Optimisation of FSM business model in Pokhara, Nepal with an emphasis on faecal sludge entrepreneurs

Moving on from MDG (Millennium Development Goals) to SDG (Sustainable Development Goals), global attention has shifted from increasing the sanitation coverage to improving the level of service for the entire sanitation value chain. The concept of FSM (Faecal Sludge Management) is growing in popularity as a key element in the safe management of human waste. Like in many countries around the world, the holistic concept of FSM is slowly being established in Nepal. With only 30% of urban households connected to a sewer as per 2011 census and being a low income country, FSM has great potential in Nepal. For a city like Pokhara that has abstained from adopting a sewered system and where the study is based upon, it seems FSM is the future. Progress has been made in the FSM sector but the efforts have largely remained fragmented. The emptying and transport sector specifically, has been overlooked and many such service providers provide the service informally and there is very little in-depth research in this sector. This study intends to fill this knowledge gap in the context of Pokhara and seeks to understand the functional, operational, financial and capacity aspects along with revenue generation of such businesses. The study has been extended further to encompass the remaining components (collection, treatment and reuse) of the service chain. For this, the existing FSM business model is assessed to understand the financial sustainability of all the current businesses and a business model that would best suit the context of Pokhara is sought for. The study shows that the situation of current FSM scene in Pokhara can be substantially improved. The city practices on-demand desludging and an estimated 86% of households do not use proper septic tanks. Likewise, the FSTP (Faecal Sludge Treatment Plant) is not functioning adequately, most probably due to lack of human resource and interest. All this eventually affects environment and public health. Also, the analysis shows that all - the FS entrepreneur, FSTP (Faecal Sludge Treatment Plant) and sludge management firm, are making losses when taxes, depreciation, finance costs are taken into account along with full investment costs. To rectify this unsustainable FSM scheme, six different financial models have been studied, of which Model 3 has emerged as the most suitable for the context, which incorporates sanitation tax for improved financial stability across the chain. On further optimising Model 3, it is revealed that setting emptying fee as USD 3/ m 3 , discharge fee as USD 0.4/ m 3 and sanitation tax as USD 1/household/yr yields the optimum profits for the service chain stakeholders thus benefitting everyone evenly. Scheduled emptying and full coverage of septic tanks are the pre-requisites for this model to work as intended. The newly formed FSM Institutional and Regulatory Framework, 2017 will prove to be vital for implementing this FSM mechanism through its policy and regulatory backing with a clear distinction of stakeholders’ roles. The expected results of the business model can only be realised through concerted efforts of all the stakeholders, which may require behavioural changes and change of mind-set. This is crucial for development of FSM as one of the major tool for safely managed sanitation. Once the model is well established and as experience is accumulated, this model can prove to be the blueprint of upcoming FSM plans throughout the cities of Nepal and abroad, which will massively improve the probability of achieving the national sanitation goal