Issuu on Google+

PUBLIC PRIVATE PARTNERSHIP (PPP) FOR EFFICIENT WATER MANAGEMENT IN URBAN AND RURAL AREAS BY

M.S. AGRAWAL CHIEF ENGINEER (YAMUNA BASIN) CENTRAL WATER COMMISSION CO-CHAIR FOR THE SESSION


Urban Water Supply - Issues Deficit raw water availability Rapid population growth

High NRW

Inequitable distribution & Uncovered areas

Key Issues

Intermittent Supply: Contamination Ground Water: Suspect Quality

Low level of functional metering

High energy cost Water Quality 2


Rural Water Supply - Issues  Source of water supply mainly ground water  Unsustainability  Rural habitations located in remote/ inaccessible areas are still uncoverd with water supply facility  Problem of slipping back of covered rural habitation due to mainly drying up of water source  Large number of habitations facing water quality problems

3


Un-sustainability • Deteriorating Assets • Declining Productivity • Increasing Operating costs

• Declining service levels •Customer unwillingness to pay

Result: Unsustainable Water Supply Schemes

• Declining revenues • No access to re-financing • Declining investment


National Water Policy, 2012 Institutional Arrangements (provision regarding PPP) “……… For improved service delivery on sustainable basis, the State Governments/ urban local bodies may associate private sector in public private partnership mode with penalties for failure, under regulatory control on prices charged and service standards with full accountability to democratically elected local bodies.” 5


PPP - Advantages  Brings in innovative ideas  Generate financial resources  Bring in better management of water supply system  Improves system efficiency 6


Principles for PPP  Asset ownership to remain with Government  Government/ULB to ensure availability of raw/ treated water  Operator for operational efficiency and service quality  Willing Government employees to be retained in project area o Technology transfer to Government employees 7


Principles for PPP

(contd.)

 Operator payment independent of water tariff  Tariff to be determined by Government: Political Sensitivity/ No regulator  Simple, measurable & achievable Key Performance Indicators (KPIs) to judge performance o Inbuilt Incentive/ Penalty against performance  Customer focus  Contract within Government Acts and Regulations 8


Benefits for Private Operators ďƒ˜ Operational Efficiency & Service Quality o Payments linked to performance o In absence of performance-linked payments, Govt. has to chase Private Operator to ensure quality & timely delivery ďƒ˜ Government Strength: Policy, Regulation & Subsidy support o Heavy expenditure but customer satisfaction low o Government employees lack accountability 9


Rehabilitation Works  Hydraulic re-designing  Rehabilitation of existing infrastructure  Pipeline replacement & upgradation  Replacement of old house service connections o Biggest source of leakage  Bulk & Consumer Meter replacement  Use of modern leak proof material  Providing pipelines in hitherto uncovered areas 10


Models of PPP ďƒ˜ Service Contracts: under which the private firm partner is responsible only for a particular function like billing, collection of fee etc. ďƒ˜ Management Contract: under which the private firm partner is responsible only for the management, operation & maintenance of the system ďƒ˜ Lease Contract: under which the private firm partner, maintains & operates the assets at its own commercial risk, deriving revenue from the tariff


Models of PPP

(contd.)

ďƒ˜ Concession: Private partner acquires the right to provide a service at a given standard or specification for a fixed time ďƒ˜ Build-Operate-Transfer (BOT): Normally done for new investments


Project Profiles of Failed Urban PPP Projects Project

Operator

Value Chain(VC)/ Operator’s risk

Status

Reasons for failure

Bangalore

Bi-Water

VC : Bulk water Risk : Investment, Design, Construction and O&M

Negotiations • Bulk water tariff abandoned unaffordable • Project generated controversy

Hyderabad

--

VC : Bulk water Risk : Investment, Design, Construction and O&M

Project abandoned

• Bulk water tariff unaffordable. • Credit quality of the Water Baoard

Pune

--

VC : Distribution, Tereatment, Bulk water Risk : Investment, Design, Construction and O&M

Project abandoned after some degree of preparation

• High political opposition


Project Profiles of Failed PPP Projects (contd.) Project

Operator

Value Chain(VC)/ Operator’s risk

Status

Reasons for failure

Goa

_

VC : Bulk water Risk : Investment, Design, Construction and O&M

• Bulk water tariff Project abandoned unaffordable. after bidding

Sangli

--

VC : Distribution and Bulk water Risk : O&M, tariff collection

Project abandoned after some level of preparation

Hydro Comp

VC : Rehabilitation and Distribution Risk : O&M and tariff collection

• Lack of Project Project abandoned preparation after 2 International firms submitted proposals

Bangalore Delegated Management Contract

• Council decided against the Project


Project Profiles of Successful Urban PPP Projects Project

Operator

Target Duration Value population Chain/ / quantity Operator’s risk

Reasons for success

Chandrapur Gurukripa 3 lakh

10 yrs

VC : Distribution, Treatment, Bulk water Risk : O&M, collection

• Operator does not have investment risk • Tariff curve prefixed prior to holding • All commercial risks with operator

Salt Lake

30 yrs

VC : Distribution Risk : Design, construction, O&M, collection

• Institutional clients with high credit quality • High growth area • Capital investment from JnNURM • Operator takes all commercial risks

JUSCO

14 MLD


Project Profiles of Successful Urban PPP Projects Project

Operator

Target Duration population/ quantity

Madurai

Hydro Comp

10,000 Upgradation VC : connections and O&M Distribution, Treatment, Bulk water Risk : O&M, collection

Chennai Desalination

IVRCLBefasa

100 MLD

25 years

(contd.)

Value Chain Reasons for / Operator’s success risk • Capital investment by Government • Favourable metering and tariff policy • Tariff curve for 10 years fixed before bidding

• Only VC : Bulk water production Risk : costs Investment, Design, construction, O&M


Rural PPP Projects – Through SHGs Village

Popula - tion

Scheme details

Khambegaon

1,314

Kambare

506

Year of commis sioning

GP resolution date

Functions performed by SHG

Period of engage -ment of SHG

Open-well, 2007 5 HP pump, OHSR, Distribution system HCs : 157/172 (91%)

25-6-07

Water tax One billing, year collection, after minor repairs, disinfection , payment of electricity bills

80:20

Not involved now

Open-well, 2009 5 HP pump, OHSR, Distribution system HCs : 73/107 (68%)

6-12-10

Water tax collection, minor repairs, payment of electricity bills

Voluntar y service

Continuing

Since Dec’ 2010

Water SHG tax current collecfunctions tion and sharing


Constraints faced in PPP and suggestive mitigation measures Constraint on

Description

Remedy

Supply side (Authority)

Investment in construction/ reconstruction

Government funding

Long term financing

Commercial borrowing with longer tenure/ take out financing

Fear of making super normal profits

Awareness, training on PP and successful studies in particular

Capacity to undertake PPP

Capacity building

Demand Side Regulatory risk of assessing (Concessionaire) stringent norms

Community side Political

Clearly defined TOR

Clarity in tariff levy/ collection

Pre-defined tariff policy

Lack of financially viable, bankable projects

Entire market risks need not be passed on

Lack of adequate and reliable database

Establish performance matrix

Low/No willingness to pay

IEC

Not amenable to metering

Mandatory metering

Water charges

Strong political commitment


Way Forward for PPP  Model-1: Full O&M responsibility over a fixed time with limited capital investment  Model-2: BOT for industrial / commercial water supply  Model-3: Bulk water supply/ treatment and distribution  Model-4: Decentralized community managed models with technical assistance from outside  Model-5: PPP under CSR by Industrial Giants  Model-6: Decentralized water quality testing and/or other Service contracts


Thank You


PUBLIC PRIVATE PARTNERSHIP (PPP) FOR EFFICIENT WATER MANAGEMENT IN URBAN AND RURAL AREAS