanks.
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