Various Service Provision Options For Urban Infrastructure

Published Date: 02 Nov 2017

Contents

Chapter 1 Introduction

Background 2

Need for Study 3

Aim 4

Research questions: 4

Objective: 4

Scope 4

Limitations 4

Methodology 5

Chapter 2 Literature Review

India is Urbanising 6

Contribution of migration from rural areas 7

Status of Urban Infrastructure 8

Water Supply and Sanitation 8

Solid Waste Management 9

Urban Transport 9

Infrastructure Bottlenecks 10

Estimate of Funding Requirements 10

Issues in Urban Financing 13

ULB�s in India: Limited Resources 14

Fund Sources for ULB 14

Multilateral/ Bilateral Funding 14

Government Funding 15

Local Authority Funding 15

JnNURM 15

Private Sector through Public Private Partnerships (PPPs) 15

Some of Successful Case Studies on PPP in Urban Infrastructure Sector 17

Detailed case study of Alandur Sewerage Project 20

Project Description 20

PPP structure of the Project 21

Current Status 22

Financial Information 23

Loans 23

Public Contribution 24

PPP Project Preparation 25

Exit Clause 27

Value for Money (VfM) Analysis 30

Suitability for PPP 30

Impact of PPP 31

Key Learning and Observations 32

Chapter 3 Data Analysis

Analysis of PPP Projects under JnNURM Submission UIG 44

PPP through Capital investment 44

PPP through O & M Participation 45

Sector Specific Analysis 45

Analysis of PPP leveraging across States 47

Water Supply Sector 49

PPP through Capital Contribution 49

PPP in O & M 50

Solid Waste management Sector 50

PPP through Capital Contribution 50

PPP in Operation and Maintenance 51

Sewerage Sector 52

PPP through Capital Contribution 52

PPP in Operation and Maintenance 52

Urban Transport Sector 53

PPP through Capital Contribution 53

List of Tables

TABLE 1: TRENDS IN URBANISATION IN INDIA (1961-2011) 9

TABLE 2 : URBAN �RURAL POPULATION GROWTH DIFFERENTIALS (1971-2011) 9

TABLE 3: CAPITAL EXPENDITURE AND O& M ESTIMATES BY SECTOR 13

TABLE 4 FINANCING INFORMATION 25

TABLE 5 CONNECTION CHARGES FOR USERS 26

TABLE 6: RISK ALLOCATION FRAMEWORK FOR ALANDUR SEWERAGE PROJECT 30

TABLE 7IMPORTANT OF PPP 33

TABLE 8:SECTOR-WISE RELEASE OF FUNDS UNDER SUB-MISSION FOR URBAN INFRASTRUCTURE AND GOVERNANCE (RUPEES IN LAKH) 39

TABLE 9 STATE STATE WISE DETAIL OF SANCTIONED PROJECTS UNDER UIG OF JNNURM AMOUNT RS IN LAKHS AS ON 6-08-12 41

TABLE 10: SECTOR WISE PROJECTS SANCTIONED & PROJECTS COMPLETED 44

TABLE 11 STATE WISE PROJECTS SANCTIONED & PROJECTS COMPLETED 45

TABLE 12 : SECTOR SPECIFIC PPP PROJECTS SANCTIONED UNDER UIG 46

TABLE 13: CLASSIFICATION OF PPP PROJECTS ON BASIS OF CAPITAL CONTRIBUTION 47

TABLE 14THE EXTENT OF SECTOR-WISE PPP: 48

TABLE 15 VARIOUS MODELS UNDER THE PPP FORMAT UNDERTAKEN IN JNNURM BY THE ULBS IN THE STUDY 56

List of Charts

CHART 1: COMPONENTS OF URBAN GROWTH 11

CHART 2 CURRENT PERFORMANCE OF INDIA�S CITIES (INSTITUTE, 2010) 13

CHART 3: RELATIVE SHARES OF SECTORS IN CAPITAL INVESTMENT REQUIREMENT (PER CENT) 15

CHART 4: RELATIVE SHARES OF SECTORS IN OPERATIONS & MAINTENANCE (PER CENT) 15

CHART 5 : TOTAL ACA RELEASED CENTRALLY 41

CHART 6 CAPITAL CONTRIBUTION BY VARIOUS STAKE HOLDERS 49

CHART 7 CAPITAL CONTRIBUTION BY VARIOUS STAKEHOLDERS IN DIFFERENT SECTORS 50

CHART 8:COST SPLITUP AS PER DIFFERENET STAKEHOLDERS 51

CHART 9 PROJECTS UNDER WATER SUPPLY WITH CAPITAL COMMITMENT BY PPP OPERATOR- ALL STATES 53

CHART 10 PROJECTS UNDER SWM WITH CAPITAL COMMITMENT BY PPP OPERATOR - ALL STATES 54

CHART 11PROJECTS UNDER SEWERAGE WITH CAPITAL COMMITMENT BY PPP OPERATOR 55

CHART 12PROJECTS UNDER URBAN TRANSPORT WITH CAPITAL COMMITMENT BY PPP OPERATOR 57

LIST OF FIGURES

FIGURE 1: VARIOUS SERVICE PROVISION OPTIONS FOR URBAN INFRASTRUCTURE 20

Chapter 1 Introduction

Background

India is urbanising. This transition, which will lead India�s urban population around 600 million by 2031, is not simply a shift of demographics. It places cities and towns at the centre of India�s development trajectory. 1 Even though urban areas are becoming powerhouse of Economy there is an important Constraint lying ahead i.e. inadequate urban infrastructure.

The urban area have been historically neglected with most of Central aid and resources focus mainly towards the rural sector, until the launch of JNNURM. The outlay for the XI Plan in the rural sector was Rs.5.5 lakh crores while the same for the Ministries of Urban Development and Housing and Urban Poverty Alleviation was Rs. 68080 Crores2. This neglect has now created a huge infrastructure challenge to cater for new population along with backlog of the past due to which infrastructure investments have to be accelerated.

Traditionally, the urban Infrastructure has largely been financed by the public Fund and since public funds for these infrastructures are inadequate, ULBs have to look for alternative sources for financing their infrastructure needs. Given the major risks involved, private sector has largely stayed away from urban infrastructure projects, until very recently The Government of India has launched the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) in 2005 with Rs 50,000 crores over seven year duration. JNNURM reforms

To meet the challenges of rapid urbanization, the Government of India has launched the Jawaharlal Nehru Urban Renewal Mission (JNNURM) in 2005 with an overarching objective to strengthen and empower urban local bodies/municipalities and to catalyse investment, both public and private, for urban infrastructure and amenities. This is a reform-based investment programme supported partially by grant from Government of India which varies by the type of city (based on population). It has an outlay of Rs. 66,000 Crore ($14.5 billion) over a seven year period.

Need for Study

PPPs have become attractive to government as an off-budget mechanism for infrastructure development due to various advantages associated with it .Despite various initiatives taken by the central and many state governments, the level of private investment in the urban sector through PPPs has been much lower than in the other infrastructure sectors which are able to attract private capital of about 40-50 per cent of the total requirement.

With momentum for private participation having picked up in the last few years with the thrust provided by JNNURM, Working Group in the next Plan period views 13-23 per cent of the total investment coming from the private sector as a target. Currently, roughly 2 per cent of all urban infrastructure projects i.e. about 49 projects are being under taken in PPP mode. The Working Group�s proposal of about 13-23 per cent to be done through PPPs, appears to be ambitious and requires a substantial increase in private sector participation without which it will be difficult to escape from the situation of largely public fund led spending on urban infrastructure.3

Given the huge requirement of funds for the urban sector and the general scarcity of funds with urban local bodies and state governments it is critical that PPPs are quickly mainstreamed (about 13-23 per cent from PPP targeted by working group) into the project implementation process

However to bring PPPs in mainstream in the urban sector a great deal of ground work needs to be done. also involvement with third-tier governments brings elements of legal, regulatory and implementation challenges with a issues of low tariffs, poor efficiencies in urban basic service delivery increase the commercial and political risks for a private investor, resulting in poor response of private capital which needs to be tackled by development of financially bankable projects, and demonstrating feasibility of urban PPPs in Sector.

Aim

To evaluate Public Private partnership (PPP)s in urban infrastructure :a critical review of jnnurm urban infrastructure projects

Research questions:

� Can Public Private Partnership (PPP)s become an alternative to public exchequer for Urban Infrastructure funding?

� What is extent of PPP involved in Urban Infrastructure particularly with JnNURM fund?

� Are there options so that PPPs are quickly mainstreamed into the project implementation process related to urban infrastructure?

Objective:

� To understand the Finance mechanism of Urban Infrastructure

� To understand the existing framework for PPP models for Infrastructure sector under JnNURM.

� To evaluate the extent and options of P-P-P under JnNURM for providing UIG

Scope

This study has been undertaken to the present status of Public-Private Partnership (PPP) projects in JNNURM sub-Mission UIG and various Issues related PPP Projects. The analysis is based on the information provided by various States and Cities on the PPP projects initiated under JNNURM

Limitations

Limitations of the study is limited to PPP projects taken under Sub Mission UIG of JnNURM in various Mission cities. The study is based on secondary sources.

Methodology

Step I: Defining Need, Aim, Objective and Scope of the study

Based on preliminary search and studies the need for the study has been identified. Based on that the aims and objectives have been framed, taking into consideration the time limitation of the academic exercise

Step II: Background Studies

The preliminary studies carried out in the first step have carried forward to get a better understanding of the subject. Various concepts of urban Infrastructure finance have been studies.This step also involves understanding various similar case studies as well as getting a better understanding of the JnNURM.

Also, the data needed for further analysis had been identified at this stage.

Step III: Data Collection

After, identifying the data required the next step was to find all data available through secondary sources like MouD, Census, Published and Unpublished works, Newspaper cutting etc. Also this stage included authentication of Data from various sources

Step IV: Data Analysis

This step involves:

1. Analysis of the identified JnNURM Projects.

Analysing and segregation of Completed projects in UIG JnNRUM

� Comparison of Financials of projects ,State and ULB level

2. Analyzing the various PPP Projects under JnNurm Sub Mission UIG

Step IV: Recommendation and Conclusion

To give recommendation and conclusions based on the above analysis.

Chapter 2 Literature review

India is Urbanising

Post-Independence India had option to choose from Capitalist or Socialist form of Economy but it opted neither and went to select mixed form of Economy. Mixed economy cleared the way for rise of private sector. It also gave tremendous growth options in Cities due to economic development. The trend of urbanisation started from few cities like Mumbai, Kolkata due to concentrations of opportunities.

The result of Economic development was the increase in urban population from 11.04% in 1901 census to 28.53% in 2001 which stood at 31.16% as per census 2011.Recently as per UN State of World Population report (2007) Indian Urban population will make up to 40.76%in 2031.Cities like Mumbai saw largest urbanisation in last century. At present its population is about 12.5 million people, and is largest metropolis in India, which is being followed by Delhi which has 11 million populations. If we follow the growth rate of Indian metro cities as per 2011 census Mumbai grew by 3.1 %, Delhi by 4.1% and Kolkata by 2%

Of late policymakers had finally started to think about urbanisation which was ignored for large duration. As per 11th five year plan it has view that urbanisation should be positive trigger for country like India if properly managed as urban sector contributes to 62 % of GDP which is expected to increase to 75% in next few decades. Also various Domestic as well as international forecasting agencies has predicted Indian economy is going to rise by 8-9 % over next decade which is totally dependent on Fundamental of Vibrant urban Sector.

The Office of the Registrar General and Census Commissioner ,India projected the urban population for the year 2011 to 358 million, and projected that growth rates of urban population would decline from 2.75% per annum observed during 1991-2001 to 2.23 during 2001-2011 (Registrar General and Census Commissioner 2006). As per 2011 Census, the urban population grew to 377 million with a growth rate of 2.76% per annum during 2001-2011 as compared to 2.75% in last decade. The percentage of urbanisation in the nation increased from 27.7% (2001) to 31.1% (2011)4 � showing an increase of 3.3 percentage points during 2001-2011 compared to 2.1 percentage during 1991-2001. It can be noticed that the GDP has grown from about 6% per annum during the 1990s to about 8% during the first decade of the 2000s (Ahluwalia 2011).

Table 1: Trends in Urbanisation in India (1961-2011)

Census Year

Table 2 : Urban �rural population Growth Differentials (1971-2011)

Contribution of migration from rural areas

There is relative small Contribution of rural to urban migration in the entire process of urbanisation in recent decades. I.e. share of migration (excluding seasonal migration) is continuously decreasing during the period of 1981-2001. As shown below net migration from rural areas contributed approximately 21% to the rise in urban population in 1990s, compare to 22.6 percent in 1980s. Natural increase is the largest source of increase in urban population

Chart 1: Components of Urban Growth

Status of Urban Infrastructure

Water Supply and Sanitation

As per Census 2011, Drinking Water within the premises is available to 71.2% of the urban population which was 65.4% as per Census 2001. Similarly, 20.7% of the population has access to Drinking Water near the premises vide Census 2011 as compare to 25.2% Census 2001. None of the cities have 24x7 water supply. Nonrevenue water, which includes leakages of various kinds, is fairly high, being in the range of 40 to 50 percent

The challenge of sanitation in Indian cities is acute. In fact the problem of lack of systematic sanitation facility is much worse in urban areas than in rural areas. A Sanitation rating of 423 class-I cities done in 2009-10 by Ministry of Urban Development, GoI revealed that only 39 cities qualified on 3 basic water quality parameters of turbidity, residual chlorine and Thermo Tolerant Coliform bacteria.

According to Census 2011, 32.7% of the urban population has access to a piped sewer system and 12.6% of the urban population still defecates in the open. Installed sewage treatment capacity is only 30% as per Central Pollution Control Board Report 2009. The capacity utilisation is around 72.2%, which means that only about 20% of sewage generated is treated before disposal in most of the cities and towns.

Solid Waste Management

The Disposal and management of solid waste generated from cities in India is a major problem of time. As per CPCB Report 2005, approximately 1, 15,000 MT of municipal waste is generated daily. Collection performance differs from city to city. In most of the Indian cities, scientific treatment of waste is absent and solid waste is transported and dumped to land fill sites.

Urban Transport

In India Public transport accounts for only 22 percent of urban transport as compared to 49 percent in lower middle-income countries (e.g. the Philippines, Venezuela, and Egypt) and 40 percent in upper middle-income countries (e.g. South Africa, South Korea, Brazil)6. The percentage share of public transport is decreasing steadily as neither the quantity is sufficient nor the quality is satisfactory. At present the Image of Public transport is such a bad that only the people with no alternatives prefers to use public. Out of 423 class I cities, only 65 have a formal city bus service as of 2012 and that too owing to the intervention of the Central Government intervention through the programme of funding of buses for city transport. In 2006, this number was only 20 cities (Infrastructure, March 2012)

Chart 2 current performance of India�s cities (Institute, 2010)

Infrastructure Bottlenecks

� Rapid urbanisation means that India needs heavy investment in urban�Infra

� Public reports suggest that in next 20 years India�s investment in urban infrastructure will be 20X its investment in the past decade

� unless funding, governance and policy challenges are addressed, investments could be much lower than the required

� Urbanisation amplifies infrastructure deficit While the degree of urbanization in India is one of the lowest in the world (~30%), India�s urban population is growing at a rapid pace-340 mn in 2008 (290 mn in 2001) expected to grow to 536-590 mn by 2026-30 (source: HPEC and World Bank).

� This pace of urbanisation has not only�exposed India�s urban infrastructure deficit but also highlighted that the deficit backlog is increasing at a rapid pace

� Government (GoI) sponsored and UN studies highlight that the severe supply deficits in basic urban Infrastructure will rise 2-4X if investments continue at the current pace.

Estimate of Funding Requirements

(HPEC, March 2011) (Infrastructure, March 2012) (Institute, 2010) (Management, October 2011) (OM PRAKASH MATHUR, DECEMBER 2003)

A number of Study have been conducted in the recent time on estimating the funding requirements for urban infrastructure. The India Infrastructure Report (1996) by Rakesh Mohan Committee estimated Rs. 56,000 Crores at 1995-96 prices over a 10-year period for the four urban sectors of water supply, sewerage, solid waste management and urban roads. More recently, the �Report on Indian Urban Infrastructure and Services� (2011) of the High Powered Expert Committee of the Government of India (HPEC) and �India�s Urban Awakening� (2010) report by global management consultants McKinsey and Company, have independently estimated the requirement for urban infrastructure services.

Based on various available reports, discussions with experts and the Ministry of Urban Development and studying the assumptions used in various studies for investment estimates, the Working Group on Financing Urban Infrastructure adopted the HPEC investment estimates as the basis for determining the financing requirements for urban infrastructure.

Accordingly, the estimated urban investment requirement for the 20-year period from 2012-13 to 2031-32, as projected by the HPEC, is Rs. 39.2 lakh Crores, the breakup of which is set out in Table below. The estimates for urban infrastructure in the core 8 services of water supply, sewerage, solid waste management, storm water drains, urban roads, urban transport, street lighting and traffic support infrastructure amount to Rs. 31 lakh Crores over the 20-year period. In addition to the above, the HPEC had also estimated capacity building costs of Rs. 1 lakh Crores, renewal and redevelopment costs of Rs. 4.1 lakh Crores and other sector expenditure of Rs 3.1 lakh Crores over the 20-year period. The total expenditure of urban infrastructure is thus estimated to be Rs. 39.2 lakh Crores over 20 years.

Table 3: Capital Expenditure and O& M Estimates by Sector

Sector

Chart 3: Relative Shares of Sectors in Capital Investment Requirement (per cent)

Chart 4: Relative Shares of Sectors in operations & maintenance (per cent)

HPEC has also estimated Rs. 19.9 lakh Crores towards the operation and maintenance under consideration over the 20-year period, of which Rs. 18.1 lakh Crores is for the 8 core sectors. The costs presented above do not include those for affordable housing which have been detailed out separately the total investment requirement for low income housing is estimated at Rs.8.5 lakh Crores to cover the existing housing shortage and the future affordable housing requirement up to the end of the 12th Plan Period.

The estimates also do not factor in the new data from the Census 2011 which has projected the urban population at 377 million for 2011, against the estimate of 368 million by HPEC for the same year. In addition, the following factors which have not been accounted for are likely to increase the cost of financing urban infrastructure:

� Land costs, Cost escalations and time overruns

Given the multiplicity of factors involved in estimating urban infrastructure estimates, it may not be possible to fully capture all parameters. The Working Group is of the view that the estimates used in this Report, while likely to be an underestimate, broadly represents the spending requirements for ULBs, and provides a reasonable basis for suggesting policy recommendations on financing urban infrastructure.

Issues in Urban Financing

The Urban areas was never a priority as it was always suffered neglect, with maximum amount of resources and energy spent on Rural Sector, until JnNurm was launched by Government of India in year 2005. The ignorance of decades towards Urban Infrastructure has created a huge of Infrastructure threats of not only having to cater for new population but also having to ramp up capacity to address the backlog of the past.

With limitations of capacity at the ULB level and unclear devolution of functions and funds even after the 74th Constitutional Amendment Act, the urban sector faces a huge infrastructure financing challenge. Given the political risks involved, private sector has largely preferred to stay away from urban infrastructure projects, until very recently.

Plan outlays have also historically been focused on the rural areas. The outlay for the XI Plan in the rural sector was Rs. 5.5 lakh crore while the same for the Ministries of Urban Development and Housing and Urban Poverty Alleviation was Rs. 68080 crore (2006-07 prices) With nearly 70 per cent of the GDP contributed by the urban areas, and the recent population projections of India moving towards a figure of 40 per cent urbanization in the coming decades, there is a clear need to focus attention towards the urban sector. This would not only be important to sustain India�s economic growth story, but be critical for inclusive growth, given the strong positive effects that a prosperous urban sector has on the rural hinterlands7. (HPEC, March 2011)

China invested, on average, 2.7 per cent of its GDP over a 7 year period from 2000 towards urban infrastructure. At 0.7 per cent of GDP in 2011, India�s spending in urban infrastructure is very low. To compare the figure, the Government of India spends 1.25 per cent of GDP in subsidies on fertilizers and petroleum products. With the financing of India�s urban infrastructure being closely inter-twinned with its complex web of institutions and governance challenges, achieving immediate success will be a tall order. The Working Group sees the initial years of the 12th Plan as a preparatory stage for careful realignment of the financing framework and capacity building initiatives towards preparing ULBs for managing the challenges of urbanization. (Infrastructure, March 2012)

ULB�s in India: Limited Resources

* The total municipal revenue in India accounts for about 0.75 per cent of the country � s GDP

* In terms of both revenue and expenditure the urban local bodies account for little above 2 per cent of the combined revenue and expenditure of Central Government , State Governments and Municipalities, as compared to 20-35 percent in developed countries. (Infrastructure, March 2012)

* Limited revenue base and dependent fiscal Jurisdiction

* Fairly Large Capital Investment required by ULB

* Meeting revenue expenditures is a great deal, increasing capital expenditure difficult to meet with its own resources

Fund Sources for ULB

Multilateral/ Bilateral Funding

World Bank, ADB and various international agencies based on reform agenda

Fairly detailed appraisals done Sectorial or project-wise based on Government of India Guarantees as security.

Government Funding

� Direct budgetary devolution (tax-payer money)

� Debt raised against government guarantees

� Financing primarily by HUDCO and LIC and other Ventures led by IL& FS

� Financial requirements are increasing way beyond direct budgetary/ guarantee capacity

Local Authority Funding

* After the 74th Amendment, there is increasingly, funding generated by the ULB

* Escrowing revenues such as property tax, entry tax

* Selling/ securitizing land

* But there is a limit to these numbers

JnNURM

* Excellent scheme to lead reform-based financing

* Also focus towards commercial finance, which can be a significant percentage of the project investment � PPPs are envisaged to be the way forward

Private Sector through Public Private Partnerships (PPPs)

PPPs are becoming one of the favorite options as a substitute to limited govt fund, also it holds various advantage. the main reasons advocating the PPPS are

* Attract private investments for infrastructure projects

* Lack of Budgetary Resources

* Need to improve efficiency in service delivery

*

* Private Sector contribution for:

* Financial investments

* Best Management practices

* Efficiency in service delivery

* Efficient use of capital resources

* Typically PPP model has been adopted by Local Urban Bodies / Cities to achieve one or more than one the following objectives

* Improving Governance

* Superior Project Delivery

* Improving quality of service

* Investment required

* Reducing tariffs

* Reduce costs to government

Figure 1: Various Service provision options for urban Infrastructure

Some of Successful Case Studies on PPP in Urban Infrastructure Sector

Sector

Government / public sector entity

O&M Contract (Underground Sewerage System)

BOT Annuity (STP)

6.68 Crores (Sewage Treatment Plant)

5 years

BOT Annuity 14 years

Contract

BOT

(includes Design and Finance)

crore

Government of Punjabn Builders (India) Pvt ltd. Rajdeep Buildcon Pvt. Ltd and Rajdeep Road Developers Pvt ltd

Detailed case study of Alandur Sewerage Project

(Infrastructure, March 2012) (Mathur, Alandur Sewerage project A Success story of Public Private partnerships arrangements) (Mathur, Private sector participation in the water Sector") (USAID, 2005)

Project Description

The Alandur Sewerage Project (ASP) initiated in year 1996 by the Alandur Municipality. ALANDUR, located near Chennai, forms a part of the Chennai Metropolitan Area. With a population of approx. 165,000, the municipality is a residential suburb of Chennai with predominantly residential and commercial activities.

Prior to 1996, the town did not have an underground sewerage system and all sewage was managed with individual septic tanks. The largely unregulated disposal of sewage in storm water drains was an environmental and health concern for the local residents and was frequently raised as a political issue. Around 98% of 19,800 households used either septic tanks or holding tanks collected periodically by tankers and disposed in the low-lying areas outside the municipal limits.

In 1996, Alandur municipality announced an ambitious plan to construct an underground sewerage system and waste water treatment facility with the participation of the private sector, contribution from the public, and payment to be provided by the city. The ASP was designed with the following objectives:

To improve the standard of living of the residents of Alandur (on par with that of Chennai);

* To provide the most essential basic facility to all the residents of the town;

* To eradicate the mosquito menace;

* To avoid the recurring expenditure on septic tank cleaning; and

* To avoid ground water contamination.

The proposed sewerage system was to be designed for the estimated population of about 300,000 in 2027 and was planned to be completed within a five-year period from its inception date. The project components included:

* A sewerage network consisting of the main sewer line, branch sewer line and manholes;

* Construction of a sewage pumping station;

* A sewage treatment plant; and

* Low cost sanitation

PPP structure of the Project

The ASP was the first project in the municipal water sector to be taken through the Public Private Partnership route in India. The construction of the underground sewerage system in Alandur town, involving the laying of pipes, construction of pumping station, etc., was done on a BOQ (Bill of Quantities) basis, and the sewerage treatment plant (STP) on a BOT (Build, Operate and Transfer) basis. Besides the construction responsibility, the contractor was also required to undertake the operation and maintenance of the sewerage system for a period of five years from the date of completion of the construction, on a fixed fee basis. The collection of tariff and provision of new connections during the O&M phase was to be undertaken by the municipality directly.

Accordingly, the PPP structure of this complex project was governed by three contracting mechanisms awarded to one engineering, procurement, and construction (EPC) contractor selected through a competitive bidding process:

* A Works Contract for construction of the sewage network, using the World Bank�s Contract for National Competitive Bidding (NCB-W2) as the template;

* An Operations and Management Contract, also using NCB-W2. The selected contractor would operate and maintain the underground sewerage system for a period of five years on a fixed fee basis.

* A Lease Contract (in the nature of a BOT Agreement) for the STP, using guidelines from the International Federation of Consulting Engineers (FIDIC). Through this Agreement, the contractor would finance, build and operate the STP for a period as proposed in the contractor�s successful bid. The contractor would be required to recover the investment on the STP on the basis of a per unit rate payment from the municipality for treatment of sewage delivered. The municipality agreed to provide a minimum payment level per annum regardless of the volume of sewage actually delivered. It was designed to cover the company's minimum fixed operating cost and capital investment. Accordingly, the PPP structure was technically in the nature of BOT-Annuity.

Following the bid process, the project was awarded to IVRCL Infrastructures and Projects Ltd in technical collaboration with Va Tech Wabag Technologies Ltd. A Special Project vehicle (SPV) called �First Sewerage Treatment Plant Pvt Ltd� (First STP) was incorporated and was the concessionaire company with whom the BOT Agreement was signed. Once the project achieved financial closure, First STP Pvt. Ltd signed contracts with IVRCL and VA Tech Wabag. IVRCL was to carry out the civil works for the project. VA Tech Wabag, through the electro mechanical contract, was to design the process, supply, install and commission the equipment. It was also to carry out a contract for operating and maintaining the facility for 14 years. The land on which the plant was set up was leased by the municipality to First STP.

Current Status

As per the Agreement the date of completion was 31st March 2003. By end 2001, the laying of the sewer pipes and main sewers was completed, as also the construction of the Pumping Station, Pumping Mains and the Sewerage Treatment Plant. The overall date of completion was October 2003.

Of the 23,000 households who paid for the services, 8,350 households were connected in the first phase, i.e. by 2005. Nearly 500 slum households out of 7,000 had sewerage connections, and 43% of slum dwellers had opted for and paid for individual sewerage connections. By 2010, of the 30,600 households who paid for the services, 29,300 households were connected; 14 community toilets were constructed to serve poor clusters.

The management contract for the operations and management of the sewerage system expired in 2005, after the stipulated contract period of 5 years. Following this the operations and management function has reverted to the municipality. The ALANDUR MUNICIPALITY is currently in the process of sourcing an O&M manager for the operations of the sewerage system. The STP Agreement will terminate in the year 2019.

Financial Information

Initially, the cost of the project was estimated to be 45.31 crore, which was later revised to 40.86 crore. To finance the municipality�s portion of the capital cost, a package of loans and grants was structured.All loans were from domestic sources and denominated in Indian rupees. A unique aspect of the project funding was the initiative of bringing in people�s money to fund public infrastructure by generating public awareness and interest right from inception

Table 4 Financing Information

Source

The majority of financing to the municipality (59%) was made through loans provided by the Tamil Nadu Urban Infrastructure Development Corporation (TUFIDCO) and TNUIFSL. The loan provided by TUFIDCO was payable over eight years (after a two-year moratorium) at an interest rate of 5% per annum (as against prevailing market rates of 15% at that time).TNUIFSL�s loan was set at a rate of 16% per annum payable over a period of 15 years with a five year moratorium.

The term loan conditions resulted in the municipality assuming significant financial risks. One condition of the TNUIFSL�s loan was that the disbursements would be provided for three years, after which they would be subject to the condition that the municipality meets its connection targets. Should targets not be achieved, further disbursements would be terminated. Interestingly, no funds were required to be disbursed under the TNUIFSL loan as the revenues generated from the one-time connection fee exceeded the amount anticipated when the finance package was structured.

Both the term lenders stipulated an escrow account, to the extent of the debt finance, where all the revenue receipts of the municipality (including property tax, stamp duty, and the grant from GoTN) as well as the sewer tariff was to be deposited in favour of TNUIFSL and TUFIDCO. The municipality also accepted limits imposed on future indebtedness.

Grants

As no funds were available either with the municipality or with TNUIFSL to oversee and monitor the progress of the project, TUFIDCO provided a special grant from the Tamil Nadu urban development grant fund for this purpose, which worked out to nearly three per cent of the total project cost. GoTN agreed in principle to bridge the gap in the sewer account during the life of the project, after providing for operations and maintenance (O&M) expenses, debt servicing and contribution to the sinking fund. In addition to the above, GoTN also agreed to fund the monthly operating costs of the system above the 150 per household sewer charge to a maximum of 30 per connection per month.

Public Contribution

The connection charges for different categories of users were fixed as follow

Table 5 Connection Charges for users

The municipality targeted to provide about 22,000 connections both for domestic and non-domestic categories of users by the end of 2004-2005.This would yield an estimated income of nearly ` 13 crore, which it proposed to put into a revolving fund for repayment of loans to the lenders.

As the above connection charges on sewer were considered to be very high especially for domestic consumers, the GoTN, in consultation with TNIUFSL, suggested to the authorities of the ALANDUR MUNICIPALITY to collect the connection deposits in two instalments. The local branch of the Punjab National Bank also offered financial support to the citizens of Alandur by creating a scheme for lending the connection deposit amount to them. However as the rate of interest on the scheme was quite high (14.1 %), it was reported that no one had availed this facility.

In addition to the above, it was also decided by the municipality to collect the sewer maintenance charges at the rate of 150 per month per connection from the domestic users, 450 per month per connection from commercial users and 750 per month from industrial users. The domestic monthly charges were proposed to be increased to 6% annually till they reached a level of 180 per month. Similarly, the commercial and industrial maintenance charges were proposed to be increased by 6% annually up to the level of 540 and 900 respectively. These limits were later reduced on the basis of a willingness to pay (WTP) survey, and discussions with the citizens and officials concerned.

PPP Project Preparation

As the first step, TNUIFSL, the state asset management company formed with the objective for improving the urban infrastructure levels in the state, was nominated as the agency to coordinate the investigation and detailed studies, and to structure the project. TNUIFSL procured and managed a private engineering contractor to prepare the detailed technical design and prepare engineering reports for the Alandur project. The scope of work included project design, identification of the locations of pumping stations and the treatment plant, and cost estimates.

While conducting the feasibility study on the project, a �Willingness to Pay� (WTP) survey was also conducted by the consultants in order to assess the scheme�s acceptability by the citizens of Alandur town, and their willingness to pay for the service. The WTP survey covered more than 10 per cent of the population of the ALANDUR MUNICIPALITY, spread over to 42 wards. It indicated that the average household income of the majority of the people was in the range of ` 1000-5000 per month. According to the survey, although the public strongly supported the project and accepted that users should pay for sewage services, this willingness had its limits. About 29% of the respondents were willing to pay a one-time connection fee lower than ` 500 per household and 21% were open to paying a one-time connection fee more than ` 2000 per household. Further, about 86% of the respondents were willing to pay monthly sewer charges in the range of 21 to 50 per month, comparable to the existing water charges structure and GoTN accorded administrative sanctions to the project on 9 December 1998 and technical sanction on 27 January 1999

As part of the project preparation, land for the project was identified and proposed to be acquired through the Alandur Municipality.

Public Participation: The ASP project is a unique case of public participation in financing of a municipal infrastructure project. The collection of sewer charges and convincing the community to pay for it was a difficult and challenging task. Since there had been no precedence of private participation in municipal water and sanitation services in the state, or a BOT Agreement awarded anywhere in India, public outreach was critical to overcome initial resistance as well as public concerns about the need to pay for the new sewage services.

To gain acceptance and build consensus among the public, the municipality mounted a vigorous public outreach/public participation campaign with extensive media coverage to explain the projects benefits, costs, and tariff system. The municipality adopted the following procedures:

* A detailed discussion was held among the officers and staff along with the Chairman about the sewerage project.

* All the holidays including Saturdays and Sundays were used for discussion with the residents� welfare associations. During the discussions, the scheme was explained in detail: its advantages on the city environment and quality of life of the residents of Alandur

* Residents were motivated through corner meetings and advertisements on the public transport system such as auto rickshaw, buses, cable network, local newspapers, distribution of pamphlets, etc. In addition, all the staff including sanitary workers earnestly carried out door-to-door canvassing of the benefits of the underground sewerage scheme

* Although, initially a sizeable population of the town was not ready to pay the high deposits on account of sewerage connection charges and monthly tariff (as indicated through the survey), later through active canvassing and educating the people on the benefits of the project they agreed to pay the sewer charges as per the municipal tariff structure

Exit Clause

The management contract for the operations and management of the sewerage system expired in 2005, after the stipulated contract period of 5 years. Following this the operations and management function has reverted to the municipality. It is understood that the Alandur municipality is currently in the process of sourcing an O&M manager for the operations of the sewerage system.

The STP Agreement will terminate in the year 2019 at the end of the stipulated lease period of 14 years at which time the STP will be transferred to the alandur municipality free of cost. The defect liability period, however, will extend for one year beyond the expiry of the STP lease period.

It is understood that the STP Agreement has worked well with no penalties being imposed during the contract and no significant lapses in obligations, till date. There has been only one issue that arose at the beginning of the Agreement and is

Table 6: Risk Allocation Framework for Alandur Sewerage Project

Risk Type

s part of the feasibility study. The same was provided to the developer as part of the RFP document. The Bidder had the option to comment on the design provided and suggest changes, if any. However, after the submission of bids, the Contractor was required to adhere to the design provided by the Alandur Municipality.

System was based on detailed bill of quantities with rigorous clauses related to cost over-runs. In respect of the STP, though the developer bore the construction cost, the design and cost was based on detailed costing pre- determined at the bid stage. Since the construction cost was also the basis of the annuity payment determined in the bid, it was carefully controlled.

Since the construction did not experience any time over-runs, cost over-runs were also controlled. The project was implemented as per the original cost estimation.

Private developer

Private developer

Value for Money (VfM) Analysis

The ASP was not a commercial project but an initiative at the municipal government level to improve the life style of its residents. Taking this into account, a qualitative VfM assessment has been undertaken here with the purpose of highlighting the benefits drawn by way of private sector participation in the implementation and continued operation of the project.

Suitability for PPP

One of the parameters used for the VfM assessment is the suitability of the project to be undertaken on a PPP basis. The greatest challenge (as well as accomplishment) of the ASP, was that both the municipality and the public recognized and accepted the �value� of bringing in private participation. Indeed, this project truly demonstrates the benefits of bringing in PPP in the municipal sector in terms of drawing private sector expertise while addressing important risk related aspect that would make the project attractive for the private sector.

The bid criteria for the project ensured that the municipality obtained the best offer in terms of the �lowest Evaluated Construction Price� and the �lowest Lease Period� both of which were the selection criteria with a weightage of 90:10.As the municipality had already undertaken a feasibility study and also prepared the detailed design and costing for the project, the private sector was able to bid for the project with considerable background information. The ensuing offer, therefore, provided value for money.

The PPP structure evolved also facilitated an effective implementation of the project. The ASP was one of the few projects with a complex PPP structure wherein the works contract of the sewerage system and the BOT contract of the STP was jointly bid for and awarded to the same developer. The bidding parameter was also combined and addressed the best commercial aspect of both projects. Thus the bidder offering the lowest cost for the sewerage system and lowest lease period for the STP was selected. By combining both the projects under an effective structure the municipality ensured a competitive bid that gave value for money.

Impact of PPP

A brief on the difference made by the ASP, as captured at Table illustrates that the �value for money� brought in by the project far exceeded any monetary consideration:

Table 7Important of PPP

Parameter

Key Learning and Observations

Beneficiary participatory approach: People�s participation in the project, including the fact that almost 29% of the project cost was garnered from public contributions, was the most outstanding aspect and learning from the ASP. The project established that mobilising people�s participation for infrastructure projects is possible through collective efforts and transparent procedures.

The success of the project from the outset depended highly on effective collection of connection charges and monthly sewer fees as also public acceptance of engaging a private BOT participant. Community awareness, support and on-going cooperation was, therefore, critical. The aggressive public outreach campaign conducted by the municipality and GoTN and the engagement of stakeholders was essential to assure the lending agencies and city officials that repayment provisions would be met.

Stakeholder involvement and interdepartmental coordination

Continued involvement of stakeholders throughout the project ensured timely completion of the project and addressing of issues even as they arise.

To maintain support for the project, a citizen�s committee was formed and it met frequently to review the status of the project, monitor performance of the BOT contractor and provide a forum in which citizens could air their concerns.

The ASP established that close involvement of all stakeholders/departments at the key decision-making stages of the project, as also for review and monitoring, is critical to ensuring that the project stays on-track

Political will and strong decision making, especially at the grass-root level

The ASP demonstrated that �political will and quick decisions make projects happen�. The political leadership and strong advocacy for the project provided by the chairman and council of the municipality proved to be critical element of the success. While strong support for the sewerage system within Alandur existed, political will was essential to convince the customers and citizens to pay a significant share of the cost and accept the entry of the private sector. Throughout the project decision making stages, the members of the municipality maintained full support for the project

Acceptance of fiscal discipline:

The term lenders, TNUIFSL and TUFIDCO, placed strict lending conditions on the municipality, requiring the municipality to accept and implement strong fiscal discipline measures. TNUIFSL required the municipality to establish a separate sewer account distinct from the general budget of the municipality, forcing discipline and transparency on the officials managing the system. The municipality was also required to limit new debts to a certain percentage (typically 30%) of their revenue. GoTN, which provide loan guarantee, stipulated that any payment made to these entities on account of default by the municipality would be recovered from the annual transfer of payments from the municipality to the state government.

Similarly the contractual obligations between the municipality and the BOT operator forced the municipal government to ensure timely payment for management and waste water treatment services.

Thus, the loan as well as contractual obligations ensured strong fiscal discipline by the municipal body, by making it take difficult decisions on capital priorities, closely oversee the sewer system management, and ensure budgeting of sufficient funds to meet payment schedules

Implementing an effective fee system: Despite the willingness to pay survey that indicated that public willingness was far below the tariff requirement to meet the capital and operational cost of the project, the municipal council, through its rigorous public outreach measures, managed to impose reasonable levels of connection charges and sewer fee on the public.The municipality also managed to collect the connection charges fairly well in time to pre-empt the need for the TNUIFSL loan.

A large part of the success of the municipality in this aspect sprung from the fact that they provided sympathetic measures that addressed the concern of the public. For example, the connection deposits were collected in two instalments as per the convenience of the consumers; the local branch of the Punjab National Bank also offered financial support to the citizens of Alandur by creating a scheme for lending the connection deposit amount to them.

Assurances on payment to the Private Sector Participant: The municipality agreed to provide the BOT operator a minimum level of income by accepting the �take or pay� condition in the Agreement. Thus, the municipality assumed the risk of minimum payment to the operator while the private partner assumed all other responsibilities and risks of financing, constructing and operating the STP for a period of 14 years

Access to finance for the municipality: An important aspect of the success of the project stemmed from concession financing and subsidies from the Government and public-private entities, established specifically to meet the credit needs of the municipalities without access to private capital, due to a low or non-existent credit rating.Though almost 30% of the capital was generated by the municipality from connection fees, grants from GoTN and loans from TUFIDCO were crucial. The loan agreement from TNUIFSL, while proving to be unnecessary in the end, was imperative for participation in the finance package by all the parties.

Technical and financial assistance: The expertise needed to plan and manage the technical and financial aspects of the project far exceeded the capacity of the municipality. Assistance from the other government bodies in the state, the Chennai Corporation, and sources, such as the USAID�s FIRE project, was critical. TNUIFSL and FIRE played a substantial role in structuring the project, managing the feasibility studies, and preparing the bid and contract documents crucial to project success. The review and approval of the engineering reports by the management committee, consisting of senior officials of the ALANDUR MUNICIPALITY, the Tamil Nadu Water supply and Sewerage Board, Chennai Metropolitan Water Supply and Sewerage Board, and TNUIFSL, were essential for successful project management

Transparency in bidding and contracting procedures: The transparent approach to the project, right from inception to selection of contractor/operator and implementation, was critical to providing the necessary assurance to the private sector bidders on the professional approach of the municipality. This included strict application of World Bank and FIDIC processes, oversight and approval of the process by the World Bank. Public participation in the deliberations of the management committee overseeing the tendering process execution was also important

Chapter 3: Data Analysis

The Jawaharlal Urban Renewal Mission (JnNURM) has tried to make interventions in the urban space of the country from past seven years. It has led to the implementation of a large number of projects alongside an array of reforms that were aimed at improving the quality of governance in States and local governments. Apart from the two Sub-Missions on Urban Infrastructure and Governance (UIG) and Urban Infrastructure Development Scheme for Small and Medium Towns (UIDSSMT), that jointly catered to 737 cities and towns, the Mission also led a comprehensive capacity building programme to empower the ULBs with adequate skill sets required to upgrade their level of service delivery for the betterment of lives of the urban populace. While implementation of projects and reforms is important, documentation of these experiences is equally so.

In a bid to uplift the financial profile of the ULBs, the Mission is keenly encouraging ULBs to look at innovative means of financing as well as managing their existing resources to the fullest. Management of public assets viz. land and public infrastructure and leveraging of the same is an important step in this direction. At the same time, the Mission Directorate is also focusing on improving private sector interest in urban projects and an increasing portfolio of public private partnerships (PPP) in the urban sector. Better financial management of ULBs, is therefore, being encouraged to increase the creditworthiness of ULBs and attract private sector investment, among other benefits.

JnNURM Projects:

Table 8:Sector-wise release of funds under Sub-Mission for Urban Infrastructure and Governance (Rupees in lakh)

Sl.No.

Chart 5 : Total ACA Released Centrally

Table 9 State State Wise detail of sanctioned projects Under UIG of JnNURM Amount Rs in Lakhs As on 6-08-12

Sl.No.adesh

Table 10: Sector wise projects sanctioned & projects completed

Sectors

Table 11 State wise projects sanctioned & projects completed

States

Analysis of PPP Projects under JnNURM Submission UIG

PPP projects are classified on the basis whether Capital investment was made by the PPP operator or Project is only an O & M Contract with no capital provided by the private partner.

Table 12 : Sector specific PPP projects sanctioned under UIG

Sector

PPP through Capital investment

The main facts emerged out of the analysis are:

* Approximately 19% project cost was leveraged through PPP in various Sectors

* In the 48 projects, total Project cost was Rs 10685.72 Crores, of which the Private partners contributed around Rs 2064.02 crores

* GoI�s Share was 41 % (Rs 4349.03 crores) as Compared to State Governments Share of 15% (Rs 1604.89 Crore). ULB�s own Contribution was 25 % (Rs 2667.77 Crores)

* Out of the 48 projects 31 projects attracted capital contribution across various sectors others were either service or Management Contracts

* Majority of PPP are in SWM Sector, followed by Seewerage and Water Supply and Urban Transport Sector.

PPP through O & M Participation

Out of the sample, 15 projects have engaged some form of private partnership for O&M. These Projects are undertaken in 5 cities namely Ahmedabad, Vadodara, Faridabad, Jaipur, and Surat. Ahmedabad had undertaken O&M in water supply, SWM and sewerage sectors

Table 13: Classification of PPP projects on basis of Capital contribution

Sr NoPPP

Analysis of Projects being taken up only on O&M contract basis:

* Majority of the O&M contracts have been observed in components like Sewage Treatment Plant (STP) and Water Treatment Plant (WTP). Performance-based contracting for service level improvement has been used as a PPP format. In case of SWM, management of collection & transport vehicles, sanitary landfill, etc. is the preferred structure

* O&M of WTP has been observed in Ahmedabad under a comprehensive O&M contract and Service contract for STP has been noted for various newly developed STPs in Surat

Sector Specific Analysis

It was observed that a majority of PPP�s where capital is brought in by the private participation, were seen in Solid Waste Management sector, followed by Sewerage and Water Supply. Urban Transport has also attracted PPP in a few cases.

Table 14the extent of sector-wise PPP:

Sr No

Key facts that emerged out of the analysis of the samples are:

* Leveraging of JnNURM funds to attract private capital was 40% in the SWM sector.

* Leveraging of JnNURM funds to attract private capital was at mere 10% in the Sewerage sector followed by Water Supply sector at 21%

Chart 6 Capital Contribution by Various Stake holders

Chart 7 Capital Contribution By various Stakeholders in Different Sectors

Analysis of PPP leveraging across States

It is observed, based on the sample, that 11 States/UTs have undertaken projects on PPP basis

No

Sewerage � 10

Solid Waste � 4 Urban Transport � 3

Sewerage � 1

Solid Waste � 1

Sewerage � 1

Solid Waste � 2

Chart 8:Cost Splitup as per differenet Stakeholders

Water Supply Sector

PPP through Capital Contribution

Analysis of all PPP projects with capital contribution revealed that:

* Out of the sample size of 48, 8 projects were undertaken in the water supply sector.

* For the 8 Water Supply projects, the total project cost was Rs. 914.29 Crore,out of which 21% (Rs.191 Crore) was leveraged through PPP.

* GoI�s share was 52% (Rs. 474.6Crore) in comparison to the State Governments� share of 16% (Rs. 143.93 Crore) and ULBs� own contribution was 11% (Rs. 104.62 Crore).

* In water supply, private participation has primarily come through BOOT contracts for system design, development and maintenance.

* Out of 8, 6 projects were undertaken in Nagpur and Salt Lake, Kolkata. The private sector contributed for project components like construction of WTP, replacement of machinery, replacement of consumer meters, etc.

Chart 9 Projects under Water Supply with Capital Commitment by PPP Operator- All States

PPP in O & M

The learning from the evaluated Projects with O&M participation revealed that:

* Out of the 8 projects, there was only one project in Water Supply Sector with O&M participation by the Private Sector.

* O&M of WTP was based on performance-based contracting for service level improvement, etc.

* Contract for comprehensive O&M of WTP was observed in Ahmedabad

Solid Waste management Sector

PPP through Capital Contribution

An analysis of the projects with capital contribution revealed that revealed that:

* Out JnNURM PPP projects, 23 SWM projects were able to leverage the largest amount of PPP share.

* The total project cost was Rs. 1653 Crore. Out of that, PPP contribution was Rs. 657 Crores, which represents 40% of the total project cost. GoI�s share was 33% (Rs. 540 Crores) against the State Governments� share of 11% (Rs. 188.87 Crores). ULBs� own contribution was 16% (Rs.267 Crores).

* In solid waste management, private participation has primarily come as BOT, BOOT, DBOOT, DBFO for system design, development and maintenance, collection, transportation, waste segregation, composting, recycling, bricks/blocks manufacturing refuse derived fuel (RDF), development of sanitary landfills, leachate collection and treatment facilities, and energy generation

* Capital Contribution by private sector has been observed in 5 ULBs in Asansol-Durgapur Agglomeration, Surat, Rajkot, Puducherry, 13 ULBs of Kolkata Metropolitan Area, Agra, Allahabad, Kanpur, Lucknow, Mathura, Meerut Varanasi, Guwahati, 3 ULBs of Allandur, Tambram, Pallavpuram, Chennai, Madurai, Coimbatore, Mysore and Pimpri-Chinchwad

Chart 10 Projects under SWM with Capital Commitment by PPP Operator - All states

PPP in Operation and Maintenance

The learning from the projects with O&M participation brought out that:

* 4 projects had O&M participation by Private Sector Operators.

* O&M participation has been observed in cities like Vadodra and Faridabad for project components like comprehensive O&M design, development, operation & maintenance of the secured landfill facility for disposal of Municipal Solid Waste.

* Private sector participation is observed in billing and collection in Ahmedabad

Sewerage Sector

PPP through Capital Contribution

The below Pie chart reveals that:

From the sample, only 2 projects in Sewerage Sector attracted private capital contribution.

* Approximately 10% cost of the project was leveraged through PPP in the Sewerage projects.

* Out of the total project cost of Rs.638 Crores, PPP contribution was Rs. 61.17 Crores. GoI�s share was 47% (Rs. 300 Crores) as compared to the State Governments� share of 18% (Rs. 116.03 Crores). ULBs� own contribution was 25% (Rs 161.74 Crores).

* Capital Contribution by private sector was seen in Salt Lake, Kolkata and Nagpur for project components like construction of Sewerage Treatment Plant, laying of sewer pipes and construction of manhole chambers, electrification, etc.

Chart 11Projects under Sewerage with Capital Commitment by PPP Operator

PPP in Operation and Maintenance

PPP in O&M participation has been observed in 10 JnNURM project, the second contributing setctor after SWM, which is brought out that:

* In sewerage, private participation has primarily come as O&M operator for STP for a certain number of years; performance-based contracting for service level improvement, etc. 10 nos. of projects in Sewerage Sector had O&M participation by Private Sector Operators.

* 7 projects with O&M participation were observed in Surat, while 3 projects were observed in Ahmedabad for project components like comprehensive O&M of STP

Urban Transport Sector

PPP through Capital Contribution

* Out of the sample, 6 nos. of projects in Urban Transport Sector had capital contribution from the private sector.

* Urban Transport projects were able to attract only around 6 % cost of the project through PPP.

* For the sample, with the total project cost of Rs.2136.11 Crores, PPP contribution was Rs. 122.70 Crores. GoI�s share was 40% (Rs.860Crores) in comparison to the State Governments� share of 17% (Rs. 354 Crores). ULBs� own contribution was at a high of 37% (Rs. 800Crore).In Urban Transport, private participation has primarily come as BOOT for operating the transport system in which the private party shall procure buses and operate and maintain them for a certain number of years.

* Capital Contribution by Private sector has been observed in the cities of Visakhapatnam, Rajkot, Surat, and Ahmedabad.

* No project in Urban Transport Sector had O&M participation from the private sector

Chart 12Projects under Urban Transport with Capital Commitment by PPP Operator

Table 15 Various models under the PPP format undertaken in JnNURM by the ULBs in the study

Sector

BOOT/Concession

Kolkata � Development and Management of Water Supply in

Sector � V of Salt Lake

Performance-based management & service contracts

EPC contracts along with Performance based O&M contracts

Nagpur � Water Audit Project;Energy Audit Project for Water Supply Nagpur � Rehabilitation plan to implement 24 X 7 Water Supply Project

PPP formats for solid waste management covering composting, recycling,bricks/blocks manufacturing, energy generation and developing and maintaining a scientific landfill site

Community Participation for Collection

Faridabad � O&M and capacity expansion of MSW plant

Jaipur � O&M for Sanitary Landfill Vadodara � O&M of Phase I of

Secured Engineered Landfill Facilit