Private Sector Participation in Sewerage : Experiences in India

Presentation at Second Annual Conference on Sewage Treatment Plants: Opportunities, Issues, Projects, Technologies ,
October, 17-18,2013

R.V. SINGH
Vice President & Head - Engineering

JITF WATER INFRASTRUCTURE LIMITED

STRUCTURE OF PRESENTATION
Experience Of The Private Sector In Sewerage Management

Risks And Challenges Faced By Private Players

Expectations

Way Forward

EXPERIENCE OF THE PRIVATE SECTOR IN SEWERAGE MANAGEMENT

SEWERAGE MANAGEMENT
It consists of :

Sewer Network Sewage Treatment Plant With Or Without Reuse & Sludge Management O &M

PPP in complete Value chain of Sewerage Management, in India, is yet to happen.

PROCUREMENT STRUCTURE OF A SEWERAGE PROJECT

There are mainly three elements in sewerage management: SEWERAGE NETWORKING: Private sector is involved in construction as contractor. contracts are awarded based on competitive bidding system and are of EPC Turnkey or Item Rate type. O&M responsibility of network is of ULB beyond the DLP or extended O&M period as per contract; Generally 1-7 years (vary contract to contract) O&M: Service Contract are not so common for sewerage networks & generally undertaken by ULBs after end of DLP of the contractor. (Management contract in line with water supply, are yet to happen) STP: Private sector is involved as EPC Contractor & Developer both.

SEWERAGE NETWORK
EXPERIENCE CONSIDERING EPC/TURKEY CONTRACT: Delay in approval of network design House connection is responsibility of ULB which is done poorly by untrained workers resulting into leakage of sewage Generally S/W & RCC pipes are prescribed in bid documents which are prone to breakage due to unequal settlement of soil below sewer owing to ingress of rain water or any other reason Least state level commitment or support

STP/ETP/CETP
EXPERIENCES CONSIDERING BOT PROJECT:

Inadequate considerations for financial viability and lack of project development ability
Delay in appointment in independent engineer Delay in approval due to prescriptive rather than participative technical specifications as well ambiguity in specification & interpretation of codes Sludge disposal mechanism not defined in contract Reuse policy or facility not in place in time; often not in concession agreement Industries discharge effluent in nearby natural course and least bother to take membership of CETP.

Projected revenue not realized as plant is ready but either sewer conveyance network is not ready or users not ready to connect with network/number of users substantially lower than projected at procurement stage
Least involvement of employer during implementation

CASE STUDY

CETP, SIDCUL INDUSTRIAL PARK, SITARGANJ ON BOT

CASE STUDY
Capacity of CETP in CA 8MLD with RO (for Reuse) Plant capacity reduced to 4MLD during development stage & RO system procured but not installed owing to zero demand in local market of treated effluent for reuse Plant is running under capacity as only 1.3MLD influent is available Even BEP sale is not realizing Though Tariff revision based on deviation in Base Effluent Parameters (pH, COD, TDS) is permissible yet deviation measuring mechanism not in place. Hence Tariff revision is always a conflict Private developer is making loss

RISKS AND CHALLENGES FACED BY PRIVATE PLAYERS

RISK & CHALLANGES

o The typical design & preparation process is still largely technicallyoriented with limited appreciation of the overall financial and commercial risk issues involved. o Often information distortions in the market have led to large variations in the bids/offers received during the procurement process. o The procurement process is highly prescriptive, rather than participative. o The emphasis is on conforming to public sector requirements which may not offer value for money and doesn't not encourage innovative solutions o While public sector dictating the terms, it is quite often not willing to shoulder commitment risk and apportionment of risk, in some cases, quite inefficient.

EXPECTATIONS

PRIVATE SECTOR EXPECTATIONS

o Incorporation Of State Asset Management Company Such As TNUIFSL (Tamil Nadu Urban Infrastructure Financial Services Limited) to take the lead in preparing & structuring the project and finance package in conjunction with multi-stake holder committee to ensure sound and bankable project. o There must be an agreement among the parties/stake holders for sharing responsibilities to avoid confusion and delay in implementation stage of the project. o Transparent Lines Of Communication With BOT Operator/ Management Contractor. o PAYMENT ASSURANCE TO THE PRIVATE SECTOR PARTICIPANTS: ULB to provide BOT Contractor a minimum level of revenue through a form of TAKE OR PAY arrangement; ULB to guarantee to supply minimum level of raw sewage/effluent to the plant and pay through a unit rate agreement at pre-determined annual fee. Through this arrangement, ULB/ the city assume the risk of paying the fee if the predetermined level sewage was not met. in turn, the private partner assumes all responsibilities and risks for financing, constructing and operating the STP/ETP/CETP for whole concession period.

OUTLOOK GOING FORWARD

EMPLOYER TO CONCEIVE BANKABLE PROJECTS; ENSURE FINANCIAL VIABILITY AND DEVELOPERSS REPAYMENTS THROUGH TAKE OR PAY CLAUSE IN CA. FURTHER, AS LONG -TERM SUSTAINBILITY OF THE PROJECT IS THE ABILITY OF THE ULB TO ASSUME RESPONSIBILTY FOR OPERATION & MAINTENANCE OF THE PROJECT AFTER THE END OF CONCESSION PERIOD .. FOR THIS ULB TO HAVE LONG-TERM PLAN THAT SHOULD INCLUDE THE TRAINING AND STAFFING OF MUNICPAL EMPLOYEES. A VIABLE ALTERNATIVE TO THIS APPROACH WOULD BE FOR THE ULB TO AWRAD A NEW MANAGEMENT CONTRACT AND KEEP O&M WITHIN THE PRIVATE SECTOR.

THANKS
R V Singh
Vice President & Head-Engineering

REFERENCES:
Case studies of bankable water & sewerage project for USAID by ARD Infrastructure In India: A Vast Land Of Construction Opportunities By PWC

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