ALANDUR SEWERAGE PROJECT

Prepared by –
Apurva Sinkar
Trisha Bordoloi
Renuka Kulkarni
Apurva Sethia
GOVERNING INSTITUTE AND IT’S NEED
ALANDUR SEWERAGE PROJECT
Need of project:
1. Prior to 1996, no underground sewerage system,
sewage disposed off in individual septic tanks.
2. Unregulated disposal of sewage in storm water drains
3. Potential health and environmental hazard for local
residents
4. Out of total 19,800 households, 98% used either septic
tanks or holding tanks collected periodically by tankers
and disposed in low-lying areas outside municipal limits
5. Hence, Alandur Municipality announced construction
of underground sewerage system and treatment with
an objective of :
• Improving standard of living
• Provision of basic services to citizens
• Eradicate mosquito menace
• Avoid recurring expense of septic tank cleaning
• Avoid contamination of ground water
ABOUT ALANDUR
Location : Alandur, Greater Chennai, Tamil Nadu
Area : 41.50 sq mts
Population : Year 1991 - 125,244, Year 2001 - 146,287, Year 2011 -
164,430
Sources: City Corporate cum Business Plan, Alandur Municipality, GoTN, 2007.
Public Private Partnership Projects in India (The World bank), 2010
Need for separate governing institute:
1. It is duty of every municipality to provide for basic
urban services and ensuring health and safety of its
citizens.
2. The municipal finances were not adequate due to lack
of fiscal decentralisation, in spite of 74th CAA.
3. There was also technical incapability to handle large
scale, capital intensive urban infrastructure project.
4. Hence, a separate institute was required to bridge the
technical and financial gaps.
5. Governance for project was carried out through PPP
model, in which private institutions were involved to
provide the technological expertise and financial gap
was bridged using grants, loans and public
contribution.
SALIENT FEATURES
First successful municipal water project in India undertaken
through PPP.
Strong political will and good decision making led to successful
and timely completion of project.
Stake holders involvement and interdepartmental co-ordination.
Inclusiveness through planned communication strategy leading
to good community response.
Equity achieved by provision of services in all strata of society.
 SERVICES CATERED TO AND ITS FINANCIAL DETAILS

Description of Works Investment Municipal % of M.B.

Required - IR Budget - MB to I.R.
(in crores) (in crores)
Sewerage Network 18.60 Alandur Sewerage Project
Pumping Main 5.94
Pumping Station 2.44
House Service Connections 2.25 Sewerage
Sewerage Network
Physical Contingency (5%) 1.46 Treatment Plan
Price Contingency (10%) 3.04 2.36
Total 33.75 2.36 7% Alandur First STP Pvt. Ltd.
Municipality (SPV)
As seen from the above table, the construction and operation &
maintenance is capital intensive, with total estimated project cost
coming up to 33.75 crores.
Urban Service
The municipality’s total budget in the year 1996 was 7% of total
project cost which was approximately 2.36 crores, hence the Institution
financial incapability on the part of Alandur Municipality

Source: Approaches to Capital Financing & Cost Recovery in Sewerage Schemes Implemented in India: Lessons
learned & Approaches for Future Scheme (March 2016).
Case Study : Underground Sewerage System Alandur
Organization Management in Construction,2011.
STAKEHOLDERS

Government of Tamil Nadu (GoTN) • Policy environment and gap funding support

Tamil Nadu Urban Infrastructure

• Overall facilitation support
Financial Services (TNUIFSL)

TNUDF and TUFIDC • Term loan

Alandur municipality • Prime borrower with responsibility for repayment, community

mobilisation, House Service Connection(HSC)

Kirloskar Consultants • Assisting TNUIFSL in preparation of contract.

Consulting engineering Services • Consultant contract carried out comprehensive investigations and
engineering reports including detailed designs.

Private sector company - Contractor for laying sewerage network

Ms IVRCL and construction of sewage pumping BOT basis

CMA, CMWSSB and TWAD, TNPCB • Advisory role and according necessary approvals . CMWSSB also
provided land for construction of STP
Sources: Approaches to capital Financing and cost Recovery in Sewerage Schemes implemented in India
ENABALING POLICIES

Enabling Policy at the National, State and ULB Level:

GoTN Policy
framework for
GoI -74th GoTN issued order Private
Private Sector
Constitution (GO NO. 69, dated Participation such
Participation in
Amendment, 1992 May 4, 1998) as BOT, BOOT etc.
Municipal
Infrastructure
Source: More (2008).

How the Project governed differently?

• Public Participation.
• Close involvement of Stakeholder and coordination.
• Political will and strong decision making, especially at the grass-root level.
• Maintenance of double entry accounting system for the project.
• Commitment towards project prior to implementation.
• Transparency in bidding and contracting procedure.

Sources: Approaches to capital Financing and cost Recovery in Sewerage Schemes implemented in India
STRUCTURE OF ORGANIZATION
The Tamil Nadu Urban Infrastructure Financial Services Limited ( TNUIFSL ) was nominated as the agency to
coordinate the investigation and detailed studies, and to structure the finances for the project.

BOT (Build, Operate and Operation and

BOQ (Bill of Quantities) Tariff
Transfer) Maintenance

• Construction of • The sewerage • Contractor for 5 years. • Municipality.

underground treatment plant (STP)
sewerage system such
as laying of pipes,
construction of
pumping station, etc

• PPP structure – 3 contracting mechanisms awarded to one engineering, procurement, and construction (EPC)
contractor selected through a competitive bidding process:
1. A Work Contract.
2. An Operations and Management Contract.
3. A Lease Contract.
Sources: Public Private Partnership Projects in India (The World bank)
STRUCTURE OF ORGANIZATION
The bidding process:
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

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 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.

Sources: Public Private Partnership Projects in india (The World bank)

FINANCIAL STRUCTURE OF INSTITUTE/PROJECT

BOQ contract Alandur BOT contract

Sewerage Network Sewerage Sewerage Treatment Plant
Project

Alandur Municipality First STP pvt.ltd (SPV)

Public BOT Land Acquisition

Grants Loans
Deposits Agreement (AM)
Municipality to pay minimum
level income to BOT operator
(Pay or take agreement)
Received from: Received from: Financing Constructing and IVCRL &
GoTN (VGF) TNUIFSL Operating of STP by BOT Va Tech Wabag
operator for 14 years
TUFIDCO TUFIDCO Pvt Ltd
Construction
Escrow account prepared due to financial risk Legend
TNUIFSL - 16% pa 15 years
TUFIDCO - 5% pa 8 years Project
Monthly User
Charges O&M Stakeholders
Activities
One time
Loan Servicing In flow of money
connection fees One time connection fees paid in
Interest earned two instalments for public Out flow of money
convenience Sources: Financing mechanisms for wastewater and sanitation (ADB)
FINANCIAL STRUCTURE OF INSTITUTE/PROJECT

Type Source Amount (in Financial Stakeholders share (%)

Crores)
SEWERAGE NETWORK 100% 0.60
Grant TUFIDCO 1.00 90% 16.08
Own Revenue Public Deposit 8.00
VGF GoTN Grant 3.20 80%
14.93
Loan TNUFISL (16% pa) 6.20 70%
TUFIDCO (5% pa) 16.20
60%
Total 34.60
SEWAGE TREATMENT PLANT 50% 39.01
BOT Contract 6.68
40%
Own Revenue Land Acquisition (AM) 0.25
Total 6.93 30%
Total cost of project 41.53
20% 19.26
1. The project was divided into two sub-parts: 10%
• Sewerage Network – Rs 34.60 crores. 7.71
0% 2.41
• Sewage Treatment Plant – Rs 6.93 crores.
2. Since the sewerage network was done on Bill of Quantities basis TUFIDCO Grant GoTN Grant (VGF)
(Works contract and O&M Contract), the grants, loans and gap
Public Deposit TUFIDCO Loan
funding was allocated to it.
TNUIFSL Loan BOT Operator
Land Acquisition (AM)
Sources: Financing mechanisms for wastewater and sanitation (ADB)
Public Private Partnership Projects in India (The World bank)
EQUITY AND DEBT

SEWERAGE NETWORK SEWERAGE TREATMENT PLANT

Type Source Amount (in Type Source Amount (in
Crores) Crores)
Equity BOT Contract 6.68
Grant TUFIDCO 1.00 Equity
Own Revenue Public Deposit 8.00 Own Revenue Land Acquisition (AM) 0.25
VGF GoTN Grant 3.20 Total 6.93
Debt
Loan TNUFISL 6.20
TUFIDCO 16.20
Total 34.60

Types of Finances(%) Equity to Debt (%) Types of Finances(%)

3.60
2.89
9.25
26
23.12

64.74 9.25
64.75
96.40

BOT Operator Land Acquisition (AM)

Grant Revenue VGF Loan Equity Debt VGF
Sources: Financing mechanisms for wastewater and sanitation (ADB)
TIMECYCLE

YEAR ACTIVITY
1996 Conceptualisation of the Project by Alandur Municipality

1997 Government Order on privatisation of Municipal Services and Willingness to Pay

Survey
1999 Project Sanctioned by GoTN

2000 BOT Contract awarded to IVRCL in association with Va Tech Wabag

Technologies Ltd.
2001 Laying of main sewers, sewer pipe line, pumping stations, STP completed

2003 Overall completion date

2005 Contract for sewer network expired, user Charges used for O&M hereafter
(Expected Project Completion date)
2011 Alandur included in Greater Chennai Corporation
Water Supply and Sewerage under CMWSSB (Chennai Metropolitan Water Supply
and Sewerage Board
2018 Today - CMWSSB as provider

2019 Termination of agreement for STP and handing over to Alandur Municipality (now
status unknown as Alandur is under Greater Chennai Corporation)
Sources: Financing mechanisms for wastewater and sanitation (ADB)
Public Private Partnership Projects in India (The World bank)
USER CHARGE AND ITS AFFORDABILITY

Connection charges User charges

Property Area Connection Charges Type of user User Charges

(Sq. ft.) (in Rs. per house hold per month) (in Rs. per house hold per
Domestic Non domestic month)
<500 60 200 EWS 20
500-1500 80 400 LIG 40
1500-3000 100 600 MIG 75
>3000 120 1000 HIG 110

• Deciding tariff - Willingness to pay survey :

Alandur Kalyan About 86% of the respondents were willing to pay monthly
sewer charges in the range of INR 21 to 50 per month.
Then also, they managed to take the desired charges by
providing sympathetic measures like installments
Under Metro- Under Mumbai
politan region metropolitan • Revenue sources – covers Operation and maintenance
of Chennai area
and debt repayment – only user fee sufficed

Source:
Sewerage User Sewerage User 1. Chennai metropolitan water supply and sewerage board
charges for charges for 2. Chennai corporation website
MIG : 75 Rs. per MIG : 60 Rs. per 3. World bank report
household household 4. Kalyan city budget
5. Asian development bank report
FINANCIAL SUSTAINABILITY & VIABILITY GAP FUNDING

Financial sustainability :

• With prior feasibility study and cost estimation, 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’
and hence value for money.

• The lenders TNUIFSL and TUFIDCO placed strict lending conditions on the Municipality, leading the municipality
to accept and implement strong financial discipline measures. This lead to seamless implementation of
projects and made the project more sustainable.

• The municipality had a “pay and take” contract with BOT operator, which meant giving minimum level of
income. The minimum guaranteed inflow increased gradually per year and the price per MLD decreased the
flow increase (Underground Sewerage System Alandur, pg. 8). Hence, the BOT operator had enough
motivation to work efficiently.

1998 – Alandur Public Viability gap

Municipality contribution fund of 3.20 Cr Sustainable
Budget – 7% of accounts to 23% i.e. 9.25% of the financing
total estimate of of the total total estimated mechanism
the project project estimate cost

Sources: Financing mechanisms for wastewater and sanitation (ADB)

Public Private Partnership Projects in India (The World bank)
Case Study Underground Sewerage System Alandur
CONCLUSION :

• Since decentralization is not implemented properly, the municipalities lacked the technical and financial ability
to fund and implement capital intensive projects and hence they had to be implemented through public
private partnerships which gives the municipality the necessary technical and financial support.

• Community mobilization, transparency in financial processes from inception and prioritizing the need of public
should be carried out to achieve inclusiveness.

• Public Participation and contribution form a major source of own revenue for municipality, which increases its
viability.

• A sincere and constant involvement of all the stakeholders will lead to a smooth functioning of the whole city.

• A good communication and proper awareness is necessary to gain consensus and acceptance among the
public.
REFERENCES

ICLEI . 2012. Access to Sanitation – Case Study Alandur Municipality, Tamil Nadu. Available at :
http://awasla.org/Docs/ACCESS_Case_study_alandur.pdf-

Mathur, Mukesh P. 2002. ‘Alandur Sewerage Project—A Success Story of Public-Private Partnership Arrangements.’
National Institute of Urban Affairs. New Delhi.

Public Private Partnership Projects in India - Compendium of Case Studies. (2010). [PDF] The World Bank in association Government of India
Ministry of Finance Department of Economic Affairs. Available at: https://pppinindia.gov.in/toolkit/pdf/case_studies.pdf [Accessed 16 Nov.
2018].

Financing mechanisms for wastewater and sanitation. (2016). [ebook] Manila, Philippines: Asian Development Bank. Available at:
https://www.ircwash.org/resources/financing-mechanisms-wastewater-and-sanitation [Accessed 17 Nov. 2018].

Case Study - UNDERGROUND SEWERAGE SYSTEM ALANDUR - Sewerage. (n.d.). [PDF] Available at:
http://www.idd.kar.nic.in/docs/CS_Alandur.pdf [Accessed 14 Nov. 2018].

Approaches to Capital Financing and Cost Recovery in Sewerage Schemes Implemented in India: Lessons Learned and Approaches for
Future Schemes. (2016). [ebook] World Bank Group. Available at:
http://www.indiaenvironmentportal.org.in/files/file/Approaches%20to%20Capital%20Financing%20and%20Cost%20Recovery%20in%20Sew
erage%20Scheme.pdf [Accessed 15 Nov. 2018].

City Corporate cum Business Plan, Alandur Municipality. (2007). [PDF] Government of Tamil Nadu, TNUDF. Available at:
http://tnuifsl.com/documents/ccpbp/Alandur.pdf [Accessed 16 Nov. 2018].

Greater Chennai Corporation : http://chennaicorporation.gov.in/

Chennai Metropolitan Water Supply and Sewerage Board - http://www.chennaimetrowater.tn.nic.in/