Date: 18-05-2018

General

Providing amenities like e.g. water

supply, sewerage, urban transport to
households and build amenities in
cities which will improve the quality
of life for all, especially the poor and
the disadvantaged is a national
priority.
 An estimate of the funds required over a 20 year
period, at 2009-10 prices, was made by the High
Powered Expert Committee (HPEC) during 2011.
The Committee estimated that Rs. 39.2 lakh crore
was required for creation of urban infrastructure,
including Rs. 17.3 lakh crore for urban roads and
Rs. 8 lakh crore for services, such as water supply,
sewerage, solid waste management and storm
water drains. Moreover, the requirement for
Operation and Maintenance (O&M) was separately
estimated to be Rs. 19.9 lakh crore
 Urban Population Senario
 The Urban population is around 33% and expected to
go up to 40% by 2030.
 (i) That means 60 Crs population live in Urban by
2030.Supply of water and a sewerage is required.
(ii) We need 100 Smart cities to handle this
population.
(iii) Tamilnadu population is around 7.21 Crs and
Urban population is 3.49 Crs and accounts 48.45 %
against national average of 31.16%.Around 70% of
SGDP comes from Urban Sector.
 Considered to be the most urban populated state in
the country.
Cost of Delay- Rs.1 Lakh Crores
Particulars Rs. in Crores
Estimated cost in 2007-08 5,28,800
Revised Costs as on 2016-17 6,44,700
Increase in 10 years 1,15,800
Annual increase 11,580
 Reasons for Delay
1.Shortage of adequate Capital
2.Delay in getting Approvals
3.Change of Governments
4. Delays in land acquisitions
Revenue Vs Capital Expenditure
Year Revenue Exp % Capital Exp %
1977-78 (Centre) 58.73 41.27
2016-17 87.51 12.49
1977-78 (States) 67.20 32.80
2016-17 80.09 19.91
 1. What is sewage

Sewage is a combination of both Black water and

Grey water
i. Blackwater is waste water generated from a
toilet and heavily contaminated with human faeces
and/or urine and can be highly infectious if
untreated.
ii. Greywater is from a shower, bath and washing
machine or sink.
 STP Screenings
 Textiles
 Plastics
 Paper
 Rocks
 Wood
 Organics
 Other rubbish
 Chemicals
 Project Cost
SL No Particulars Amount
Rs.Crores

Design,Supply,Construction,Insta 50.00
llation, Testing, Commissioning
of STP including civil,
mechanical, electrical,
instrumentation and associated
Works for 25 MLD STP plant
Cost Elements
Particulars
Sewer System

Providing , lowering, laying & jointing collection system

Replacement of existing old sewer network
House service connection Nos. 332290 11697
Construction of decentralized STP

Reuse of Water
construction of New OHT Reuse water storage
Providing , lowering, laying & jointing Reuse network of various
diameter in project
 Per Capita Cost of Sewerage

 Investment Cost Rs.4,704

 O & M Cost Rs.286

3. Value chain of water supply and Sanitation.
 Sewerage

i. Decentralised, networked underground

sewerage systems, including augmentation of
existing sewerage systems and sewage
treatment plants.
ii. Rehabilitation of old sewerage system and
treatment plants.
iii. Recycling of water for beneficial purposes and
reuse of wastewater
 Financial Aspects-Costs
 Civil construction, equipment supply and erection
costs
 - Land purchase costs including legal fees, if any
 - Engineering design and supervision charges
 - Interest charge on loan during construction period
 Operating costs after start-up of plant include direct
operating costs and fixed costs, such as:
 Amortisation and interest charges on capital
borrowing
Operation AND Maintenance Cost
 Salary & Wages
 - Chemicals
 - Energy
 - Transport
 - Maintenance and repairs
 - Tools and Plants
 - Insurance
 - Overheads
 O & M Costs per MLD
SL No Particulars Rs.in Crs
1 Power 1.30
2 Chemical 0.17
3 Manpower 0.22
4 Residual Disposal 0.58
5 Maintenance Cost 0.44
Total Cost per LPD 2.71
 Billing-Tariff Fixation
 The charges to be fixed by the utility must take into
account the ability of the system to meet the following:
 a. Operating cost (excluding establishment cost)
 b. Establishment cost
 c. Depreciation
 d. Debt services (both capital repayment and interest)
 e. Asset replacement fund
 f. Capital development
 Tariff structure should be fixed and revised
periodically
 Billing Process
 The billing for sewerage is mostly included in the
water bills. Various stages in the water billing process
are:
 a. Data gathering (meter reading in case of metered
billing)
 b. Preparation of bill based on collected data
 c. Distribution of bill to consumer
 d. Payment of the bill by the consumer
 e. Sending the receipt details to billing section
 f. Related accounting.
Billing-Methods of Charging
 The methods of levying charges can be any one or more of
the following:
 a) Metered system: Based on water consumption charges
(with minimum fixed charge)
 b) Non-metered system:
 i. Fixed charge per house per month
 ii. Fixed charge per family per month
 iii. Fixed charge per tap per month
 iv. Percentage of rateable value of the property.
 v. Charge based on number of toilet seats in the house /
building
 Billing-Japanese System
 In Japan, the sewerage charges are normally based on
water consumption. The following methods are
adopted for calculating sewage charges:
 a. Volume of water consumed
 b. Land size: When the sewerage system is started, the
beneficiary is required to pay the services charge one
time, which is estimated based on land/property size.
 Billing-Japanese System
 When tap water is used: By reading water meter
 When groundwater is used: Calculated using per
capita consumption
 Tap water + groundwater used: Meter reading +
calculation based on per capita consumption
The sewerage charge is calculated as certain
percentage (say 50-150%) of the total water charges.
The sewage charges are added up along with the water
use charges in the bills.
 Funding Pattern
Components Funding Pattern
Water supply, Sewerage, S eptage, One third of the project cost as a
Storm Water Drainage and Urban grant from GOI for cities population
Transport above 10 lakhs.
One half of the project cost as grant
for cities/towns population less
than 10 lakhs.
Balance funding by State
Governments/ULBs or through
private investments
 Financing Pattern-Institutional Funding
 HUDCO
 NABARD
 LIC
 ILFS
 Criteria of Funding
 1. 90% of the Project.
 2.Loan for a period of 5 to 10 years
 3.Maximum amount of Loan is 15% NOF
 4.Loan to be guaranteed y Government.
 5. Tariff has to be made to collect all the costs.
 6.Loans are extended to ULBs, State and Central Govt
 Undertakings and private parties, NGOs etc.
 Financing Options
1. Funds from GOI
2. Funds from GOAP
3. ULBs own funds
4. Bank Borrowings
5. Issuance of Bonds
6. PPPs
7. CSR
8. Other Sources
 Financing Options-Other Sources
1. Collection of Old Receivables
2. Increase in Property Tax and Water Tax
3. Increase in the User Charges
4. Door to Door user charges collections
5. Sale of Bye products like water,Manures, Scrap etc
 6. Donors.
 7. MPLADs.
 8. Beneficiaries Participation.s
Benchmarks :Sewerage
Proposed Indicator Benchmark
Coverage of waste water Network services 100%
Collection efficiency of waste water Network 100%
Adequacy of waste water treatment capacity 100%
Quality of waste water treatment 100%
Extent of reuse and recycling of treated wasted Water 20%

Extent of cost recovery in waste water management 100%

Efficiency in redressal of customer complaints 80%
Efficiency in collection of sewerage charges 90%
Extent of Sewer House Connection 100 %
Coverage of Toilets 100%
Benchmarks :Storm Water
Drainage
Proposed indicator Benchmark

Coverage of Storm water Drainage 100%

Network
Incidence of water logging/flooding 0%
 What is PPP

 A PPP is an arrangement between a Public(GOVT)

entity and a Private (Non-Govt) entity by which
services that are the responsibility of /have
traditionally been delivered by the public entity are
now to be provided by the private entity under a set of
terms and conditions that are defined at the outset.

 Accountability to users still remain with Government.

Public Sector Private Sector
National Level Financial operator
Provincial Level Construction
Companies
Local (ULB) Water
Companies/Suppliers

District Level NGOs/Donors

Perceived strong points of public and sectors in PPP
Public Sector Private Sector
Idealistic striving for Provides continuity and
general good profitability
Pay attention for legal Willing to take challenges
security and lawfulness
Weighing of Interests Efficient

Political Responsibility Large degree of freedom

in Organizational
Structure
 Financing Options-PPP
Main arguments for PPP
Improve quality of Service (adequacy and reliability)
Make effective use of existing infrastructure
Introduce expertise to the Sector
Introduce improved Commercial Management
Improve operating efficiency and System performance
Introduce net savings in service provision and reduce
subsidies
Reduce political interventions in utility operations
Reduce Govt. funding by bringing Private Investment
Reduce the no. of public sector employees
Expand service coverage to more customers
Introduce competition in the sector and act as a catalyst
for change.
 Justification of PPP in Sewerage Sector
 Complicated Projects.
 Government has insufficient money .
 Govt do not have time and expertise on such big
projects.
 Govt can not meet cost overruns and time schedules.
 PPPs compliments resources and expertise.
 Government can not run the risks.
 Government could not deliver the services effectively
in the past.
Identification of issues and Gaps

Asset Review
Asset Inventory
Detailed consumer survey
Water Audit
Energy Audit
Identification of leakage points
 Credit Rating
 It is the assessment of credit worthiness of the ULBs
using the established methodology as per the SEBI
Guidelines.
 To identify the areas of strengths and weakness of the
ULBs in management of its finances.
 Recommend a road map for Financial improvement
plan to improve credit rating.
 To assess the borrowing capacity of the ULB.
 Key Questions
1. What is the extent of financial dependence on the
state
2. The intrinsic credit quality of the Government.
3. How much of costs are recovered from own revenues.
4. Track record of revising user charges
5. What is the standard of basic services.
6. The progress in introducing reforms.
7. Nature and magnitude of projects envisaged.
8. How equipped is the ULB to handle such projects.
 Forms of PPP
 1.Contracts in which Private Sector Invests capital in
full or in Part
 2.Contracts in which Private Sector does not Invest
 Capital.
 Where Capital is Invested,
 BOT,BOO,BOOT.
 When money is not invested, they are
Management/Service/Works Contracts.
 PPP Models
Option Asset O&M Investment Risk Duration
ownership
Service Public Private Public Public 1-2 years
Contract
Manageme Public Private Public Public 3-5 Years
nt Contract
Lease Public Private Shared Shared 8-15 years
BOT/BOO Public/Pri Private Private Private 20-35 Years
vate
Annuity Private Private Private Private 10-15 years
Viability Gap Funding Scheme
 Provides fund in the form of grant to meet Gap to
make PPP viable.
 Funding of 20% of the Project Cost and additional 20
% in case where Private Sector Public Infrastructure
assets and provides infrastructure services for a
fee/user charge under a concession agreement.
 Concession is granted on the basis of transparent
bidding process.
 One of the bidding parameter is grant of VGF
 Alandur Sewerage Project
 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.

 Project Components
 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

 Financing Information
Particulars Amount. Rs.Crores
Grant from TNUIFL 3.00

Loan from TNUIFL 6.00

Loan from TUFIDCO 16.00
Grant from TUFIDCO 1.00
Deposits from Public 12.40
Interest on Deposits 2.46
Total 40.86
 Operational Issues
Operational issues Infrastructure Issues
Low Coverage Corroded pipelines –Transmission
Losses
Poor Collection Lower than the required capacity
Efficiency of WTP
High O & M Costs Inadequate storage Capacity
Low O & M Recovery Absence of Meters
Poor grievance Lack of STP/open sewage drains
addressal
 Making a choice-PPP
 Whether the Project returns are attractive enough for
the Private entity.
 Whether the Private entity has the competencies to
undertake such big Projects.
 Whether PPP generates savings in the service costs
and brings efficiencies.
 Acceptance among the key stakeholders-Users, Public
representatives and employees of the ULBs who are
hitherto managing these services.
 Sample Case Study-PPP
 X City Sewerage development DPR is prepared with
the following assumptions.
 1.The demand is considered for 25 years-2041.
 2.The existing HSCs are around 25,000
 3.Proposed HSCs are around 1,50,000.
 4.The Project Cost is 395.36 Crores.
 5.The Project Cost does not includes O& M .
 6. The Project Cost includes revamping of the existing
 infrastructure.
 Means of Finance

 GOI Grant…….. 197.68 Crores

 State Govt/ULB 197.68 Crores

 Total 395.36 Crores.

 Funding Pattern
Details Particulars Rs.in Crores
Government of India Funding 197.69
Loan 118.62
Balance 79.05
Total 395.36
Interest Rate 7.5%
Interest Amount 51.38
Revenues 2390.00
O & M Costs 1342.00
Total Cost 1512.00
Margins 878.00
IRR 5.87%
 Financial Analysis
Particulars 100% 70%
Revenues 2390.00 1673.00
Costs 1512.00 1512.00
Margins 878.00 161.00
IRR 5.87% 1.08%
 Financial Closure
Particulars Amount in Crores
Government of India 197.69
PPP 118.62
VGF 79.05
Total 395.36
Tirupur Water Supply and Sanitation
Project –A Critical Review
Tirupur is located about 50 KMs east to the
Coimbatore City.
Tirupur has 900 Textile units and exports 90% of
India’s Readymade Garments.
Large concentration of dying and bleaching
industries.
Generates 100 to 120 MLD effluents.
Generates sludge and stores in bags.
These effluents have been polluting the land
around Tirupur for last 50 years or more.
Existing Infrastructure
 1.First scheme –Tirupur Municipality is supplying
 7MLD to the Tirpur City.
 2.Second Scheme-Tamilnadu Water Supply and
 Drainage Board (TWAD) supplies 24 MLD to the
 City.
 3.Remaining water is supplied to the wayside
 Panchayats.
 4.No piped water to the Industries.
 Project Structure
 Concessionaire contract has been granted to New
Tirupur Area Development Corporation
Ltd(NTADCL).
 Contract granted by GOTN and TM for a period of
30 Years.
 The Contract is on BOT basis.Contract to develop,
finance,design, construct,operate, maintain and
transfer strictly on commercial basis.
 SPV NTADCL has got the following funding
Pattern.
 Capital Structure-NTADCL
 1. GOI
 2. GOTN
 3. TEA
 4. I L & FS

 First time the beneficiaries participating in the

Project.
 Scope of the project
 Provide water abstraction,treatment and
distribution by undertaking to develop,finance,
design,construct, own,operate maintain and
transfer to GOTN or TM.
 Provide sewage offtake treatment and disposal
service by undertaking to develop,finance,design,
construct, own, operate maintain and transfer to
GOTN or TM.
 Develop, design, finance construct the water
distribution system and sewerage system and
tranfer to GOTN or TM.
 Project Capacity
When the project is fully
operational,
 1. 185 MLD for 900 Textile firms.
 2. 1.6 million residents of Tirupur.
 3. 60,000 slum areas.
 4. Other surrounding areas.
Project Cost and Means of Finance

 Project Cost.. Rs.1023 Crores.

 Means of Finance
 Equity 322.70 Crores.
 Debt 700.30 Crores.
 FIRSTs
 1.First water and sanitation project to be implemented
on PPP basis.
 2. Largest private investment in urban sector.
 3. Viable model to implement other projects.
 4. Providing quality water to the industries.
 5. Protect ground water exploitation.
 6. Position TN as the textile export state.
 7. Help industrial growth.
 8. Beneficiaries participating in the Project.
Thank You