COMPARISON BETWEEN DIFFERENT PPP OPTIONS

A need has been felt to evaluate available contracting options to improve the urban water infrastructure service delivery as well as objective
mechanism to monitor the improvement in service delivery after creation of new water asset.
PPP Type

Concession Contract

EPC + Management Contract

EPC+ O&M Contract

(Service Contract)

Example

Khandwa & Shivpuri under

implementation

Hubli-Dharwad, Gulbarga
Operational

Two projects (......) were bided out

recently.

Part funding by Private player and

Grants from JNNURM/ UIDSSMT+
GoMP

Grants from JNNURM/ UIDSSMT +

GoMP + ULB Fund

Grants from UIDSSMT/ JNNURM,

GoMP and ULB contribution

Contract period

> 25 years

13 years or 17 years

5 years

Asset ownership

ULB

ULB

ULB

Tariff Fixation &

Revisions

Tariff discovered through biding.

Formula driven or built in the contract.

Tariff to be fixed by ULB. Private

operator will be paid Management
fee +/- Bonus or penalty

Tariff will be fixed by ULB. No

bonus or penalty structure.

Usually 12 to 18 months

Usually 6 to 8 months

Usually 6 to 8 months

Investment

Procurement
Timeline

Responsibility / Risk sharing

Design

Investment
Vehicle

Private Operator
Full design is being prepared by the
private operator and the cost of project
usually high because of lack of
information about the current asset.

Private Operator
The management contractor will be
responsible for the preparation of
developmental plan. Usually 6 to 9
months are given to them to design
system.

Project SPV
Partners: Private operator and ULB.
Termination Difficult.

Project SPV [optional]

Private operator with oversight of
ULB

Major Government
Although the design is being
prepared by contractor but mostly
DPR is relied upon as during
bidding process DPR is the base.
Not much time is given.

No need of SPV formation.

PPP Type

Concession Contract

EPC+ O&M Contract

(Service Contract)

EPC + Management Contract

Revenue to
Private operator

Dividends from SPV

SPV revenue from User charges +
Shortfall funding from ULB up to and
extant.

Management fee + Bonuses for

achieving service level Benchmark
Penalty of non achievement

Flat Lump sum Fees for EPC work

and O&M fees (No incentive).

Revenue to ULB

None
or lump-sum Authorization fee
or Revenue sharing or fixed mark-up
over the tariff.

Revenue=
Private operator collects water
charge/tariff Payment to operator
Repairing Charges.

User charges directly

Technology
Flexibility
Monitoring Focus
Billing /
Collection

Possible Bid
Variable (s)
keeping other
parameters fixed.
Bidder type
Timeframe for
Bidding process

Yes
in case bidding is technology neutral.

Flexibility
As contractor will earn by achieving
service level benchmark.

Service Outcomes

Service Outcomes

Compliance to DPR specifications

and project specification.

Private player

Private player

ULB

Bidding Process and Variables

Price of Water per KL
(with/without shortfall
Management fee per kl bulk of
compensation) or
water billed;
Capital Grant (or) Investment to be Or lump-sum management fee
brought in by private provider
International / National
International / National.
6 months

4-6 months

No flexibility

Lump sum quote for the EPC

+ O&M contract

National / Regional
4-6 months