3.

1 Components of Project Development Cycle

REGIONAL CAPACITY BUILDING HUB

Module 3 - Project Development

Draft for Internal Review

2011
Submitted to:

Mission Directorate,JnNURM
Ministry of Urban Development (MoUD), Government of India, Nirman Bhavan, Maulana Azad Road, New Delhi 110 011 Submitted by:

Administrative Staff College of India (ASCI)

Bella Vista Campus, Raj Bhavan Road, Khairatabad, Hyderabad 500082 Phone: 04066533000 Ext 221, 040-66534221, Fax: 040 -23316211, Website: www.asci.org.in

[TYPE

THE COMPANY ADDRESS]

Module 3 - Project Development

Jawaharlal Nehru National Urban Renewal Mission

Regional Capacity Building Hub

Module 3 Project Development

Submitted to:

Mission Directorate,JnNURM
Ministry of Urban Development (MoUD), Government of India, Nirman Bhavan, Maulana Azad Road, New Delhi 110 011 Submitted by:

Administrative Staff College of India (ASCI)

Bella Vista Campus, Raj Bhavan Road, Khairatabad, Hyderabad 500082 Phone: 04066533000 Ext 221, 040-66534221, Fax: 040 -23316211, Website: www.asci.org.in

RCBH Module Prepared By: Administrative Staff College of India (ASCI)

Sub Module: 3.1 Components of Project Development Cycle

Module 3 - Project Development

Module 3 Project Development

Need for Urban Infrastructure

Sub Module 3.1 Project Development Cycle

Sub Module 3.2 Project Identification

Sub Module 3.3 Project Preparation and Detailing

Sub Module 3.4 - Project Finance

Sub Module 3.4 Public Private Partnerships

Annexure 1: Infrastructure Demand Assessment

Annexure 2 Design Criteria for Urban Infrs. Services

Annexure 4 - List of approved Sewerage Project DPRs

Annexure 5 - List of approved SWM Project DPRs

Annexure 6 - List of approved Road Project DPRs Annexure 7 - Water Supply Project - Sample Report

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Annexure 3 - List of approved Water Supply Project DPRs

Module 3 - Project Development

COMPONENT
BACKGROUND

DESCRIPTION JnNURM is a reform-led urban governance strengthening and improvement at ULB, parastatals and state government levels. Financial Management reforms, therefore, is the cornerstone and a necessary condition for investments in mission cities as well as across ULBs the states. The module addresses the training needs of all functionaries elected as well as appointed - at ULBs, parastatals and other related urban governance institutions and state government departments who are directly or indirectly involved in urban management. The primary aim of this module is to help the municipal functionaries to provide a larger understanding on Project Development so that, in turn they become enabled to sustain the investments being made through JnNURM. It is also intended to develop a basic understanding of key issues and their prospective solutions. This module provides an overall understanding of the key aspects pertaining to Project Development, including Project Life Cycle, Project Identification and Prioritization, Structuring Commercially Viable Project Proposals, Feasibility Assessment, Project Financing, Public Private Partnerships, Contracting Process etc Awareness Knowledge Skills

INTENDED AUDIENCE(S)

LEARNING OBJECTIVES

MODULE OVERVIEW/CONTENTS / STRUCTURE

MODULE DELIVERY OUTLINE

MODULE DELIVERY

SUPPORTING MATERIALS MODULE DELIVERY

Presentations using powerpoint, interaction, group discussion and peer learning to find out differences and issues pertaining to good urban management, site visits where necessary, exercises, etc. Additional supporting material is given in a CD enclosed with this module. Send your feedback on the material, how they can be improved to [email protected] Centre for Urban Governance, Administrative Staff College of India

MODULE PREPARATION

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Sub Module 3.1 Project Development Cycle

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Need for Urban Infrastructure Projects

Urban Infrastructure Demand in India
Urban India has grown by nearly five times during the last fifty years, while the population of India has grown two and half times in the same period. Indias Urban Population grew from reported 290 million in Census 2001 to an estimated 340 million in 2008. This process of urbanization has created a huge gap between demand and supply of urban services and infrastructure. For instance, the Ninth Plan Working Group on Housing has estimated the investment requirement for housing in urban areas at Rs. 526,00 crores. The India Infrastructure Report, 1996 estimated the annual investment need for urban water supply, sanitation and roads at about 28,035 crores for the next ten years. The Central Public Health Engineering (CPHEEO) has estimated the requirement of funds for 100 percent coverage of the urban population under safe water supply and sanitation services by the year 2021 at Rs.172,905 crores. Estimates by Rail India Technical and Economic Services (RITES) indicate that the amount required for urban transport infrastructure investment in cities with population 100,000 or more during the next 20 years would be of the order of Rs.207, 000 crore. Mckinsey Global Institutes Report on Urbanisation of India (2010) indicates an urgent need for increasing the pace of creating Urban Infrastructure in India to be able to bridge the gap between demand for services and their provision. The report estimates that 53.1 trillion rupees need to be invested on capital expenditure over next 20 year period to cover the infrastructure backlog and to meet the funding requirements of future needs.

Jawaharlal Nehru National Urban Renewal Mission:

The JNNURM (Jawaharlal Nehru National Urban Renewal Mission) scheme was announced on 3 December 2005 for a duration of seven years (200511) with a planned outlay of Rs 50,000 crore as an ACA to state governments for sixty-three selected cities which included thirty-five cities with 10 lakh plus population, state capitals and twenty-eight special cities. GOI has also formulated the Urban Infrastructure Development Scheme for Small and Medium Towns (UIDSSMT) on similar lines with Rs 50,000 crore planned outlay as an ACA to state governments for over 4000 agglomerations identified as small or medium towns. In this paper we shall evaluate JNNURM only. The JNNURM has the following objectives: 1) To ensure that cities generate outcome-oriented propoor plans through participatory processes. 2) To pool all relevant GOI programmes/schemes into a centralized Mission Fund, 3) To use Mission funding to focus on supporting services for the poor. 4) To link fund disbursement with performance parameters. 5) To secure effective linkages between asset creation and asset management so that the infrastructural services created in the cities are not only maintained efficiently but also become self-sustaining over time.

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6) To develop cities in a well-planned manner to include peri-urban areas, outgrowths, and urban corridors, so that urbanization is dispersed. Infrastructure projects admissible under JNNURM are: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Water supply and sanitation, including de-salination plants, where necessary. Sewerage and solid waste management. Hospital waste management. Laying/improvement/widening of arterial/sub-arterial roads and bridges to remove transport bottlenecks. Urban transport and construction and development of bus and truck terminals. Environmental improvement and city beautification schemes. Construction of working women hostels, marriage halls, old age and destitute childrens homes, night shelters with community toilets. Street-lighting. Slaughter houses. Civic amenities like playgrounds/stadiums, community halls.

A total 846 Detailed Project Reports (DPRs) have been submitted by various Mission Cities during 2006-10 to Ministry of Urban Development, Government of India seeking additional central assistance. Of these, 331 DPRs have been be approved by GoI and the projects are under implementation at various stages. Majority of these projects are spread across the four municipal services viz., water supply, sewerage, solid waste management, drainage and roads and transport.

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3.1 Components of Project Development Cycle

3.1.1. What is a Project?
A project is a group of unique, inter-related activities that are planned and executed in a certain sequence to create a unique product and/or service, within a specific time frame, budget, and the clients specifications. American National Standards1 define projects as temporary endeavors undertaken to create unique products or services. Similarly, British standards 2 define project(s) as, a unique set of coordinated activities, with definite starting and finishing points, undertaken by an individual or organization to meet specific objectives within defined schedule, cost, and performance parameters. Most artistic endeavors are projects. Composing a song or symphony, writing a novel, or making a sculpture is one-person project. The unusual, and somewhat controversial, works of the artist Christodraping portions of the Grand Canyon, several islands in Biscayne Bay, and 1,000,000 square feet of Australian coastline with colored plasticare projects too, but bigger. So is the making of motion pictures, whether they are home movies or the releases of major production studios. Some large artistic projects have also involved the skills of many engineers and builders: Mount Rushmore, the Eiffel Tower, and the Statue of Liberty (discussed later) are examples. In Simple terms, A Project is a Complex Non Routine One-time effort

And the one time effort is limited by Sub Module: 3.1 Components of Project Development Cycle
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Time Budget Resources Performance Specifications

All of the work done in most organizations is geared toward satisfying a customers need. But the characteristics of a project help differentiate it from other corporate endeavors. The major characteristics of projects are: Projects have defined objectives Projects have defined life span with a beginning and an end Projects usually involve several departments and professionals Projects typically havent been done before Projects have specific time, cost and performance requirements

1 2

The standards and guideline publications of Project Management Institute, Inc (PMI) , PMBOK Guide,2004 British Standard 6079 of 1996 (BS6079)

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Module 3 - Project Development

In the case of urban infrastructure or other urban development projects, they can also be categorized as being either: Remdial where they are intended to address an existing indentified gap in service or performance and bring it up to a desired service level Anticipatory meaning projects that are intended to add new capacity or service over and above what is currently available in order to satisfy a forecast or anticipated future need. Both remedial and anticipatory projects with both remedial and anticipatory components.

Projects can also be defined by other inherent characteristics: Incrementality the ability of a project to be implemented in separate phases or increments over time rather than being implemented as a whole Independence the ability of a project to be implemented independently from other proposals or projects, such as those that do not require the completion of several prerequisite projects or actions Simplicity the ability of a project to be dealt with by a single agency or department rather than by several agencies or several levels of government Fundability the ability of a project or proposal to be funded by non government entities (private investment, direct foreign investment, grants, etc)

3.1.2. Project Development Process

Project Development or Formulation is the art of conceiving an idea and developing a set of data analyzed into its logical components. This also looks into the connected systematic requirements which decide about the usefulness and also its viability, both technically and financially. Identification of such projects requires imagination, sensitivity to environmental changes and realistic assessment of what the Urban Local Body can do. The task is partly structured and partly unstructured; partly dependant on convergent thinking and partly dependant on divergent thinking; partly requiring objective analysis of quantifiable factors; partly requiring subjective analysis, evaluation of qualitative factors; partly amenable to control; partly dependent on fortuitous circumstances. The urban infrastructure projects routinely experience uncertainty and delays. Although the urban sector is growing tremendously, private investment is still limited. The main challenges to developing good projects in India are imperfect data, minimal tariff reforms, frequent transfer of senior officials and limited municipal capacity. These are compounded by poor enforcement of environmental regulations and standards. Poor communities continue to be excluded from city-wide service networks. The Traditional Approach: Indias traditional method of developing projects does not adequately address project risk. The traditional way of creating any civic asset was to entrust the work to external agency and depend on their technical capacity to implement the project. For example, some of the bridges and building constructions are executed as deposit work with state PWD departments. The department will require urban local body to deposit the entire value of work in full before the
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commencement of work. In such cases, urban local body does not have full control on the quality of work and also has no control over the progress of work. If there is any time overrun, it results in cost overrun and the department would demand the additional cost. Works like these done by other departments have failed to deliver the services in the timely manner and also within the estimates. The other problem is that the departments do not even hand over the as-built drawings and the completion report is quite often not handed over to the urban local body. In some cases, these local bodies are forced to take over the asset before its completion due to unexplained compulsions. These result in higher debt burden resulting in higher debt servicing and also since the quality of work is not up to the mark, urban local bodies face wrath of the citizens. In other words, Engineers in state level agencies or local governments developed technical proposals and submitted them to state government for funding. With erratic budget transfers, funding requests often fell short of the estimated cost, and projects would have to be curtailed or spread out over many years. As a result, the work tended to be implemented piecemeal, through many small contracts. Over time, numerous overlapping contracts led to coordination problems, delays and cost overruns. It also made performance monitoring very difficult. Consequently the system was inefficient and risk prone. This became particularly apparent when, on the one hand, there were not enough funds for projects, while, on other hand, agencies could not absorb the funding already available. The Project Approach: In project approach, the urban local bodies are required to undergo the various stages of the project which will justify need and also the investment of huge funds. In these cases, the urban local body selects the contractor for implementing the project in a transparent way and is responsible for the day to day supervision of the project. Thus the urban local body can avoid the time and cost overruns. In most of the cases like water supply projects, sewage treatment plants, bus terminals, etc the contract value is less than the estimates prepared based on the Bill of Quantities (BOQs). Thus instead of cost overruns, there is savings in the project. With the help of grant funds, many urban local bodies are appointing design consultants and project management consultants for the preparation of Detailed Project Reports (DPRs) and also the supervision of the project. These help in reducing the debt servicing due to the savings on one hand and also the quality of work is comparatively better than the traditional approach and the urban local bodies are able to deliver the civic services in a better manner.

3.1.3. Life Cycle of Infrastructure Projects:

Infrastructure development encompasses a very broad range of interests, activities and stakeholders. Getting a good grasp of infrastructure development entails assessing which stakeholders are involved at what point and why. Private sector participation (PSP) in infrastructure adds additional layers to the already complicated system of infrastructure development, augmenting the steps involved in public provision of infrastructure, Therefore, a good understanding of the project development cycle will be necessary to further appreciate the role played by different stakeholders in infrastructure development projects. Project Managers or the Organization generally divides a project into various project phases to provide for better management control with appropriate links to ongoing operations of the

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organization. All the project phases put together comprise a project life cycle. The project life cycle refers to a logical sequencing of activities to accomplish the projects goal or objectives. Regardless of scope or complexity, any project goes through a series of stages during its life.

3.1.4. Phases of Project Life Cycle

There is no single best way to define an ideal project life cycle, as many are unique to a specific industry or kind of a project. Although many project life cycles have similar phase names with similar deliverables, few life cycles are identical. Some can have four to five phases, but others may have nine or more. The figure 1 illustrates three different phases of project life cycle. The completion and approval of one or more deliverables characterizes a project phase. A deliverable is a measurable, verifiable work product such as a specification, feasibility study report, detailed design document or working prototype. This section broadly explains the project life cycle in three phasespre-investment phase, investment phase and post investment phase.

3.1.5. Pre Investment Phase

3.1.5.1. Project Identification:
Project identification involves surveying different sources to identify demand for infrastructure projects. The sources of project identification include (1) existing city development plan documents, (2) priorities of local elected representatives as a part of development planning

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exercises, (3) demand from interest groups or beneficiaries, (4) private sponsors, (5) dialogue between a country/state/ULB and multilateral or bilateral creditors. The basic results from this phase of the project cycle include 1) Determining existing needs or potential deficiencies or existing facilities or activities, and which are consistent with approved development priorities 2) Establishing the concepts that provide strategic guidance to overcome these existing or potential deficiencies 3) Identifying initial technical, environmental and economic considerations of the project 4) Examining alternative ways to accomplish the desired objectives 5) Identifying human and non-human resources to create and support the facilities; and 6) Selecting the initial project design

3.1.5.2. Project Preparation

Project preparation begins with a description of project objectives, identification of principal issues, and setting up a timetable for the different phases of the project cycle. This stage must cover the full range of technical, institutional, financial and economic issues relevant to achieving project objectives. Government policies that could influence the projects outcome may need to be examined. The projects technical and institutional alternatives may also need to be critically assessed. An appropriate technical package must be chosen in implementing the project, and an appropriate agency or unit that will manage the project. The basic results from Project Preparation phase 1) Preparation of detailed plans required to support the facility 2) Indication of the possible technical packages to be considered 3) More realistic assessment of costs, time schedule and operational requirements 4) Identification of areas where high risk and uncertainty exists, and further exploration of these areas 5) Identification of human and other resources for the project 6) Determination of the necessary support systems 7) Identification and initial preparation of documents required to support the project such as procedures, job descriptions, budget and funding papers

3.1.5.3. Feasibility Phase

In this phase, the projects overall potential viability is examined using data and information gathered at the preparation stage. A lack of proper project planning that flows from a poor feasibility study has been found to be a major contributor to the failure of projects. A good feasibility study covers the following modules: 1) Demand and supply module: This module examines demand for the goods and services of a project in the domestic or foreign market and the supply condition expected to prevail during the projects life. 2) Technical or engineering module: This aspect is concerned with a projects input parameters, quantities and prices of inputs by type required for project construction, inputs required for the projects operation by year, and the propriety of the technology

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adopted. It is also concerned with issues such as project size, design and location, and the technology to be adopted including equipment and processes to be used. Assessment of the environmental impact caused by inputs, outputs or technology should be a central component of this module. 3) Manpower and administrative support: This module reconciles the projects technical and administrative requirements with the supply constraints on manpower. Whether future financial and economic benefits materialize depend on whether there is sufficient administrative capability within an agency in charge to put the project in place. 4) Financial module: This module provides the first integration of financial and technical variables estimated in the marketing, technical and manpower modules. A cashflow profile of the project is constructed, which identifies all receipts and expenditures expected to occur during a projects lifetime. 5) Economic module: Economic appraisal examines the project from the entire economys point of view to determine whether or not its implementation will improve the economic welfare of the region or city. Benefits and costs are measured using techniques to determine the economic prices of goods and services. True economic values of costs and benefits are not reflected in market prices in the presence of various distortions such as trade restrictions, price control, taxes, subsidies and minimum wages. 6) Social module: This module deals with the identification and quantification of the projects impacts on its stakeholders, including the well-being of particular groups in society. 7) Institutional module: This module addresses the following issues: a. Is the entity supposed to manage the project properly organized and its management equipped to handle the project? b. Are local capabilities and facilities being properly utilized? c. Are changes needed in the policy and institutional setup outside this local entity? 8) Environmental module: This module should address the following issues: a. What impact will the project have on the environment? b. What equipment or facilities will be required to reduce or eliminate the pollution from the project and what will be their cost? c. What will be the cost of providing remedies to the adverse impact created by the project? Sub Module: 3.1 Components of Project Development Cycle
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3.1.5.4. Project approval and financing

After all modules in the feasibility phase have been completed, the project must be examined to see if it can meet the financial, economic and social criteria set by the government for investment expenditures. This is the final part of project appraisal and is meant to improve the accuracy of the measures of key variables if the project shows potential for success. More primary research will have to be undertaken and perhaps a second opinion sought on other

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variables. Since estimates of costs and benefits may be subject to error, the sensitivity of the projects outcome to variations in the values of key variables must be analyzed. Cost estimates should at this point be accurate and the sources and nature of financing identified. Identification of financing at this stage will ensure that the project can proceed to the next phase. Also, the implication on the project costing of each type of financing will be established. At the end of this stage, the decision to approve or disapprove a project must be made. If the feasibility study convinces decision-makers to approve a project, the next major steps are tying up the financing and developing a detailed project design.

3.1.6. Investment Phase

3.1.6.1 Detailed Engineering design
In this point in the project cycle, preliminary design criteria must be established when the project is identified and appraised, but expenditures on detailed technical specifications are usually not warranted at this time. Once the project has been approved for implementation, the design task should be completed in more detail. Details of the basic programs should be provided, tasks allocated, resources to be determined and functions to be carried out along with their priorities set down in operational form. Technical requirements, such as manpower needs by skill class, should also be completed at this stage. After the blueprints and specifications for construction of facilities and equipment are completed, operating plans and schedules along with contingency plans must be prepared and brought together. When this process is completed, the project is again reviewed against the criteria for approval and implementation. If it is unable to meet the criteria, the result must be passed onto the appropriate authorities for final disapproval or acceptance.

3.1.6.2 Project Implementation

This stage covers both the completion of construction activities and the subsequent operations. Implementation is generally divided into three time periods: an investment period when the major investments are made; a development period when production capacity is gradually built up; and the period of full implementation. Resources are allocated and coordinated to make the project operational. Proper planning at this stage is essential to prevent undue delays and administrative procedures have to be designed for the smooth coordination of the activities required in project implementation. All projects face implementation problems, usually due to planning flaws or changes in the economic and political environment. Thus, monitoring and supervision systems have to be evolved to ensure that implementation is completed successfully and on time.

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A detailed explanation on various tools and techniques for Project Monitoring, Project Management (including the Bid Process Management) have been covered in the Module 4: Project Implementation and Module 5: Project Management.

3.1.7. Post-Investment Phase

3.1.7.1. Project Operation
A project reaches the operation stage after investments have been made. It is when the expected project benefits start to be generated. As soon as the project is operational, it is essential that the skills, plans and controlling organization be available to carry on with the function of the project in order to avoid excessive start-up costs.

3.1.7.2. Mid-Term, Post Project Evaluation

For the development of the operational techniques of project appraisal and improvement in the accuracy of evaluations, it is useful to compare the projects predicted with its actual performance. In a post project evaluation, elements of success or failure are analyzed. A project evaluation is a must before any follow-up project is planned. A detailed post project evaluation must be undertaken once the project is terminated. To facilitate this type of evaluation, the administrative aspects of project development must be reviewed as soon as the project becomes operational. An audit should be conducted immediately after the construction phase and a completion report submitted. The projects outcome (net present value or internal rate of return) should be re-estimated based on actual investment costs and updated costs of maintenance and operations. More extensive than the audit is the post project evaluation where the projects performance and overall contribution to development is assessed. Such an evaluation also identifies the critical variables in the projects design and implementation that may have determined its success or failure. Well-considered recommendations about improving each aspect of the project design and actual implementation should emerge from such an evaluation. Based on this evaluation, ongoing projects may be modified and subsequent projects in the sector can be improved. Evaluation may be performed by different parties directly or indirectly involved with the project.

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JnNURM Projects:
The JNNURM envisages acceptance of a reform-driven approach to access financial assistance for infrastructure development by ULBs. The process of undertaking reforms needs to be dovetailed with the project development process. The aim is to put together a compliant proposal that is ready for the sanction of funds. The project development cycle for a project or a group of infrastructure projects proposed to be undertaken with assistance from JNNURM shall include the process from the point of origin of the project concept up to the point of achieving financial closure. The phases of PD Cycle under JnNURM is explained as under:

Project Scoping: For the project proposals identified during CDP preparation process under JnNURM, the project scoping shall include, (i) definition of the scope of the project in terms of demand, components, capacity, phasing and sizing etc., (ii) provision of an outline of nature and extent of the project and a broad sustainable option for its implementation, (iii) feasibility exercise or prefeasibility

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assessment to--define technical feasibility and commercial viability for infrastructure projects, identify projects that could be implemented with JNNURM funds and additional support (if any), required making them sustainable, categorize projects which could be implemented in PPP mode and those which could be implemented otherwise, as non-PPP projects, (iv) an indicative plan for project implementation, and (v) identification of issues and risks associated with the project and assess ways of mitigating them. Any other project scoping exercise may be considered equivalent to a prefeasibility analysis, such as an initial screening report, so long as the document provides the intended analysis. Project scoping could also form part of the CDP or master plan study in which case such documents should include an assessment for sustainability and a strategy for implementation. In case of those projects where project scoping is dovetailed as a part of a proposed detailed feasibility exercise, the prefeasibility stage may be eliminated Project Approval: Project Approval phase starts after the project is sufficiently detailed and structured for implementation, but could also be undertaken in parallel with meeting statutory approvals and internal approval process that a ULB must follow as a part of the project preparation. For accessing JNNURM assistance, all necessary decisions required to implement the project shall be based on approvals. The process of approval at ULB level takes two stages(1) the ULB shall obtain necessary inprinciple approval for proceeding with the project for implementation in a public financed mode or with private sector involvement on completion of CDP at the prefeasibility report stage, and (2) the proposal shall be approved by the ULB for implementation with regard to its proposed plan for implementation and institutional arrangements for the same; its commitment for funds to be invested in the project; the reforms it proposes to undertake to support infrastructure development as required for availing of JNNURM assistance, including projectspecific reforms proposed for financial viability and sustainability; and any changes in the legal and constitutional framework governing the ULB. The above approvals shall be documented in the form of appropriate council resolutions. The ULB shall also obtain the necessary State Government approval indicating its support to back the project. Evidence of appropriate state government approvals--government order, policy, cabinet approval, enactment of laws and amendments etc.--should be provided along with the project documents to demonstrate state governments commitment to provide investment support to the project as well as its commitment to reforms. Implementation arrangements: The ULB shall take necessary steps to ensure successful project implementation, such as (a) provision of land required for the project and its availability on pre-decided and approved terms and set aside necessary funds for the same, and (b) statutory approvals required from other agencies or government bodies and obtain such approvals and permissions, NOCs and clearances on a project-specific basis.

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Financial Closure: Financial closure is the stage in the project development cycle when the principal stakeholders (sponsors, government, and lenders) reach a formal agreement on the fundamental business structure of the project and the underlying terms and conditions of the projects financing plan. Financial closure is dependent on commitment of the ULB/government for implementing the project, investor experience, risk management framework, lender appetite for investment in the sector and project size. Generally, closure has been faster for smaller projects in cities or towns with prior experience of private sector participation or relatively high creditworthiness and strong political commitment. Delays could result from difficulties in resolving issues of risk allocation, changing priorities, and lack of adequate experience in project preparation. Closure is important as the project gets ready to move into the implementation stage. Closure in the case of JNNURM projects would imply tying up of all the sanctions for financing and compliances therein prior to disbursement (conditions precedent) of funds. JNNURM shall be the catalyst for achieving financial closure of identified projects. The assistance from JNNURM can be leveraged to attract other investments from institutional investors and State governments. Under the JNNURM, it is envisaged that achievement of financial closure will result in sanction of JNNURM assistance for project implementation. Execution of Agreements for Implementation: State governments and ULBs including parastatal agencies, where necessary, would execute a Memorandum of Agreement (MoA) with GoI indicating commitment to implement identified reforms. The MoA would spell out specific milestones to be achieved. Signing of the MoA is necessary to access central assistance under JnNURM.

Suggested Readings and Related Links

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Sub Module 3.2 Project Identification and Prioritization

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3.2 - Project Identification and Prioritization

Project Identification and prioritization is the first step of Project Development Process. Typical municipal projects include storm water drains, water supply improvements, laying of roads, construction of municipal commercial complexes, bus terminals etc. Project Identification is often the outcome of a triggering process rather than an analytical exercise. While the notion of project identification is simple, it is difficult to develop methods or procedures for accomplishing it, as there is no well defined theory to guide this task. Project identification often involves surveying different sources to identify demand for infrastructure projects.

3.2.1. Integrating Projects with the Strategic Plan:

The first step when planning a project is to make sure there is a strong link between your organizations mission and the initiative you are considering. The project you plan and seek funding for should be part of your overall strategy for addressing the issues. In many cases, the projects often fail to support the strategic plan of the organization. Strategic plans are written by one group of managers, projects are selected by another group, and the projects are implemented by a third. These independent decisions by different groups of managers create a set of conditions that leads to conflict, confusion and frequently unsatisfied citizens. Under these conditions, the resources of the organization are wasted in non-valueadded projects. Similarly in the context of an ULB, the urban manager should undertake the delineation of city infrastructure requirements through a process that sets forth the stage for participatory development. (a) Preparation of a strategic plan: The ULB shall map out a city-level development plan through a consultative process that includes the involvement of citizens. The process itself shall include an assessment of population growth, infrastructure needs and resource requirements in the short-term, medium-term and long-term horizons. (b) Delineation of needs and priorities with public involvement: Citizens may be informed about the existing status of infrastructure, the broad investment requirements for augmentation and new development, and consulted on the prioritisation of projects. A public consultation shall include a broad assessment of municipal resources, possible or likely impact on the municipal budget, and the proposal for reforms to support development. Such an assessment shall take due cognizance of the existing infrastructure and its usefulness over the planning horizon in the long term. Such a rapid assessment reviews the citys economic development, physical planning and growth management, physical infrastructure status, social infrastructure status, and municipal fiscal status. The objective of the same is to provide insight into the infrastructure needs of the city and assist in identifying capital investments in consultation with local stakeholders. (c) Prioritization of infrastructure and investment requirements: The willingness to accept reforms and impact on the municipal budget are expected to lead to prioritisation. Any alternative consultative process may also be considered leading to delineation of Sub Module: 3.2 - Project Identification and Prioritization
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infrastructure priorities and consequent investment requirements that are necessary for financial planning. (d) Documenting the City Development Plan (CDP): The summary of assessment of broad infrastructure requirements and their phasing shall be documented in the CDP. This would include the willingness of the public and elected representatives to accept inprinciple implementation of reforms to support the proposed development.

3.2.2 City Development Plan:

A City Development Plan (CDP) is both a perspective and a vision for the future development of a city. It presents the current stage of the citys development where are we now? It sets out the directions of change where do we want to go? It identifies the thrust areas what do we need to address on a priority basis? It also suggests alternative routes, strategies, and interventions for bringing about the change what interventions do we make in order to attain the vision? It provides a framework and vision within which projects need to be identified and implemented. The CDPs already prepared by 65 mission cities as a prerequisite to access central assistance under JnNURM, need to be revised periodically. The exercise is a consultative process through which stakeholders opinion is collected for the deciding the direction and priorities of city development. Lists of priorities and investment plans need to be prepared, and detailed project proposals developed for each priority pertaining to primary infrastructure and basic services to urban poor including their housing needs.

3.2.3 Service Level Benchmarking (SLB):

Service level benchmarks are defined as a minimum set of standard performance parameters commonly understood and used by urban stakeholders across the country. Benchmarking foresees a shift in focus from infrastructure creation to service delivery outcomes and the

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concept of benchmarking is now well recognised as an important mechanism for performance management and accountability in service delivery. Continuous measurement and monitoring of service provider performance in a systematic approach helps helps utilities to identify performance gaps and introduce improvements through the sharing of information and best practices, ultimately resulting in better services to people. Ministry of Urban Development (MoUD), Government of India, has developed a common framework for SLB covering water supply, wastewater, solid waste management and storm water drainage. The framework encompasses 28 performance indicators explained in table. The SLB process also needs to be integrated in strategic planning exercise before identifying and prioritizing the projects. S.No. Name of the Indicator Water Supply 1. Coverage of Water Supply Connections 2. Per Capita supply of water 3. Extent of metering of water connections 4. Extent of Non Revenue Water (NRW) 5. Continuity of water supply 6. Quality of water supplied 7. Efficiency in redressal of customer complaints 8. Cost recovery in water supply services 9. Efficiency in collection of water supply related charges Sewerage and Sanitation 1. Coverage of Toilets 2. Coverage of sewage network services 3. Collection efficiency of sewage network 4. Adequacy of sewage treatment capacity 5. Quality of sewage treatment 6. Extent of reuse and recycling of sewage 7. Efficiency in redressal of customer complaints 8. Extent of cost recovery in sewage management 9. Efficiency in collection of sewage charges Solid Waste Management 1. Household level coverage of SWM services 2. Efficiency of collection of municipal solid waste 3. Extent of segregation of municipal solid waste 4. Extent of municipal solid waste recovered 5. Extent of scientific disposal of municipal solid waste 6. Efficiency in redressal of customer complaint 7. Extent of cost recovery in SWM services 8. Efficiency in collection on SWM charges Storm Water Drainage 1. Coverage of storm water drainage network 2. Incidence of water logging/flooding Benchmark 100% 135 lpcd 100% 20% 24 hrs. 100% 80% 100% 90% 100% 100% 100% 100% 100% 20% 80% 100% 90% 100% 100% 100% 80% 100% 80% 100% 90% 100% 0 Sub Module: 3.2 - Project Identification and Prioritization
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3.2.4 Infrastructure Demand Assessment

The analysis of infrastructure needs is an important step in understanding the project demand. The infrastructure that is likely to be built and the proposed investments for the same will be influenced by the way the infrastructure needs are defined and nature of these needs. The demand assessment is of great relevance to planners (city officials), who are responsible for making investment and management decisions about provision of services to citizens. Information on the extent to which project beneficiaries demand and are willing to pay for project outputs is necessary to design better projects during the early stages of the project cycle, and to manage and evaluate the performance of projects. As all the designs, estimates, implementation system, financial provisions are made based on the projected demand thus for the success of any projects accurate assessment is very important. Although the task is complex, there are various methods for assessing infrastructure needs and highlighting the principles and standards. Demand assessment involves four major tasks: (1) selecting households to study, (2) data collection, (3) data analysis, and (4) checks for validity. The selection of households to listen to or consult with can be based on rigorous random sampling procedures, or more informal or purposive sampling. Data collection can involve a review or use of secondary data sources, or primary data collection in the project area. Primary data can be collected through house hold questionnaire survey, participant observation, structured or open-ended interviews, focus groups, or participatory community meetings. Data analysis can range from qualitative interpretation of participant observations, to simple tabular presentations of raw data from structured interviews, to sophisticated econometric estimation of household demand relationships. The accuracy and reliability of the results can be crosschecked by the use of multiple methods or repeated investigations.

3.2.4.1 Approaches to Demand Assessment

Infrastructure demand assessment can be classified in two broad categories (1) Engineering Demand Assessment and (2) Social Demand Assessment. Engineering Demand Assessment is a supply-driven process in which households or citizens have few choices or virtually no say in the process. It determines infrastructure quality and quantity norms and standards set by international, national or state departments. Engineering needs assessment is a technical method based on engineering studies of the conditions and needs for development and investment. Engineering needs studies attempt to meet technical engineering and quality of service standards. The condition of the existing infrastructure stock is determined and future infrastructure needs are identified. The gaps between the existing stock and future needs are identified. Social Demand Assessment is an iterative, demand-driven process in which planners or decision makers use information on household preferences to structure the menu of service

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options for households. In particular, demand information can reduce the risks of building facilities that people do not want and for which they are not willing to pay for. Regular, periodic demand assessments can provide utility managers with the information needed to respond to changing customer circumstances, and regulators with useful information to assess the performance of service providers. Public consultations use varying mechanisms for gaining feedback including polls, mail or phone surveys, open houses and focus groups. The public is the primary stakeholder in planning and prioritization, they use, own and pay for infrastructure thus they have a major influence in decision making for infrastructure. Also public participation in the decision making is becoming inevitable in the current era of globalization and privatization because the local authorities are becoming a facilitator rather than provider and citizens are becoming customers rather than beneficiaries. Citizens should be involved at all the stages of plan preparation starting from visioning, conceptualizing, actual plan preparation and resource management and implementation. This minimizes confrontation and miscommunications while preparing and implementing projects and policies and also gives sense of ownership to the citizen.

3.2.4.2 Consultation Process

Experience reveal that some of the following characteristics foster a successful public participation or consultation process, which help to ensure outcomes that reflect the interests and concerns of potentially affected people and parties. The consultation process should ensure: a) identification of key stakeholders (those potentially affected) and facilitate their involvement b) provision of key information needed by stakeholders to participate in a meaningful way c) reasonable efforts to identify the interests and meet the needs of key stakeholders d) providing opportunities to stakeholders for meaningful inputs, consider public issues/concerns, during project design development and project approval decisions e) incorporating stakeholder feedback consolidating their inputs and needs f) communication to stakeholders on how their input can affect the outcomes (i.e., project design and review/approval decisions) Stakeholders are the group of individuals, communities or organizations who are directly or indirectly effected by the project, plan or policy and who has a right to say for the betterment of the same. The stakeholders can include NGOs, other government organisations (like police department, urban administration, line departments pollution control boards etc.), commercial organisations, elected representatives, eminent citizens, technocrats and social workers. Stakeholder Analysis shall help to identify and map the primary, secondary and other key stakeholders, showing their degree of importance and influence and provide clear information on the concerns and interests of each stakeholder group. SWOT analysis helps to identify Strengths, Weaknesses, Opportunities and Threats for each identified sector/area of focus. SWOT analysis should be undertaken with the sector specific working groups, and shall focus on parameters viz., resource availability, geographical and topographical condition, prevailing political and institutional framework, regulatory framework,

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financial framework, participatory approach in the planning process, private sector participation in the development process, availability of technical know-how, etc.

3.2.4.3 House Hold Survey

Household survey is the other method for assessing and acquiring public perceptions and demand for different sectors and overall city development at large. The key aspects to be taken care are selection of sample and sample size. Sample should represent the total spatial area as well as population size, class, economic groups and vulnerable groups (women, children, senior citizens, disabled etc). Questionnaire should include questions on qualitative as well as quantitative information and perception of the respondent for specific sectors as well as overall city development at large. The questionnaire should also provide space and platform to the respondents to express their concerns and vision for specific sectors as well as overall city development at large.

3.2.5 Demand Forecasting for Urban Infrastructure Services

Some of the components remain common for all the infrastructure services and form the base for all projections and assumptions e.g. population, land use, site suitability and availability and some of the components are service specific and to be analysed separately e.g. distribution network, sources, norms and standards. Population Vs Infrastructure Demand For any infrastructure project demand assessment, the key demographic parameters are population growth and economic group distribution. Population forecasts are essential (1) to understand population growth trends in previous decades, and (2) to suggest the expected population growth in future years. Population projection methodology should consider static parameters like present population, past growth trend and also dynamic parameters like employment, investment opportunities etc. The design population should to be estimated, with due consideration to all factors governing the future growth and development of the project areas (across all the sectors)--not only residential but also commercial, educational, industrial, social and administrative. A judgment based on these factors would help in selecting the most suitable method of deriving the probable trend of the population growth in the area/areas of the project out of the following mathematical methods used for population. There are various methods for populations projections e.g. arithmetic increase method, geometric increase method, incremental increase method, decreasing growth method and graphical method. (a) Arithmetic Increase Method - This method is generally applicable to large and old cities. In this method the average increase of population per decade is calculated from the past records and the present population is added to the average increase. Pn = [ P0 + n.x], where Pn = Prospective or forecasted population after n decades from the present (i.e. last known census);

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P0 = Population at present (i.e. last known census); n = No. of decades between now and future; x = Average (Arithmetic mean) of population increase in the known decades. Box-1 Example Population: Naranpura Ward Ahmedabad city as per census data 2001 is 83272. What will be the population in the year 2031 at the decadal growth rate 25% of the population at census 1991? Population in 2001 P0 = 83272; Decadal growth rate X =25 ; Number of decade between now & future n = 30/10 ; Hence Population in the year 2031 Pn =83272 + [(83272 x((30/10)x25)/100] =145726 (b) Geometric Increase Method - This method is mostly applicable for growing towns and cities having vast scope for expansion. In this method percentage increase is assumed to be the rate of growth and average of the percentage increase is used to find out future increment in population. Pn = Po (1 + r/100) ^n, where Po = Initial Population i.e. the population at the end of the last known census ; Pn = Future population after n decades; r = Annual growth rate (%) Box-2 Example Population: Naranpura Ward Ahmedabad city as per census data 2001 is 83272. What will be the population in the year 2031 at the decadal growth rate 25% of the population at census 1991? Population in 2001 P0 = 83272; Decadal growth rate =25% ; Annual growth r=25/10 =2.5% ; Population to be projected for the year n= 30 ; Hence Population in the year 2031 ; Pn =83272 x( 1+2.5/100) ^30 =174670 (c) Incremental Increase Method In this method the increment in arithmetical increase is determined from the past decades and the average of that increment is added to the average increase. Pn = P0 + n.x + n (n + 1)/2 . Y , Where, Pn = Population after n decades from present (i.e. last known census), X = Average increase of population of known decades ; Y = Average of incremental increases of the known decades (d) Decreasing Growth Method - Average decrease in the percentage increases is worked out and is then subtracted from the latest percentage increase for each successive decade. It is applicable where the rate of growth shows downward trend. Sub Module: 3.2 - Project Identification and Prioritization
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(e) Graphical Method - The graph between time and population is plotted from the available data and curve is plotted. Land Use Existing as well as future land use e.g. residential, commercial, industrial, public purpose of the city plays key role in development of the city. Infrastructure demand varies in different land use zones e.g. in industrial zone water demand is normally very high and thus industrial waste water generation in that area is also high. In commercial areas water demand and sewage generation is relatively low. So existing as well as future land use should be thoroughly analysed to gauge future demand. More emphasis should be given to the critical areas like slums and low income settlements. Location Aspects/Site-Suitability

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Location and alignment of existing services, additional land required for improvement and expansion of the services should be analysed. Site suitability aspects like location, accessibility, terrain, soil condition, water table should be studied and analysed for preparing design proposal for all the infrastructure services. Existing Service Analysis Data used to identify service gap can involve a review or use of secondary data sources, or primary data collection in the project area. Primary data can be collected through participant observation, structured or open-ended interviews, focus groups, or participatory community meetings. Data analysis can range from qualitative interpretation of participant observations, to simple tabular presentations of raw data from structured interviews, to sophisticated econometric estimation of household demand relationships. Consumption patterns and life styles of a particular society shape the nature of demand; it may be higher or lesser depending upon the degree of consumption. Secondary data on quantity and quality of services exists in the city can be collected from within the ULB. The pressure on infrastructure due to the existing demand is directly linked with the consumption pattern of the people. The demand assessment for various municipal services is discussed in Annexure 1.

3.2.6. Project Prioritization

A well-defined project prioritization is important for the organizations which have a clear strategy in place that includes, explicitly or implicitly, the project selection criteria. These organizations need to solve the problem of prioritizing the projects they pursue or already have in their portfolio. It is clearly not possible to implement all projects simultaneously, and a rational, systematic approach to prioritisation will help to ensure that the available resources (including project finance) are used as effectively as possible. In practice, any organisation responsible for managing a pipeline of projects will need to prioritise within that pipeline. Thus prioritisation will often need to be carried out at national, regional and local levels. Equally, prioritisation may involve a single directive (e.g. urban waste water), a specific sector (e.g. waste) or a range of sectors/directives. The priorities can be in the terms of accession, environment, financial, economic, technical, social, political, commercial and institutional. It is important to recognize that the purpose for which the prioritisation is being carried out will have an impact on the criteria that are used. In many cases the prioritisation is carried out to determine the optimum allocation of resources, including project finance and technical resources for project preparation. It follows that these parameters will be outcomes from the prioritisation process rather than criteria applied to individual projects. This will also apply to the earliest start date of a project, since this will depend to a large extent on the allocation of resources. Similarly, the scope of the prioritisation exercise will also influence the criteria used. For example, if the prioritisation is being carried out in relation to a specific directive then the priority given to that directive within the accession process is not a relevant prioritisation criterion, since it will apply equally to all projects. However, if prioritisation is being carried out across a range of directives (even within the same sector), then this may very well be an appropriate prioritisation criterion.

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Sub Module 3.3 Project Preparation and Detailing

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3.3 Project Preparation and Detailing

Project preparation comprises all steps needed to be taken by ULB for detailing the project(s) identified in the CDP/Consultation Process. It is governed by the need to define and detail the project and address all associated risks to ensure successful implementation. Detailing requirements may vary, depending on the transaction and contractual framework, the nature and size of the project as well as the perception of risks by the public and private sector entities. In case of public financed projects, where all risks are taken by the ULB and no role is envisaged for the private sector (except contractual delivery of construction as per routine tendering process), the detailing includes detailed design as part of project development. In case of PPP projects, the detailing would be governed by the level of risk sharing envisaged apart from the nature and size of the project. In such a case, detailing would be necessary of not only the physical components but also parameters and commercial issues associated with the project. Detailing could be need-based subject to the different PPP transactions3 proposed for implementation. Structuring a Project Proposal: Project preparation is envisaged as a stepwise process of structuring a project proposal during which an identified project idea is detailed in specific terms and readied as an implementable project. This exercise is needed to ensure that the project can be implemented by evolving an appropriate option based on its, technical feasibility, financial sustainability, commercial viability, environmental compatibility, social and political acceptability, legal and regulatory feasibility. The steps involved in structuring a project proposal are explained below.
Project Goals & Objectives Project Location/Site Infrastructure Components Selection of Technology Structures and Civil works Estimation of Project Cost Work Schedule/ Phasing Environmental and Social Assessment Financial Viablity Analysis DPR Preparation

Different types of PPP transactions are explained in Sub Module 3.4

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Setting Project Goals and Objectives: Project Funding Agencies would be particularly interested in results, or how a project will bring positive benefits to a community or a group of stakeholders. Funders also understand that in some cases, results may not be seen in the short term and may include such intangibles as the social capital that has been built. They appreciate a consultative process that engages all stakeholders in the project design, implementation, and evaluation. Below are some common terms, their definitions, and key questions for project development. Funders may also ask questions regarding these areas to determine if the project fits the funders priorities, if it is realistic, or if it is likely to make a positive difference in the community. Goals: Broad and long-range accomplishments toward which the project will contribute. In formulating the goals, ask: What does the ULB want to accomplish with this project? Who will benefit from the project? How will they benefit? Objectives: Intended impacts (or in some cases, outputs) contributing to physical, financial, institutional, social, environmental, or other benefits to a society, community, or group of people via one or more development interventions. In developing objectives, ask: What are specific, measurable desired results of the project? Objectives should be SMART: Specific statements of what the project will accomplish Measurable or observable Answer the questions of who, what, when, where, how Realistic in recognizing the concrete results a project can actually accomplish Time bound Activities. Actions taken or work performed: These activities can be translated into a work plan with a timeline. Ask questions such as: What specific tasks or actions are necessary to implement the objectives? The views and needs of the beneficiaries of the project are important to consider when formulating your goals and objectives and implementing your activities. Funders may be concerned with how the beneficiaries were consulted or are involved in the key decisions for the project. In challenging circumstances where your organizations are addressing particular vulnerabilities, describe the context for the marginalized population who may not be a part of any community.
The goal of the project is to improve slum dwellers access to Water supply services in the municipality of XXXXX. The objectives of the project are: to increase by 50% the number of people who can access the water supply services available and to implement a community score card system in five slums that will measure the services provided by the urban local body. The activities over one year will include necessary network improvements and process reengineering, information dissemination on access to water supply services through communication campaigns and workshops on monitoring and accountability using the community scorecard methodology.

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Example of Goal, Objectives and Activities

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When formulating the goals and objectives, ULBs should also keep in mind the ways and means to monitor and evaluate the project. For example, funders may ask ULBs about how they would know when the results have been achieved. When communicating the project to funders, ULB could describe the situation prior to the project which is how the progress can be assessed or comparison made. ULBs may also need to consider the sustainability of a project and its benefits after the funding or project comes to a close. Project Site/Location: The choice of location and site follows the demand analysis, project identification and goal setting. Though often synonymously used, the terms location and site should be distinguished. Location refers to a fairly broad area where as site refers to a piece of land where the facility is to be created. The differentiation may be critical depending upon the project. In a sewer or water supply project, the location is not a major factor since the pipes are laid within municipal area, the site where the pumping main or the treatment plant is to be located is significant. The site becomes critical in case of a commercial complex project or a bus stand as the future revenue depends upon the site. Total quantum of land required and being provided for the project need to be clearly specified. The other aspect regarding the site is the legal ownership. The ULB should have the land title, which is to be clear and unencumbered. This facilitates the options, which can be enforced in future in case of non realization of revenue due to any unforeseen circumstances. In case of a reclaimed land or irrigation tanks which are converted as storage tanks there is a need to examine the ayakat (irrigated area) rights being disturbed. Physical Infrastructure Components: The physical infrastructure of projects can be considered in terms of project specific components. These would be unique to each project and would also vary across sectors. For example, water supply project may have the components viz., source development, raw water transmission system, water treatment, service reservoirs, distribution system etc. Similarly, the project components for sewerage and sanitation, solid waste management, road transport projects need to be considered as applicable to the project scope. An illustrative list of project components across various sectors is given in Annexure. These project components can also serve as a reference for tendering/packaging of contracts either individually, in parts or through combinations. The design of project components of an identified project should be dovetailed into the Detailed Project Report as a part of the project preparatory phase. The requirements for design could however vary depending on the transaction. For instance, where the ULB contracts out the construction and design, the requirement could be for the design of components up to the preliminary engineering level (costs + 10%) at the pre-contracting stage. Where the ULB proposes to contract out the construction only, it could undertake detailed design of project components. It should also be noted that the design of project components must also address the sustainability criteria. For identified projects, individual components should be designed so as

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to allow cost optimisation in the long term. In other words, long-term sustainability must be ensured through the design of components that are economical, considering the life cycle costs including capital as well as recurring costs. Selection of Techno-commercial Option: Every project could be implemented with a range of technologies and commercial options. Usually an option analysis would be required in such instances to ensure selection of the most technically feasible and commercially viable option. An analysis of options would involve delineation of different options and a simulation analysis based on life cycle costs for implementation. Life cycle costing shall be an integrated cost duly considering environmental, social, legal and regulatory costs that would be associated with a project. This will enable selection of the most suitable option. In projects where waste treatment is involved, the technology adopted should comply with pollution control boards norms. For example, an underground sewer scheme, the scientific method of treatment of waste water results in keeping the BOD content and once the treated water is left in the open it should be within the levels prescribed by pollution control board. In case of water supply project, the water treatment technology is very important so that potable water is supplied through the pipes. The guidelines and manuals circulated by Ministry of Urban Development, Government of India for various sectors need to be considered while structuring the project. Construction and Civil Works: Site preparation and development: In projects which involve reclamation of land, the steps towards site preparation and development are very important. If proper form of compacting is not done, while filling the place with moorum or any other material, the site may sink after completion of the project. It is therefore very essential to ensure proper soil investigation has been carried out and these are factored while arriving at the bill of quantities in the detailed project report. In case of sewer projects, the availability of land far farm forestry is very important in the absence of sewerage treatment plant (STP). There may be some existing structures, which may warrant demolition and also relocation. Some projects may involve removal of water, slush etc. This is very much applicable in case of storm water drains. Generally the time taken for site preparation influences the completion of the project. Building and Structures: The location of building is very important in case of a bus terminal project because effective utilization of space depends upon the design of various facilities within the site. Thus in a bus terminal design the flow pattern for the buses assume top priority with proper free entry and exit points. The accessibility to various facilities without much disturbance to the passenger amenities is vital. The other part is the structural design aspects. All these will get reflected in quality of design and will automatically decide the BOQ and project cost. Once the principal dimensions of the project are fixed, then the project layouts are prepared and the detailed structural designs for civil structures are also prepared, to determine the

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withstanding capacity as compared to load on these structures. Only after these are found to be satisfactory the project is cleared as technically feasible. Estimation of Project Cost: After the project is found to be technically feasible, the BOQ relating to the project is closely scrutinized and also the detailed and abstract estimates are checked. The estimates in case of civil structure should be based on specified schedule of rates and in case of water supply and sewerage items, prescribed rates should be adopted. The project (construction) cost should cover, land acquisition4/ site development, physical infrastructure component wise, environmental compliance cost, rehabilitation and resettlement cost5, cost of surveys and investigations, cost of shifting utilities, cost of consultancy services (design, supervision, quality assurance), finance/interest cost during construction, contingencies. Institutional arrangements for Project Implementation: The institutional arrangements for implementing the project are clearly specified at this stage. The roles of different institutions involved in the construction phase of project may be represented in the form of a roles/responsibilities matrix. The relationship between ULB and other supporting agencies are to be made explicit. Explanation would be given on whether the construction works are envisaged to be undertaken in house through own staff or being tendered out under the supervision of the ULB or through a separately established legal entity such as a Special Purpose Vehicle (SPV). Areas of involvement of the private sector in the construction phaseprefeasibility study, engineering design, specialized surveys, construction works, overall project supervision, quality assurance etc. are clearly spelt out at this stage. Brief description of strategy for the overall works program including information on indicative packages for tendering will be provided. Work Schedules and Project Phasing: Once the layout and design are found to be satisfactory, the work schedule needs to be prepared to satisfy as to the reasonability of the project period. The following types of activity heads need to be included as per requirements of city level project teams. a) Schedule for tendering/selection for procurement of services i. Construction Contractors package wise contract implementation ii. Consultants/firms for supervision and quality assurance iii. Consultants/firms for any specialized activity b) Schedule for bringing finances in to the project (in case of multiple funding sources) c) Schedule for obtaining all clearances d) Schedule for shifting utilities e) Project infrastructure component wise implementation

4 5

Except for designated hilly, NE states assistance under JnNURM does not cover Land Acquisition Costs. To be borne by ULB/ parastatal/ state governments in case of JnNURM projects

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The implementation schedules/work plan can be represented in a simple bar chart or Gantt chart on a quarterly basis illustrated in figure below. For large scale projects, Program Evaluation and Review Technique (PERT) and Critical Path Method (CPM) charts are also used. For all the projects whose capital costs value is greater than Rs. 25 crores, the JnNURM toolkit6 prescribes the use of PERT and CPM diagrams, in addition to Gantt Charts. The PERT chart provides a further detailed breakdown of activity tasks and milestones and the inter relationship between tasks. These inter linkages could be defined in several ways such as SS-Start to Start; SF-Start to Finish; FS-Finish to Start; & FF-Finish to Finish. The PERT and CPM would be useful for the ULBs both for project planning and subsequently project management. Environmental and Social Assessment: Most of the projects implemented by ULBs involve disturbing the environment and having an impact on social factors. For example, if land is to be acquired for construction of a bridge or widening of a road or in case of new infiltration wells or in the case of borewells or in the case of storm water drains, either there is an environmental impact due to letting of sewerage or any contaminated water, or disturbance to the water table or certain set of people are affected by the project by way of loss of land, building and livelihood. A project may involve either one of the above or in combination. Many World Bank funded projects wherein line of credit is available to the financial institutions from multilateral agencies; the projects are categorized based on environmental and social considerations. a) Environmental Categorisation: E1- Projects which involve serious impact on the environment and there is a need for environmental impact study. Specific measures to address the adverse effects should be put in place, before and also after the implementation of the project. E2 Projects, which involve certain environmental impact and which need environmental management plan E3 Projects which have no environmental impact

b) Social Categorisation: It is known fact that the pressure on land in urban areas is very significant. With the rate of urbanization increasing every decade, many people from rural areas settle in urban areas. These people cannot afford to buy a piece of land for constructing the house, and with their earnings they can only take care of food and clothing. A legal shelter for such people is beyond their imagination. The vacant spaces in the urban areas predominantly owned by government are chosen by these people which lead to encroachments. Whenever an urban local body intends to implement a project they are often posed with the problems of encroachment, leading to social problems. People whose land, house, livelihood, place of business are affected because of the project need to be compensated financially as well as ensuring their standard of
6

DPR Preparation Toolkit of JnNURM

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living is maintained. The following social categorization may be considered for the projects structured. S1- Projects where project affected families are more than 40 nos., S2 Projects where project affected families are below 40 nos. S2 Projects where no project affected persons are present

Assessment of Financial Viability: The analysis for financial viability and sustainability shall be undertaken with regard to meeting funding requirements. Depending on the means of project finance proposed by the ULB and identified for implementation, the financial analysis shall be undertaken to meet such criteria, which would be used to structure the project and evolve the optimum financial plan. It should include an assessment of revenues and costs associated with the project to demonstrate the sustainability of the project cash flows over the planning horizon. To judge a project from a financial perspective, the following information is very essential. a) Mode of financing the project b) Estimated revenues through user charges/lease rentals etc c) Unit Cost of Production (in case of water supply projects) d) Operation and Maintenance Expenses e) Determination of Break Even Point f) Project Cash flow Mode of financing the project: Majority of the urban infrastructure projects relating to civic amenities are implemented by ULBs through project grants from government, loans from financial Institutions, loans from government, deposits from the users of the facility, deposit from the prospective successful bidders, interest on deposits, own contribution from the ULBs and debentures. The cost of capital is an important factor to be considered before deciding on the mode of finance. The cost of capital is the rate of return which is required by the ULB to meet the operating and maintenance expenditure and the debt servicing obligations. The cost of capital for a project is the weighted arithmetic average of various sources of long term finance used by it. In case of ULBs, generally grants are sanctioned if certain criteria are fulfilled, eg. JnNURM, the other source of funds being loans from financial institutions and own contribution. In case of loan, the cost of capital is measured by the rate of discount, which equates the present value of expected payments to that source of finance with net funds received from that source of finance. The ULB should ideally review the scope and options for possible institutional debt and/or private sector financing while structuring the project. Institutional debt: Institutional debt can be from general bank finance, specially issued municipal bonds, term loan from financial intermediary such as HUDCO, IDFC, IL&FS, LIC; state level financial institutions including those specific to development of urban infrastructure, etc. Supporting the capital cost of the project entirely by grant and ULB internal resources (revenue surplus), might not necessarily reflect the best manner of financing urban infrastructure

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projects. A debt component would provide additional project appraisal by the funding agency and hence contributes to risk reduction and improved project structuring. It contributes to project management discipline for the ULB, especially in the context of O&M management, user charges etc. The ideal debt component is dependent upon a number of factors including the nature and sector of the project, project cash flows as well as the financial condition of the municipality and financial management practices of the ULB. However, several projects might be able to support atleast a small debt component, such as 5-10 % of the total project cost, and take advantage of stated benefits. Private Sector Participation: Private sector can be involved in financing (as well as managing the) construction of infrastructure project, especially in the case matching grants from ULBs need to be accommodated. Private sector can contribute towards ULB share of finance through (a) a separate legal entity created for this purpose, SPV arrangement or (b) a direct BOT/BOOT arrangement and its variant models with or without SPV arrangement or (c) a simple management contract or lease based contract. JnNURM Grants: In case of projects proposed under JnNURM, appraisal criteria must be referred to during financial structuring to ensure compliance. The ULB would have to arrange balance funding over and above the JNNURM grant. A financing plan would have to indicate the other sources of funding (debt) to meet the total financing requirement, which the ULB would repay along with interest over the life of the loan. It is expected that from a sustainability perspective, long tenure loans would prima facie be required to reduce the burden on cash flows and recourse to other municipal budgetary streams. The ULB would present an in-principle financial commitment from such sources including indicative terms of such financing that shall be structured in the financial plan. The financial plan shall also demonstrate the provisions made for setting up the revolving fund and its maintenance over the period of project operations. The aim of the revolving fund is to clearly establish the link between asset creation and its maintenance and therefore should be project-specific and set up by the ULB for each project. The revolving fund should be set up by apportioning revenues from the project cash flows (receivables escrowed into the fund account). While demonstrating sustainability, the ULB should provide its plan for supporting reforms that it proposes to undertake. For example, the ULBs proposal for levy and enhancement of user charges and taxes, any other sources of revenue identified to make the project viable (eg. tolls, development cess, parking and advertisement fees, betterment levy, etc.) should be provided along with accompanying documentation, as mentioned in MoUD Toolkit 4. Care shall be taken while evolving the balanced financial structure that would meet the sociopolitical acceptability as well as demonstrate leveraging of JNNURM assistance. The financial plan should also include an assessment of risks associated with every identified project and the proposed risk management framework for mitigating them. Besides the financial plan, the implementation structure should be based on the type of contractual transaction proposed for implementation. An implementation plan must include the proposed time-schedule for completion of construction, key milestones to be achieved, milestone-linked disbursement of resources, and milestones for reform programme implementation.

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Estimated revenues through User Charges/Lease Rentals: Since the operation and maintenance expenditure and debt servicing are to be met out of the revenues from the project, the user charges/ lease rentals are very important determinants. The basis of arriving at the user charges need to be carefully analysed as this is a sensitive issue and also because the future cash flow is solely dependent on the user charge structure. In case of sewer and water supply charges, a socio economic survey is done along with the willingness to pay (WTP) survey. Willingness to pay is a measure of comfort to implementing agency. In order to create a sort of commitment from the users, a one-time deposit may also be collected from the individual households in case of sewer and water supply projects. In case of municipal projects like commercial complexes, bus terminals etc., a one-time deposit may be collected from the prospective successful bidders of lease rent. This does not carry any rate of interest and there is no repayment of annuities. Determination of Break Even Point: Using the above information, the cash flows from the project is forecasted for the life of the asset or on loan repayment period whichever is greater. The breakeven point is the user charge per unit of the facility which equals the operating and maintenance and debt repayment obligations of the project. The realization of user charge should be greater than this measure. Example: Let us assume an annual expenditure of one crore rupees (Rs. 10 lakhs) on account of production and distribution of one MLD of water in the project area. The total number of assessments in project area is 100000. The water charge per house is Rs. 100/- per month. The breakeven point (in terms of assessments) is = 10 lakhs/100*12 = 1000000/1200 = 834 connections JnNURM Projects: The objective of project preparation for Mission Cities is to structure a project with the target grant assistance from JNNURM. In doing so, it is also envisaged that the grant from JNNURM is leveraged to attract private investment and private sector participation. This can be done by ensuring durable long-term use of the assets created, efficient service delivery and management of resources through a framework that allows cost recovery. An integrated process of project preparation is envisaged, to meet this objective, which would lead to successful disbursement from JNNURM and project implementation. Following specific activities need greater attention in case of project preparation for Mission Cities. The Terms of Reference (ToR) should clearly be defined in terms of (i) the information or method by which the study needs to be conducted; (ii) the tasks required to be undertaken; and (iii) the indicative timeframe within which outputs are expected. Importantly, the ToR should define the minimum required man month inputs or staffing requirements, output details including an indicative Table of Contents (ToC), etc. Procurement and appointment of consultants: The appointment of consultants by the ULB shall depend on the type of consultancy to be outsourced. If assistance available under JNNURM is to be utilised for preparatory tasks, the

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process of appointment of consultants should meet the requirements for availing of such grant assistance. (a) It is expected that a fair and transparent process will be followed for appointment of consultants. (b) Different options for the appointment of consultants could be considered depending on the consultancy requirements for the identified project. For example, fixed budget selection, quality and cost-based selection, quality-based selection or cost-based selection are different contracts for the appointment of consultants followed as a standard or best practice which could be considered. (c) As a best practice, ULBs seeking to implement a bundle of projects with JNNURM assistance, may prefer to have a database and pre-qualify consultants for various tasks. The qualifications of pre-qualified shortlist of consultants could be validated every two years. Preparation of Detailed Project Report (DPR): The detailed feasibility undertaken as above must be documented in the form of a Detailed Project Report (DPR) accompanied by other documents for availing of JNNURM assistance. The DPR is an essential building block for the JnNURM in creating infrastructure and enabling sustainable quality service delivery. The DPR is to be prepared carefully and with sufficient details to ensure appraisal, approval, and subsequent project implementation in a timely and efficient manner. A reference framework7 provided by MoUD, GoI, discusses the key issues that need to be addressed while preparing the DPR and outlines the relevant details for a DPR in various sections covering (1) sector background, context & broad project rationale, (2) project definition, concept and scope, (3) project cost, (4) project institution framework, (5) project financial structuring, (6) project phasing, (7) project O&M framework and planning, (8) project financial viability/sustainability and (8) project benefits assessments.

Detailed Project Report Preparation Toolkit circulated by MoUD, GoI

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Sub Module 3.4

Project Finance

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Financing Urban Infrastructure Projects:

Urban infrastructure financing combines (1) local government capital budget allocations; (2) grants from state and central governments; (3) bank and institutional loans; (4) proceeds from long term municipal bonds; (5) proceeds from pooled bonds issued by urban infrastructure funds on behalf of small local governments; (6) micro-credits for the poor; and (7) other emerging financing options, such as leveraging municipal assets and private equity. Depending on creditworthiness of the local government and the commercial viability of its projects, the mix of financing components will vary. Large scale urban infrastructure such as water supply and sewer systems, roads, integrated solid waste management, public transportation networks etc., are all capital intensive and expensive because of their nature, size, technologies, materials and extent of area covered. The financing of infrastructure projects involves a large capital investment during construction of assets followed by continual operations and maintenance expenditure. The traditional approach to infrastructure financing in India relied on government grants and budgetary transfers, usually presented in national and state five year plans. This approach proved to be inadequate, as the demand for infrastructure services increasingly outpaced the funding levels through grants and transfers to meet the demand. The Rakesh Mohan Committee Report (1998) quantified the financial implications of bringing Indias infrastructure up to a globally competitive standard and it has became clear that public budget resources, whether central, state or local will always be insufficient on their own to fund the infrastructure investment needed by Indian cities. Estimates indicate budget allocations can only fulfill about 20 percent of Indias infrastructure needs. The challenge therefore was to devise ways for public resources to be used to leverage private investment in urban infrastructure so that the entire funding envelope is expanded. Mobilization of private equity investments through public private partnerships/private sector partnership has addressed this challenge to a large extent. Introduction of municipal bond as a financing mechanism represents one of Indias major achievements in bringing market based financing to urban infrastructure. Sub Module: 3.3 Project Preparation and Detailing
42

Project finance is the long term financing of infrastructure projects based upon the projected cash flows of the project rather than the balance sheets of the project sponsors. Usually, a project financing structure involves a number of equity investors, known as sponsors, as well as a syndicate of banks that provide loans to the operation. Mobilizing long term debt in Indian capital markets to supplement public sector investment in urban infrastructure is not as simple. First, the local government has to become credit worthy, and bring forward a commercially viable infrastructure project. But this is not enough. Before lending money for a local government project, the capital market investors require an assessment of the risk of the local government defaulting on its debt. The capital market needs a financing mechanism that is attractive to private investors through standardization, and legally recognized securities

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Because most local governments are small and relatively weak financially, only need to borrow small amounts for their projects, a specialized financing mechanism is needed to allow smaller local governments to access private debt The long and risky project development process required of local governments means that early funding and technical assistance for project development is needed to make their projects more financially viable For the urban poor to access municipal infrastructure, especially water and sanitation services, better targeted subsidies and access to credit in a form that accommodates the poor is essential.

Several local and state governments in India have developed and implemented pilot projects related to municipal resource mobilization, market based financing, and other related themes since mid 1990s and are supported under FIRE (D) project. Once a local government or any other implementing agency decides to undertake a particular infrastructure project, two key decisions are (1) whether the local government will implement the project itself or will utilize a public private partnership mode, and (2) how the project will be financed.

Project Financing Options:

Private investment through PPP arrangements is attractive to local governments, but should be explored only where project revenue streams are large enough to meet operations and maintenance (O&M) costs, as well as a substantial portion of capital costs. In the event that project revenues are insufficient and require substantial support from the general municipal budget to meet recurring costs and debt servicing, the local government should opt for more conventional implementation model where the government finances and most likely implements the project. If a local government intends to implement an infrastructure project through a conventional engineering, procurement and construction contract, it undertakes a detailed project report (DPR), usually with assistance from technical consultants, and reviews all potential funding sources for implementation. This involves estimating all revenue surpluses, potential capital grants, and contributions from beneficiaries in the form of customer deposits or impact fees. If a funding gap exists, it is usually financed through debt, raised either through term loans or bonds. Term Loans (through banks and other lending institutions) and municipal bonds (through capital markets) are the two basic financing tools for local governments. Neither municipal bonds nor term loans have been used in India on a large scale. In little over a decade, only 23 municipal bonds have been issued for a total investment of Rs. 1353 crores. Bank lending to government is also relatively low, although it was increasing prior to the 200809 financial crisis. According to Reserve Bank of India (RBI), total bank exposure to local level institutions was only Rs. 521 crores in 2007 and the vast majority of this lending occurred through nationalized banks.

Term Loans from Commercial Banks

Since 2006, most of the lending has been for JnNURM projects through term loans. The bond market has slowed completely, presumably because sizable grants have reduced the demand for large scale borrowing. According to MoUD, 17 percent (Rs. 1280 crores) of local governments

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share of capital costs has been raised through term loans from banks and state level funds as on 2009. This makes it clear that only a fraction of the estimated US $ 1.2 trillion urban investment required over the next two decades is coming from either bonds or commercial lending at this point.

Municipal Bonds:
Municipal Bonds are more attractive as they have low interest rates than term loans on account of the tax break available to investors. The tax free status of municipal bonds means the investors do not have to pay income tax on the interest they earn. Investors that have large tax liabilities such as large corporations often appreciate the special tax free status of municipal bonds and as a result the interest rate decreases. Typically, municipalities can raise loans from banks and lending institutions with 9% -10.5%, whereas tax free municipal bonds usually have an interest rate around 8 %. Because an interest rate cap exists on tax free bonds, market demand for them decreases when the yields on taxable corporate bonds are high. Disadvantages of Municipal Bonds: Municipal Bonds require investment grade credit ratings and overall city financial viability. In practice municipal bond investors expect AA credit ratings or better, which very few Indian cities have. Municipal Bonds are normally issued in only one or two tranches within a year and have a minimum size of Rs. 50 crore. Because this generates sizable amount of money at a single time, local governments risk a negative interest arbitrage if the bond proceeds sit in a bank account for very long. As a result, construction needs to reach scale soon after the bond transaction. Also the entire process of raising municipal bonds is relatively expensive and time consuming, taking up to as much as a year to complete. It may be preferable to first access term loans to achieve financial closure, and then explore refinancing through municipal bonds once the project implementation has reached significant scale, thereby allowing local governments to choose the most opportune time to issue a bond. Since 1998, municipal bonds have become an established mechanism for mobilizing long term commercial debt financing for urban infrastructure projects. In over a decades time 23 municipal bonds have been issued in India worth Rs.1353 crores. The following table indicates the municipal bonds that have been issued as of 2010.
Rs. in Crores

Bangalore Ahmedabad Ludhiana Nagpur Nashik Indore Madurai Ahmedabad Municipal Corporation Nashik Municipal Corporation Hyderabad Municipal Corporation Hyderabad Metro. WS & Sewerage Board Chennai Metro. WS & Sewerage Board Visakhapatnam Municipal Corporation Visakhapatnam Municipal Corporation Ahmedabad Municipal Corporation

1997 1998 1999 2001 1999 2000 2001 2002 2002 2003 2003 2003 2004 2004 2004

City Road/drainage projects Water Supply & Sanitation projects Water Supply & Sanitation projects Water Supply & Sanitation projects Water Supply & Sanitation projects City road projects City road projects Water Supply & Sewerage projects Underground sewerage, SWD project Road Construction, widening project Drinking Water Supply projects Water Supply projects Water Supply projects Water Supply projects

125.0 100.0 10.0 50.0 100.0 10.0 30.0 100.0 50.0 82.5 50.0 42.0 20.0 50.0 58.0

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City

Year

Projects

Amount

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Chennai Metropolitan Water Supply & Sewerage Board Chennai Municipal Corporation Ahmedabad Municipal Corporation Nagpur Municipal Corporation TNUDF Pooled Issue Karnataka Water & Sanitation Pooled Fund TNUDF Pooled Issue TNUDF Pooled Issue Total 2005 2005 2005 2007 2003 2005 2008 2010 Water Supply projects Road projects Road and Water supply projects Water Supply & Sewerage projects Water Supply & Sanitation projects Greater Bangalore Water Supply Tamil Nadu towns Water & Sewerage Tamil Nadu towns Water & Sewerage 50.0 45.8 100.0 21.2 30.4 100.0 45.0 83.2 1353.1

*Source: Developing Sustainable and inclusive urban infrastructure services: a guidebook for poject implementers and policy makers in India

City Experiences: Ahmedabad - Ahmedabad Municipal Corporation was first municipal corporation in India to issue tax-free municipal bond, and used it for water supply and sewerage project. In April 2002, the AMC issued secured, non-convertible redeemable tax free debentures on a private placement basis. The bond's term is 10 years with a put all option at the end of the fifth year. The interest rate for the first 5 years is 9 per cent payable semi-annually; and the rate for the, next 5 years is linked to the prevailing bank rate. The bond issue amount was Rs. 500 million with a right to retain over-subscription up to Rs 500 million. Hyderabad - The Municipal Corporation of Hyderabad issued a tax-free municipal bond in 2002, the second city to do so. The Rs 825 million raised by the bond will provide urban infrastructure especially in slums. The tenure of the bond is 7 years and its interest rate is 8.5 per cent. The income accruing to the investors will be exempt from income tax. At the same time, the Government of India increased the limit of municipal tax-free bonds from Rs 2000 million in 20012 to Rs 5000 million in 20023. Nagpur - The importance of mounting a thorough marketing process is highlighted by the failure of the March 2007 Nagpur Bond issue to achieve 100% sales. Because the Nagpur bonds were issued as tax-free, an interest rate cap was required by MoF. The maximum coupon interest rate was established at a level of 7.9 percent, but that was below what many investors were willing to accept for that particular bond at that particular time. Nagpurs marketing process for the bond issue did not alert themto the problem in time to make changes to the issue (either giving up tax-free status to allow a higher coupon interest rate or scaling back the issue to the amount that could be sold at the lower, tax free capped rate). As a result, investors only bought 17% of the anticipated issuance. This reflected badly on the issuer, Nagpur Municpal Corporation, Fire (D) Program, and the merchant bankers who structured, marketed and issued the bonds.

Municipal Credit Rating:

Credit Rating is an element of the presale stage of a municipal bond issue. The rating indicates the risk level associated with an issuers ability to repay debt and is an important tool used by capital market investors to compare the risk of a particular municipal bond to alternative rated investment opportunities. While a credit rating is a key element in accessing capital markets, it has also come to be recognized as an important indicator of urban competitiveness.

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CRISILs rating methodology has evolved to focus on six major areas relative to a municipalitys profile and existing operations, including financial and managerial performance. The credit rating also examines the specific project for which a local government intends to borrow funds. The six areas considered for rating the creditworthiness of the cities are: a) b) c) d) e) f) Legal and Administrative Framework Economic Base of the Service Area Details of Municipal Finances Existing Operations Management Project Analysis

The Municipal Credit Ratings of JnNURM cities

Rating Category AAA AA No. of Cities 0 10 Cities NA Delhi, Greater Mumbai, Hyderabad, Navi Mumbai, Nashik, New Delhi, Pune, Pimpri Chinchwad, Surat, Thane Ahmedabad, Chandigarh, Kalyan, Kolkata, Mira Bhayandar, Nagpur, Rajkot, Vadodara, Visakhapatnam, Vijayawada Ajmer, Bangalore, Bhopal, Bhubaneswar, Chennai, Cochin, Coimbatore, Dehradun, Faridabad, Indore, Jaipur, Ludhiana, Madurai, Mysore, Nanded, Panaji, Raipur, Trivandrum Agra, Agartala, Amritsar, Asansol, Guwahati, Howrah, Jammu, Jabalpur, Kanpur, Kulgaon Badlapur, Lucknow, Meerut, Puducherry, Ranchi, Srinagar, Shimla, Ujjain Allahabad, Bodhgaya, Haridwar, Jamshedpur, Mathura, Shillong, Varanasi Puri NA Key Credit Factors Highest degree of safety with regard to timely payment of financial obligations Robust debt service coverage ratios, strong finances, adequate management, technical competence, healthy economic base, and consistent revenue surpluses Comfortable financial risk and favorable economic base Weak financial profile, high dependence on government grants/transfers, and weak project implementation abilities

10

BBB

18

BB

17

Cities possess marginal/negative operating surpluses, thereby limiting ability to borrow and service additional debt.

C D

1 0

The private investors in India are presently able to assess the risk of financial default through a credit rating of the local government and its project financing structure before investing. Using municipal bonds, private investors have a simple to use, legal mechanism for channeling their funds into the local governments project and recovering their repayment (Eg. Ahmedabad). State Leve Urban Infrastructure Fund (UIFs) have also proven to be an important intermediary for challenging commercial financing into urban projects, especially for smaller local governments whose projects are not large enough to access stand alone financing at a reasonable cost (Eg. Tamil Nadu Urban Development Fund, TNUDF, etc). When it comes to
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Inadequate and volatile grant support from respective state governments, poor economic base and adverse financial profile (marked by poor collection rates) In no position to repay debt Default or expected to default on repayment

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providing cost effective financing to poor urban families so that they can upgrade their access to water and sanitation, the role of microfinance is emerging as a crucial complement to capital market project financing. The steps needed to complete a project financing transaction differ depending on the mechanism employed, but the goal of identifying the investment potential of projects and then translating it into financing is the same. With a PPP approach, the goal is to bring in private sector resources and expertise through various types of service contract agreements. For debt market financing, contracts are also important to define the terms of lending.

Pooled Financing:
The small local governments are finding it difficult and expensive to utilize the municipal bond mechanism to mobilize long term debt financing for their projects. Their weak financial viability means that most are not creditworthy enough to access significant commercial financing. About 40 percent of the JnNURM cities have been rated as sub investment grade during a study commissioned by the MoUD GOI in 2008-09 and in most cases, their individual municipal bonds are too small to attract institutional investors, and the fixed costs fo a bond issue are a high percentage of the total amount borrowed (a bond should be about Rs. 50 crore to be worth the transaction costs). By pooling the borrowing needs of a group of local governments, it is possible to achieve a bond issue scale that interests the capital markets and enables a special purpose vehicle (SPV) to assume the cost and management responsibility that small governments do not have the capacity to shoulder. Pooled Financing in Tamil Nadu The first state in India to undertake pooled financing was Tamil Nadu. The Tamil Nadu Urban Development Fund (TNUDF) established an SPV in the form of a trust -- Water and Sanitation Pooled Fund. The purpose of the trust is to channel financial resources, including financing raised from private markets, into high priority infrastructure investments, contributing directly to the improved living conditions for urban population. The trust finances water and sanitation projects of small and mid-sized towns in the state of Tamil Nadu. The fund enables local governments to participate in the capital market without increasing the debt burden on the state. Pooled Finance Development Scheme Recognizing the importance of pooled financing for the development of urban infrastructure, the Government of India established the Pooled Finance Development Scheme (PFDS), and with it a special fund to encourage the wider use of the pooled fund model. The main objectives of the PFDS are to: 1) Facilitate local government access to capital and the financial market for investment in essential municipal infrastructure 2) Facilitate development of bankable urban infrastructure projects, structured with appropriate credit enhancements in such a way that they demonstrate the capacity for servicing debt to the satisfaction of rating agencies and potential investors 3) Reduce the cost of borrowing to local bodies by employing appropriate credit enhancement measures, and
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4) Facilitate development/strengthening of the municipal bond market The PFDS also creates an incentive structure to support urban reforms, which would also be driven by covenants with financial market lenders to local governments. Under this scheme, a Pooled Finance Development Fund (PFDF) provides a grant to the extent of 50 percent of a bond service fund or 10 percent of the total bond issuance, whichever is less. In addition, upto 75 percent of the cost of the project development would be reimbursed by the PFDF as a grant to the local governments after a pooled bond issue has been approved. For a state government to apply for grant assistance to their pooled bonds credit rating enhancement fund, the Government of India has stipulated certain requirements. To assist cities and state nodal agencies, MoUD has developed toolkit which outlines the PFDS in detail.

Developing Commercially Viable Projects

In infrastructure projects, especially water supply, sewerage and solid waste management projects, that deliver public goods, the government agencies may not want to make profits. From social considerations, the government may want to subsidise certain categories of consumers. At the same time, they need to provide for repayment of project capital costs and meeting the operational and maintenance (O&M) costs. Hence the outlook has to be that they should not make a loss at the project level. On the other hand, if the project were implemented with private sector investment, the private sector organization would expect to make reasonable profits on the investment. A commercially viable project, therefore, can be defined as a project that is financially sustainable from the revenues of the project, generated by sale of the services and products, to provide for the envisaged level of profits on the investment of participating organizations. It should be able to raise resources from the capital markets largely on the basis of revenue streams. Efficiency is seen mainly as a function of market and incentive structures. While in theory, it makes little difference whether a firm is privately or publicly owned, experience indicates that the private ownership will produce superior efficiency outcomes. It is unrealistic to expect the private sector to be spontaneously motivated. More often than not, urban infrastructure projects in developing countries have to be commercialized in a nonexistent market. Commercialization under such circumstances involves business innovation and market development. Hence it is necessary that the right tools and incentives are used and the private sector is encouraged through government policy, regulation, legal reform, contract design and compensation. A step wise structured approach needs to be followed for commercializing infrastructure services. Stakeholders in Commercialization Process: Various participants play different roles, direct or indirect, in the development of infrastructure projects. It is important to recognize the concerns of each stakeholder during the development of commercial projects. Addressing their concerns through a structured mitigation framework reduces the project risks and leads to successful implementation of the project. There are four key stakeholders in commercial infrastructure projects: Lenders:

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Lenders being risk averse, try to cover all foreseeable or possible risk scenarios. These risks mainly arise from uncertainty in the project costs and revenues at various stages of project implementation. Equity Holders: Private sector organisations are willing to make investments in the project as equity (hence also called equity holders) provided that the project has an appropriate risk reward relationship. Their key concerns include: Return profile Potential for efficiency gains Exit mechanisms, and Regulatory concerns

Government and Multi-lateral agencies The typical concerns of government and multi lateral agencies include: Transperancy in procurement and delivery of services when private sector participation (PSP) is sought Institutional, political and human resource impacts when transiting from an existing arrangement to a commercial one through PSP Regulation of windfall profits; and Limiting their liability

The multi lateral agencies are typically involved in supporting the government to meet its obligations in a better manner. Consumers Ability to understand and meet consumers expectations is also a key factor in the commercially viable project. Typical consumer expectations are: Quality, availability and reliability of services Minimizing the cost of services, and Achievement and maintenance of service standards

The above stakeholders are those who need to be consulted by virtue of their legitimate interests during the transition process. Others: The other stakeholders include those whom it is simply good politic to inform through a public relations campaign. They are the various citizen, environmental or political groups and nongovernmental organizations (NGOs) who often assume the role of watchdogs. Their concerns arise from issues related to the change in policy of service delivery, transperancy of the procurement and management process, impact on consumers, the environment and social impacts at large etc. Similarly, existing employees have concerns related to their future role and responsibility in the new institutional arrangement, protection/continuity of their service

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conditions and the possibility of facing retrenchment or redundancy in the name of efficiency. Understanding their view points and satisfactorily addressing their legitimate concerns strengthens the transition process. Balancing Commercial Viability with the Needs of the Poor: The poor contribute to the economy of the city and need to be recognized as residents desirable of affordable and reliable services. The major factors that affect service delivery to the poor are declining delivery system performance, high price of water, use of alternative service providers, cash flow mismatch with connection charges and unsuitable billing cycles and land tenure. There is a need to balance commercial viability with the needs of the poor. In order to achieve this, special attention must be given to: The price of service being developed Expansion of the system in order to add new connections in previously unconnected areas; and Adoption of an appropriate level of service

Financing, tariffs and subsidies therefore play a vital role. The alternative methods that can address the needs of the poor through a participatory approach, in the design of the delivery system and its integration with the main system need to be studied.

Project Feasibility Assessment:

A project proposal is structured into an implementable project through the prefeasibility analysis. The project sponsor and potential funding agencies often work together. The sponsor is mainly responsible for ensuring that the project proposal is properly completed and that the feasibility of its main components and assumptions are adequately tested. The funding agencies usually support the sponsor in this process. The sponsor may also use the services of consultants to assist them in carrying out the preparatory work. Focus of Pre-feasibility Analysis: The pre-feasibility analysis focuses on assessing those aspects of a project that are important for assessing its commercial viability. Pre-feasibility reports, thus, assess the likely charges for the services, whether they are in an acceptable range, the likely demand for services and revenues thereof, the potential return on investments that can be generated by the project, along with the institutional arrangements necessary for raising market resources. A prefeasibility study is usually undertaken in two stages (a) Technical Design Analysis and (2) Financial Analysis. Technical Design Analysis: This is a six step analysis based on existing practices in Indian cities. The steps are described below. Step 1- Consumption Forecasts: These forecasts are developed to identify user groups and their consumption patterns, which are taken as a basis for demand estimates. This analysis can then lead to an estimation of revenue inflows and the variable part of operating and maintenance expenditures.

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Step 2 Estimation of new investments required: The second step in a prefeasibility analysis is to estimate new investment requirements based on existing and desired service levels identified earlier in the preliminary project design. A preliminary financing plan is developed, including proposals for the type of finance to be used (equity or debt), sources from which it may be obtained, and the terms and conditions under which it is available. Then, total project costs are determined using: Preliminary base costs for the design year Phasing of the project Physical contingencies Cost escalation, and interest

Step 3 System Annual Costs: The system annual costs are calculated separately for the existing and new systems and comprise: Operation and maintenance costs Debt servicing costs Unanticipated costs, and Depreciation

Step 4 Initial average tariff analysis: In the case of physical infrastructure, the tariff analysis would need to take into account consumers willingness to pay to arrive at a realistic tariff plan. Particular attention must be paid to the financing, tariffs and subsidies to the poor. The most important indicators in this respect are the Internal Rate of Return, Return on Equity, and Debt Service Coverage Ratio (DSCR). Step 5 Sensitivity Analysis: One of the major constraints in tapping private funding sources has been the high risk associated with infrastructure project investments. Thus, it is important to assess the sensitivity of financial performance to the risks associated with the project. The detailed risk assessment is explained in subsequent sections. The specific variables for this analysis may include: Increases in project costs due to change in project concepts; Delays in project implementation and related cost over runs; and Delay in debt servicing due to shortfall in project revenues arising out of an over estimation of services demand, or inability to raise tariffs or poor collection efficiency (all of which depend on the institutional arrangements for service delivery)

Step 6 Institutional Issues Analysis: The institutional analysis examines two key factors, namely, who mobilizes the resources and what will be the choice of institutional arrangement for implementing and managing the project. Four institutional options are available to decide the main agency. An independent project entity A national or state level financial intermediary A state level statutory functional authority A municipal authority

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It becomes important at this stage to assess the credit worthiness, managerial and operational capacity and efficiency of the implementing institutions. Discussions with stakeholders should also be held at this point. A wide variety of institutional arrangements exist for service delivery, and these depend to a great extent on local context. Options include: A municipal enterprise Statutory functional authority, Management or service contract; or Concession through a Build Operate Transfer (BOT) arrangement or community provision

Institutional Service Delivery options may also be developed through unbundling of the service. For example, components of a service such as solid waste collection, transport and disposal may be separated, or by sub-dividing services by geographical zones. A more detailed analysis in relation to the risk assessment should also be conducted. Tariff analysis, both initial and detailed, must be conducted in relation to both political commitment and a rapid market assessment of demand for the service. Detailed Feasibility Studies: Prefeasibility analysis establishes the potential of the project to be developed in a commercial format. The next step, which comprises feasibility studies, explores the various components of the project in greater detail. The feasibility study examines not only the technical, market, institutional, legal, environmental, social and financial aspects of the project, but also reviews the projects contractual framework, legislative requirements, implementation schedules, and procurement processes. Various stakeholders may commission different agencies to carry out feasibility studies according to their objectives and concerns regarding the proposed infrastructure project. Government Objective: Sub Module: 3.3 Project Preparation and Detailing
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For the government, the key requirement is the ability of the project to demonstrate that: It is constructed, operated, and maintained in a demonstrably cost effective manner; It conforms to public requirements, especially with respect to user charges, environment and social standards, and regulatory aspects; It conforms to applicable design and performance standards; and It explicitly demonstrates the form of government support needed for the project

Private Sector Objective: The key concerns/ requirements for the project from a commercial perspective include: Clarity on projects concept and scope Need and demand for the services Certainty of revenue streams Appropriateness of the project structure, its ability to capture investor interest;

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Perceived risks of the project Extent of government support Financial viability, and Rigor and comprehensiveness of the contractual framework.

Successful commercialization of infrastructure projects requires that a balance be achieved between the requirements of the government and the private sector. In order to fully satisfy both sets of requirements, it is necessary that the documentation generated during the project development phase addresses these concerns and provides sufficiently rigorous basis for its recommendations.

Financial Analysis:
Assessing commercial viability is a crucial step in the Project Development process (especially PPPs) as it will highlight important financial parameters relating to the project, which would help the ULB to change the project configuration if required or to consider the most suitable financing option for the project. Estimation of capital costs: Capital costs are one-time expenses incurred for creating a new asset or for substantial modernisation or renovation of an existing asset. It should include cost of civil works, machinery, equipment, installation and commissioning expenses. Any substantial expenditure that needs to be incurred during the life of the project to maintain the useful life of the asset is also taken as a capital expenditure. Calculating the Capital Cost of a Project # 1 2 3 4 5 6 Item Cost of Civil Works Cost of machinery and equipment Financing charges during construction period Installation and commissioning expenses Any other cost that can be categorized as capital Total Capital cost per annum (1+2+3+4+5) Amount (Rs. In Lakhs)

Capital costs may be incurred over the first few years of the project. The year wise expenditure schedule should be established. Any substantial one-time cost that is incurred in the subsequent years and is necessary for maintaining or enhancing the useful life of the asset should also be treated as a part of capital cost. Estimation of recurring costs: Recurring costs are periodic costs which are incurred periodically for operating the asset. These include cost of labour, energy/ fuel costs, periodic maintenance and other operating expenses such as cost of tools, consumable, etc. Calculating recurring expenses # 1 2 Item Salary or Staff Cost Cost of consumables (raw material, machines, tools ) Amount (Rs. In Lakhs)

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3 4 5 6 Fuel and energy expenses Periodic maintenance Cost of periodic maintenance estimated annually Total cost of operations per annum (1+2+3+4+5)

Estimate recurring revenues: This include any user charges or fees that will be collected from users, revenue from other non-tax resources such as advertising arising out of the project, any special tax or levy that could be charged from the project users or general public, etc. Recurring Revenue estimates: # 1 2 3 6 Item Use Charges/ fees (assume realistic level of realization) Revenue from advertising rights (if any) Any other source of income Total cash inflow expected per annum (1+2+3) Amount (Rs. In Lakhs)

Both the income and expenses estimates should be calculated for the entire duration of the projects as these may vary over the years. Quantum of debt: Typically most infrastructure projects are financed with 70-80% of the cost met through debt sources such as loans from financial institutions, bonds, pooled finance, etc. This would help the ULB to undertake more infrastructure projects by leveraging its own resources to the maximum extent. The remaining amount is financed through equity contributions. In India, urban infrastructure projects are financed through much lower quantum of debt. The ULB should assume a realistic amount of debt while undertaking this analysis. Key Financial Indicators: Following are the key financial indicators that provide inputs to structuring of the project: Operating ratio: This is a measure of the extent to which recurring revenues from the project are sufficient to meet recurring expenses. Operating surplus, defined as excess of operating revenues over operating expenses shows whether the project is self-sufficient. Interest payments: The quantum of debt determines the interest expenses. If the operating surplus is more than the annual interest payment, it shows that the project can bear the cost of interest payments and this improves the financial viability of the project. Project returns: This is a measure of the overall financial viability of the project. It also measures the extent to which the project can bear the capital expenditure on the project. The project returns should be measured over a period of time that matches the life of the asset or the expected duration of the contract. Financial viability can be determined through various methods such as NPV, IRR, etc. These are discussed separately in the next section. Debt repayment: The Debt Service Coverage Ratio (DSCR) gives an indication of the capacity to repay the debt incurred for the project from operating surpluses. This ratio should be above one, although lenders may insist on much higher DSCR for additional comfort. Cash reserves and other separate provisions may have to be made to ensure that the DSCR does not fall below the minimum.

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It is important to assess income and expenses during the entire life of the project. Estimates during subsequent years could be very different from those of the initial year. The financial viability is affected by scope and structure of the project. Suitable modifications in the project structure could enhance the project viability. Computation of Key Financial Indicators: The following key financial indicators need to be evaluated for all years of the project: # 1 2 3 4 5 Item Recurring Revenue Income Less: Recurring expenses Operating Surplus/Deficit (1-2) Less: Interest Payments Net Cash surplus* (3-4)
*Calculate this indicator only in case of an Operating Surplus

Amount (Rs. In Lakhs)

If there is an operating deficit then the project will require recurring subsidy to meet recurring expenses. Similarly, if operating surplus is less than interest payment, then additional subsidy will be required for meeting interest costs. If there is a net cash surplus then proceed towards calculating financial viability NPV or IRR for the project. This should be done after taking into account taxes, interest payment, depreciation, etc. The financial viability analysis will present additional set of key indicators such as Debt Servicing Ratio, Capital Subsidy, Operating Subsidy, etc. Project Appraisal: The projects are commonly appraised by using the following appraisal criteria. Discounting Criteria Net Present Value Benefit Cost Ratio Internal Rate of Return Non Discounting Criteria Urgency Pay Back Period Accounting Rate of Return Sub Module: 3.3 Project Preparation and Detailing
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The major difference between the methods is that in discounting criteria, the time value of money is captured and in the non discounting criteria method, value of money is assumed to be the same during the project period. The discounting method is more scientific because the value of money is not constant for a given period of time. Thus the project is said to be financially viable, if the project has a positive net present value and rate of return more than the cost of funds. In order to ascertain the stability of cash flows, normally risk analysis and the sensitivity analysis is carried out. This will give an idea about the assumptions, which are sensitive in determining the stability of cash flows. Net Present Value (NPV): What future money is worth today is called its Present Value (PV), and what it will be worth in the future when it finally arrives is called not surprisingly its Future Value (FV). The right to receive a payment one year from now for Rs. 1000000/- (the future value) might be worth to us

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today Rs. 909091/- (its present value). Present value is discounted below future value. When the analysis concerns a series of cash inflows or outflows coming at different future times, the series is called a cash flow stream. Each future cash flow has its own value today (its own present value). The sum of these present values is the Net Present Value for the cash flow stream. The NPV of an investment (project) is the difference between the sum of the discounted cash flows which are expected from the investment, and the amount initially invested. It is a traditional valuation method (often for a project) used in Discounted Cash Flow measurement methodology. Therefore, NPV is an amount that expresses how much value the investment will result in. This is done by measuring all cash flows over time back towards the current point in present time. If the NPV method results in positive value, then the project should be undertaken. NPV = {(sum of expected cash flows from each period)/ (1+discount rate)period (year) } - Initial Investment

NPV Value Now in Rupees

Minus: Initial Investments

Minus: Cost of Capital

Expected Cash Flows

Limitations of NPV method: Although NPV method is widely used for making investment decisions; a disadvantage of NPV method is that it does not account for flexibility/uncertainty after the project decision. Also NPV is unable to deal with intangible benefits. This inability decreases its usefulness for strategic issues and projects. Exercise -1: Calculating the Net Present Value (NPV) for a project Sub Module: 3.3 Project Preparation and Detailing
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Any large infrastructure project involves (a) initial capital investments (b) recurring income streams, in the form of revenue from project users, advertising fees etc., and (c) recurring expenses, which include O&M expenses such as salary, consumables, maintenance expenses etc. These cash inflows and outflows occur during different time periods. It is well known that a rupee today is worth more than a rupee tomorrow due to time value of money. The Net Present Value (NPV) is a well accepted method for comparing multi-year cash flows. These cash flows are discounted to the present value using an appropriate rate of discount. This rate of discount in most cases reflects the cost of funds that will be used for the project. It should reflect the opportunity cost of the funds, i.e., if the next best investment option for the funds is investment in an alternative project with similar risk profile that is 12 percent, then this should be the rate of discount. NPV Calculation:

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A and B are two values denoting cash inflow and cash outflow respectively. A Cash inflow through user fees, grants and other sources; B Cash outflow through operation costs etc. A1 is total Cash inflow in year1; A2 is total cash inflow in year 2; An is the total cash inflow in year n. B1 is the total cash outflow in year1; B2 is the total cash outflow in year2; An is the total cash outflow in year n. n is the year of expiry of contract period r is the discount rate Then NPV is calculated in the following method:
NPV = -(Capital Cost) + [(A1-B1)/(1+r/100)^1] +[(A2-B2)/(1+r/100)^2]++[(An-Bn)/(1+r/100)^n]

Example: Capital Cost (initial investment) of the project = Rs. 45,00,000/Discount rate r = 10 percent Contract Period n = 7 years Cash flows in respective years is given as under: Cash Inflow Cash Out flow A1 = 2500000 B1 = 1500000 A2 = 2700000 B2 = 1700000 A3 = 3000000 B3 = 1900000 A4 = 3200000 B4 = 2100000 A5 = 3500000 B5 = 2200000 A6 = 3700000 B6 = 2400000 A7 = 4100000 B7 = 2600000 The net cash flows are calculated in the following table Year 1 2 3 4 5 6 7 Cash Inflow A1 = 2500000 A2 = 2700000 A3 = 3000000 A4 = 3200000 A5 = 3500000 A6 = 3700000 A7 = 4100000 Cash Out flow B1 = 1500000 B2 = 1700000 B3 = 1900000 B4 = 2100000 B5 = 2200000 B6 = 2400000 B7 = 2600000 Net Cash flow A1- B1 = 1000000 A2-B2 = 1000000 A3-B3 = 1100000 A4-B4 = 1100000 A5-B5 = 1300000 A6-B6 = 1300000 A7-B7 = 1500000 Discounted Value (An-Bn)/(1+r/100)^n 909091 826446 826446 751315 807198 733816 769737

Net Present Value (NPV) = -(4500000) + [1000000/(1+10/100)^1] + [1000000/(1+10/100)^2]+ [1100000/(1+10/100)^3] + [1100000/(1+10/100)^4] + [1300000/(1+10/100)^5] + [1300000/(1+10/100)^6] + [1500000/(1+10/100)^7] = (4500000) + 909091 + 826446 + 826446 + 751315 + 807198 + 733816 + 769737

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= Rs 1124049/Since NPV is positive, the project provides an attractive rate of return on investment. If we had a higher initial investment, say Rs. 6000000/- , the NPV would have been Rs.375951, i.e. negative. In that case the project would have been considered unattractive for return on investment. Internal Rate of Return (IRR): Internal Rate of Return measures the maximum financial return, as a percentage of total project investment that would result in a net present value of zero, i.e. the level of return that would cause a zero cash flow in the project. The IRR covers the life of the project, and a project with a higher IRR is more desirable than a project with a lower IRR. Decision makers compare the IRR of a project against the prevailing cost of capital (discount rate) in the market for projects of similar risk profiles. At the prefeasibility stage, the IRR is an indicator of the potential profitability of a project, gauging the attractiveness of an investment given general market conditions and investment trends at the time. It can also provide insights into the need for subsidies. For example, a higher IRR may be required to attract capital for a project in a new sector that is perceived as risky compared to other sectors/projects. Subsidies or credit enhancements may be required to lower project costs, thus increasing cash flows and the IRR. Over time, as the image of the sector improves and is better understood, a lower IRR may be acceptable. IRR calculations can help evaluate different scenarios of cost, revenue and other project variables (eg. tariff changes, delays, technology, and subsidy availability) through sensitivity analysis. Exercise 2: Calculating the Internal Rate of Return (IRR) for a project The IRR for an investment is the rate of return that would make the present value of future cash flows of the investment equal the current market price of the investment. For calculation purposes it is the interest rate that produces a zero NPV.
Zero = -(initial investment) + [(A1-B1)/(1+IRR/100)^1] +[(A2-B2)/(1+IRR/100)^2]++[(An-Bn)/(1+IRR/100)^n]

Thus IRR answers a question that complements the NPV analysis what is the highest cost of capital that this project can bear? Sub Module: 3.3 Project Preparation and Detailing
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Example: Capital Cost (initial investment) of the project = Rs. 45,00,000/ Contract Period n = 7 years Cash flows in respective years is given as under: Cash Inflow Cash Out flow A1 = 2500000 B1 = 1500000 A2 = 2700000 B2 = 1700000 A3 = 3000000 B3 = 1900000 A4 = 3200000 B4 = 2100000 A5 = 3500000 B5 = 2200000 A6 = 3700000 B6 = 2400000 A7 = 4100000 B7 = 2600000

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The net cash flow can be calculated as follows: Year Cash Inflow Cash Out flow Net Cash flow 1 A1 = 2500000 B1 = 1500000 A1- B1 = 1000000 2 A2 = 2700000 B2 = 1700000 A2-B2 = 1000000 3 A3 = 3000000 B3 = 1900000 A3-B3 = 1100000 4 A4 = 3200000 B4 = 2100000 A4-B4 = 1100000 5 A5 = 3500000 B5 = 2200000 A5-B5 = 1300000 6 A6 = 3700000 B6 = 2400000 A6-B6 = 1300000 7 A7 = 4100000 B7 = 2600000 A7-B7 = 1500000 To compute the IRR, 0 (zero) = -(4500000) + [1000000/(1+IRR/100)^1] + [1000000/(1+IRR/100)^2]+ [1100000/(1+IRR/100)^3] + [1100000/(1+IRR/100)^4] + [1300000/(1+IRR/100)^5] + [1300000/(1+IRR/100)^6] + [1500000/(1+IRR/100)^7]

Solving the above equation, the IRR is equal to 16.70344 %. This is the highest cost of capital that the project can bear. If there is an alternative investment opportunity with a similar risk profile which gives a higher IRR, then investing in this project is not the best option from the financial point of view. Social Cost Benefit Analysis: Social Cost Benefit Analysis (SCBA) also referred to as economic analysis is a methodology developed for evaluating investment projects from the point of view of the society (or economy) as a whole. In the context of planned economies, the SCBA aids in evaluating individual projects within the planning framework that spells out national economic objectives and broad allocation of resources to various sectors. In SCBA the focus is on the social cost and benefits of the project, and these often tend to differ from the monetary costs and benefits of the project. As a part of SCBA, it is important to capture a list of benefits from societal perspective (both social and economic) supported by (i) explanation in qualitative terms and (ii) quantification of these benefits to the extent possible along with underlying assumptions. Benefits are to be focused on project outcomes (in the context of the project outlays made) and especially on their impact on citizens/user segments covering elements such as: access supply continuity time savings coverage safety environment improvement service quality cost savings employment income for poorer sections improved efficiency improved quality of life, etc.

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Also needs to be captured is a list of negative externalities (ie adverse impacts) from a societal perspective (both social and economic) supported by (i) explanation or description in qualitative terms and (ii) quantification of these negative/adverse impacts to the extent possible along with underlying assumptions. Examples of negative/adverse impacts may include: pollution; environmental distortions reduced green cover reduced access to any specific user segments supply interruptions (especially during project construction phases) etc displacement of inhabitants disruption in livelihood /reduced employment/ labour redundancy possible haphazard development around/adjacent project site areas ( eg resulting in slums) The listing or identification of adverse impacts facilitates planning for possible counter measures and also recognizes possible trade-offs in taking up the project. Debt Service Coverage Ratio (DSCR): Debt Service Coverage Ratio indicates the extent to which the operating profits/surpluses of a project (project revenues excluding O&M expenditure) cover debt service obligations in one year and over the life of the project. It helps potential lenders determine the credit risk associated with the project. A higher debt service coverage ratio means that there is more operating surplus to cover debt service payments, and therefore less risk for lenders. Investors and lenders will want to see a slightly higher ratio in sectors that are perceived as risky. Maintaining a particular debt service coverage ratio may also be a stipulation in a loan and a reduction in it could trigger either a tariff increase or some other legal remedy.

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3.4 Public Private Partnerships

3.4.1 Need for Public Private Partnerships
Rapid urbanisation and growing demand has increased the need for investment in infrastructure development. Limited availability of funds for the provision of infrastructure has widened the divide between requirements and supply. In current terms, the investment requirement far exceeds the availability of budgetary allocation. The government therefore has been encouraging PPPs to attract market investment, thereby leveraging government budgetary resources to meet the provisions for infrastructure. Infrastructure projects are complex, involving different stakeholders, and require significant preparatory work, i.e., the project development. When properly structured or made bankable, PPP projects should meet the requirements of the government for service provision, with respect to standards, levels and quality of service etc., reduce their exposure to risks and attract private investments. To achieve this, however, it is necessary to lay down service requirements or targets of performance expected to be achieved. Governments or local authorities have to be clear in terms of objectives, on what is expected from the private sector and what price the public would be willing to pay for the quality of service(s) envisaged. With such a backdrop, PPPs provide a good alternative for attracting private investment as well as efficiency in the provision of services that meet the current social needs. Government of India (Department of Economic Affairs) has formulated a Scheme for Support to Public Private Partnerships in Infrastructure, July 2005. The outlined strategy is being broadly followed for PPP Projects proposed for funding under the JNNURM.

3.4.2 Concept and Relevance

Traditionally, PPP is understood as a concept, which involves the public and private sectors working in co-operation and partnership to provide infrastructure and services. It is one of a range of alternative structures that fall between conventional procurement through public ownership and full privatisation. Instead of the public sector procuring a capital asset by paying for it in full up front, the effect of a typical PPP structure is usually to develop a single standalone business, financed and operated by the private sector. Key features of a PPP include: 1) A long-term service contract between the public sector and a private sector operator; 2) The provision of capital assets and associated services by the operator; 3) A single payment, often known as a unitary payment, from the public sector to cover investment and services; 4) The integration of design, building, financing and operation in one proposal; 5) The allocation of risk to the party best able to manage and price it; 6) Service delivery in accordance with performance standards defined in an output specification. The output specification is determined by the public sector at the beginning of the process. The private sector should determine the inputs required, including infrastructure and skills, to achieve that specified output; Sub Module: 3.4 Public Private Partnerships
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7) A performance related payment mechanism.

3.4.3 PPPs in India

The overall response to the call to promote PPP as the preferred mode for implementation of infrastructure is encouraging. The progress is however slow and has been limited to a few sectors. Investment through PPP mode needs to increase substantially in the States and across sectors. Weakness in enabling policy and regulatory framework in most of the infrastructure sectors continues to be a constraint. Some states have made more attempts to develop a broad framework for PPPs, including cross cutting legislation and the development of cross sectoral units that play a role in the identification and preparation of PPPs. State Andhra Pradesh Assam Bihar Framework for PPP The Andhra Pradesh Infrastructure Development Enabling Act, 2001 is to facilitate greater private sector participation in infrastructure projects. The Assam Policy on Public Private Partnership in Infrastructure development proposes to bring in private sector investment with the PPP mode as the preferred approach for infrastructure projects. The Bihar Infrastructure Development Enabling Act, 2006 is for the rapid Development of Physical and Social infrastructure in the State and to attract private sector participation in the designing, financing, construction, operation and maintenance of infrastructure projects in the State and provide a comprehensive legislation for reducing administrative and procedural delays, identifying generic project risks. The Goa Policy on Public Private Partnership applies to all PPP projects sponsored by the Government or PSUs or Statutory Authorities. Gujarat Infrastructure Development Act (1999) amended in 2006 to facilitate greater private sector participation in financing, construction, maintenance and operation of infrastructure projects. The Karnataka Infrastructure Policy, 2007 has been evolved with a view to augment and expedite infrastructure development through active private sector participation. The Orissa PPP Policy, 2007 is to create a conducive environment to utilise the efficiencies, innovativeness and flexibility of the private sector to provide better infrastructure and service at an optimal cost. The Punjab Infrastructure Development and Regulation Act, 2002 provides for the partnership of private sector and public sector, in the development, operation and maintenance of infrastructure facilities and development and maintenance of infrastructure facilities through financial sources other than those provided by the State budget. Has set up the Rajasthan Infrastructure Development Fund with an initial corpus of US $ 500,000, contributed by the financial institutions and the State government. The West Bengal Policy on Infrastructure Development through Public Private Partnership, 2003 was notified to address the need to mobilize private sector investment in infrastructure development and evolve policy guidelines for the purpose.

Goa Gujarat Karnataka Orissa Punjab

Rajasthan West Bengal

3.4.4. Enabling framework for developing PPP projects

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To address the various constraints of implementing the PPPs, several initiatives have been taken by Government of India to create an enabling framework for PPPs by addressing issues related to policy and regulatory environment. Viability Gap Funding (VGF) Scheme: VGF Scheme of GOI began in 2005 to demonstrate the governments commitment to promote PPPs in infrastructure development. The fund is designed to attract investment from private equity and introduce private sector management into infrastructure projects that are economically justified but not necessarily commercially viable on the basis of user fee alone. The scheme provides financial support in the form of grants, one time or deferred to infrastructure projects undertaken through public private partnerships with a view to make them commercially viable. The VGF is administered by Ministry of Finance, with funds from an annual budget allocation. The total funding provided to a PPP project under VGF may not exceed 20 percent of the total project cost. However, the government entity that owns the project may provide additional grants out of its own budget up to an additional 20 percent of the total project cost. VGF Scheme is normally in the form of a capital grant at the stage of project construction, although a revolving fund also exists to help capitalize financial institutions operating in this sector. Eligibility under VGF Scheme: The PPP project should be implemented, i.e., developed, financed, constructed, maintained and operated for the project term by a private sector company to be selected by the Government entity through a process of transparent and open competitive bidding. The project should be from one of the following sectors viz., (a) roads and bridges, railways, seaports, airports, inland water ways, (b) power, (c) urban transport, water supply, sewerage, solid waste management and other physical infrastructure in urban areas, (d) infrastructure projects in Special Economic Zones, (e) international convention centers and other tourism infrastructure projects. The project should provide a service against payment of a pre-determined tariff or user charge The concerned government entity should certify with reasons the following, (a) the tariff/user charge cannot be increased to eliminate or reduce viability gap of the PPP project, (b) the project term cannot be increased for reducing the viability gap, (c) the capital costs are reasonable and are based on standards and specifications normally applicable to such projects where the capital cost cannot be further restricted for reducing the viability gap Based on the above criteria, MoF provides up to Rs. 200 crore to PPP projects that would otherwise not be implemented for lack of commercial viability. Each such project has to secure private investment of at least four times the amount of the grant. India Infrastructure Project Development Fund (IIPDF):

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To support the development of credible and bankable PPP projects, a revolving fund with an initial corpus of Rs. 100 crores has been set up in the Department of Economic Affairs, Ministry of Finance, GoI during 2007-08, to be offered to the private sector. The India Infrastructure Project Development Fund (IIPDF) provides financial support for quality project development activities. The Sponsoring Authority will thus be able to source funding to cover a portion of the PPP transaction costs, thereby reducing the impact of costs related to procurement on their budgets. Eligibility for IIPDF: The proposals for assistance under the Scheme would be sponsored by Central Government Ministries/Departments, State Governments, Municipal or Local Bodies or any other statutory authority. To seek financial assistance from the IIPDF it would be necessary for the Sponsoring Authority to create and empower a PPP cell to not only undertake PPP project development activities but also address larger policy and regulatory issues to enlarge the number of PPP projects in Sponsoring Authorities shelf. The PPP project should be from the sectors that are eligible for viability gap funding under the Government of Indias scheme for Financial Support to PPPs in infrastructure or any other sectors with the approval of the Finance Minister. The IIPDF is available to the Sponsoring Authorities for PPP projects for the purpose of meeting the project development costs which may include the expenses incurred by the Sponsoring Authority in respect of feasibility studies, environmental impact studies, financial structuring, legal reviews and development of project documentation, including concession agreement, commercial assessment studies (including traffic studies, demand assessment, capacity to pay assessment), etc required for achieving Technical Close of such projects, on individual or turnkey basis, but will not include expenses incurred by the Sponsoring Authority on its own staff. The IIPDF will be available to finance an appropriate portion of the cost of consultants and Transaction Advisors on a PPP project where such consultants and Transaction Advisors are appointed by the Sponsoring Authority either from amongst the Transaction Advisors empanelled by Department of Economic Affairs or through a transparent system of procurement under a contract for services. The IIPDF will fund up to 75 percent of the project development expenses to the Sponsoring Authority as an interest free loan. 25 percent will be co-funded by the Sponsoring Authority. On the successful completion of the bidding process, the project development expenditure would be recovered from the successful bidder. However, in the case of failure of the bid, the loan would be converted into grant. In case the Sponsoring Authority does not conclude the bidding process for some reason, the entire amount contributed would be refunded to the IIPDF. To seek project development funding from the IIPDF, the Sponsoring Authority will apply to the PPP cell in DEA through the Memorandum for Consideration accompanied with the Preliminary Report of the project (in six copies). The MFC would provide justification for understanding detailed feasibility studies to be taken up for financing out of the corpus of the Fund in the prescribed proforma. The proposals that do not envisage VGF can also be submitted for funding. Proposals for funding under these Guidelines would cover the entire gamut of PPP

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projects. The guidelines and scheme for IIPDF have been notified by MoF. For details refer (www.pppindia.com). Transaction Advisors for PPP Projects: To provide technical assistance to Sponsoring Authorities and to make the implementation of PPP projects smoother and efficient, the Government of India has established a Panel of Transaction Advisors (through International Competitive Bidding). The Sponsoring Authorities can secure quality transaction management services from qualified firms having skills and experience to provide commercial/ financial and legal services in support of PPP transactions. The Panel is intended to (a) streamline the tendering process for the engagement of Transaction Advisors for PPPs, (b) Enable fast access to firms that have pre-qualified against relevant criteria, and (c) to ensure transparency and accountability through clear definition of the processes and the role and responsibilities of the agencies and the private sector. The list of empanelled consultants may be obtained from the following web link: http://www.pppinindia.com/pdf/panel_transaction_advisers.pdf.

3.4.5 PPP Options

Depending upon the project scope, project cost or estimated investments, allocation of roles and responsibilities, project duration and risk allocation framework, a range of PPP models could be applied. These vary from simple service contract which could be renewed every year to long term concession contracts which could extend up to 25-30 years.

Different PPP structures could be explored based on the extent of funds that could be diverted from public sources and those required from the private sector, service levels targeted, willingness to pay and affordability of consumers, and rehabilitation of the existing systems etc. Table 1 presents different options that could be explored in the urban sector. The choice of an

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option, however, depends on the extent to which the private sector is expected to take over and the sharing of risks associated with such a transfer of responsibility. Table 1: Range of PPP Options
Form of PPP Complexity Rights of Private Partner Ownership of Assets Duration of Contract Examples Service Low Simple services Management Low Supervisory Management control with/without O&M With Govt./ its agency Short Term Improvements in existing system operations, Streamlining administrative & operational practices Leasing Moderate Construct and/or O&M and transfer Lease rights with private partner for the period Medium to Long Term Distribution system improvements BOT/Concession Complex Design, rehabilitate, construct, O&M and transfer With private partner for the O&M period Long Term Efficiency enhancement and creating new assets Divestiture Complex Fully divested and sale of assets to private partner With private partner for eternity Perpetuity Sale of existing assets

With Govt./ Private Sector Short Term Billing & Collection, equipment maintenance, Meter reading, maintenance, replacement, calibration, Monitoring

3.4.4 Choosing a PPP Option:

ULBs often face a dilemma while choosing to opt for PPPs or private sector participation in infrastructure provisioning or services delivery. In order to assess the extent of involvement of the private sector for infrastructure provision and management of services, the ULB should consider: i. Efficiency: What are the realities constraining the ULB from providing efficient services? These could include accountability in terms of time and costs, labour practices, government pay scales, personal benefits, inflexible work arrangements, and procurement procedures. Can these constraints be removed? Are there any economies of scale?

ii. Capability: Does the ULB recognise that external expertise is essential for competent and efficient management of services? What are the capabilities within the ULB for O&M, procurement or financial management? What are the private sector strengths which the ULB is proposing to explore? iii. Legal: Does the ULB have the right to award concessions or enter into contractual licence agreements with the private sector to essentially deliver municipal services? What are the statutory permissions it needs to do so? What are the enabling provisions or amendments in the existing legal framework that would be necessary to make such arrangements enforceable?

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iv. Competition: What is the potential capacity and strength of the market? Is the private sector adequately developed so as to ensure competition among private firms? Would the provision of financial incentives better enable the private sector to participate in public service delivery? v. Duplication of Roles: Will private sector entry duplicate roles or staffing requirements? Is there political will to downsize the workforce when services are given to the private sector? How is the PPP positioned to manage these issues in a co-ordinated manner? What framework or provisions in the contract need to be considered to minimise such socio-political issues? Do the monitoring costs or regulatory roles offset the impact due to private sector participation? vi. Risks: Do frameworks exist to protect the private sector against risks (such as currency adjustments, inflation, political changes and force majeure) so that prices for service are not unduly burdened with the costs of risk management? Does the ULB have adequate financial capacity to meet its contractual arrangements with the private sector? vii. Costs: Are the costs for public service known? Does the ULB have the accounting information to determine whether private sector participation would offer service delivery at equivalent or lower costs? Has there been sufficient strategic planning and have feasibility studies been conducted to benchmark whether the price or technology offered by the private sector would result in savings? In summary, private sector participation is a means to mobilise private investments and introduce efficiency in service provision. Creating a reasonable mix of public and private sector service is one way of establishing competition, introducing performance monitoring and ensuring accountability in delivery of services. Lastly, private sector participation should not be seen with a view to privatise but to introduce investments and efficiencies in the overall service delivery. The selection of the appropriate option for the involvement of the private sector by the government should depend on the (i) problems that it wants to address, (ii) what it is prepared to do to create an environment in which the private sector would be willing to address these problems, and (iii) the country's attractiveness to private investors. For example, if a government's main concern is to improve efficiency and there is little need for new investment, it might choose a management contract or a lease. A lease can yield better results than a management contract because it exposes the private sector to commercial risk, encouraging it to increase sales and reduce costs. But a lease will work well only if the government can establish an environment in which the private sector feels confident about taking commercial risk-that is, if it believes that tariffs will be maintained at a level that yields a reasonable return. If new investment is needed, build-operate-transfer (BOT) contracts, concessions, and divestitures are the logical choice. But they are unlikely to be attractive to the private sector unless the government can provide a credible regulatory framework balancing consumer and private sector interests-that gives some assurance that the private sector can recover its investments. In general, the greater a government's political commitment to creating a clear, fair, Sub Module: 3.4 Public Private Partnerships
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and credible environment for private sector involvement, the more it is likely to be able to ask the private sector to do, and the greater the likely benefits to its citizens. The selection of the particular arrangement for private sector involvement would depend on the matching of the three basic criteria i.e. i) ii) iii) It should be technically sound, targeting the problems and compatible to the existing legal and regulatory framework Financially appropriate and commercially appropriate that can be financed at the tariffs that the users are willing to pay or with viable subsidy Politically sound, having political support at the level of the government and among the different stakeholders

3.4.5. PPP Life Cycle:

PPP lifecycle refers to the entire set of activities from project identification and initiation to construction and commencement of operations. The entire lifecycle can be divided into seven distinct stages each which are briefly discussed below. Stage 1-Project initiation and assessment: The suitability of undertaking the project through PPP route should be analysed by considering the objectives to be achieved by implementing the project. This involves evaluating the suitability of PPP route to meet the objectives and generate greater value to the project beneficiaries. Stage 2- Pre-feasibility analysis: This involves a quick assessment of the commercial feasibility of undertaking the project. It includes estimation of capital expenditure, operating/ recurring expenses, and revenue stream, if any from the project. It will show whether the project is selfsustainable based on the revenues it may generate or require financial support in the form of capital grant or subsidy. Stage 3- Preliminary project structuring: Allocation of roles and responsibilities in the project to different stakeholders in a manner that the risks are assigned to entities best suited to manage them. It also includes determining the financing plan and the most likely PPP model that would be applicable. Stage 4- Detailed project preparation: If more information on technical, cost or commercial aspects is necessary, detailed project report may be prepared. This will help in defining the project scope in greater detail and with more clarity. Commercial feasibility can also be assessed with more certainity due to availability of better information. Stage 5- Bid process management: This include preparation of bid documents such as request for qualification, request for proposal and draft concession agreement. An independent and transparent process should be followed for inviting proposals from private sector partners to select the most suitable private party for implementing the project. Stage 6- Project construction and monitoring: Once project construction begins, it should be monitored on pre-agreed parameters at regular intervals. Corrective action may be necessary to ensure that the project will be completed within agreed time and cost. Stage 7-Commencement of operation: This marks the completion of construction phase. The project is now available for delivering the service for which it was intended. It is necessary to monitor whether the quality and quantity of service delivered by the project meets the performance standards as originally agreed.
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Each of the seven stages represents a crucial checkpoint for the project. Each stage should be undertaken sequentially as the output of one stage has a bearing on the next stage. The key decisions and outputs of each of the stages are presented in figure 1.

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Build, Operate and Transfer (BOT) Projects BOT is a relatively new approach to infrastructure development, which enables direct private sector investment in large-scale infrastructure projects. The theory of BOT is as follows: Build A private company (or consortium) agrees with a government to invest in a public infrastructure project. The company then secures their own financing to construct the project. Operate the private developer then owns, maintains, and manages the facility for an agreed concession period and recoups their investment through charges or tolls. Transfer after the concessionary period the company transfers ownership and operation of the facility to the government or relevant state authority.

Parties to BOT Projects There are a number of major parties to any BOT project and all of them have particular reasons to be involved in the project. The contractual arrangements between those parties, and the allocation of risks, can be complex. The major parties to a BOT project will usually include: Government Agency : A government department or statutory authority is a pivotal party. It will grant the sponsor the "concession that is the right to build, own and operate the facility, grant a long term lease of or sell the site to the sponsor, and often acquire most or all of the service provided by the facility. The government's co-operation is critical in large projects. It may be required to assist in obtaining the necessary approvals, authorizations and consents for the construction and operation of the project. It may also be required to provide comfort that the agency acquiring services from the facility will be in a position to honour its financial obligations. The government agency is normally the primary party. It will initiate the project, conduct the tendering process and evaluation of tenderers, and will grant the sponsor the concession, and where necessary, the offtake agreement. Sponsor: The sponsor is the party, usually a consortium of interested groups (typically including a construction group, an operator, a financing institution, and other various groups) which, in response to the invitation by the Government Department, prepares the proposal to construct, operate, and finance, the particular project. The sponsor may take the form of a company, a partnership, a limited partnership, a unit trust or an unincorporated joint venture. Construction Contractor: The construction company may also be one of the sponsors. It will take construction and completion risks, that is, the risk of completing the project on time, within budget and to specifications. Operation and Maintenance Contractor: The operator will be expected to sign a long-term contract with the sponsor for the operation and maintenance of the facility. Again the operator may also inject equity into the project. Financiers: In a large project there is likely to be a syndicate of banks providing the debt funds to the sponsor. The banks will require a first security over the infrastructure created. The same or different banks will often provide a stand-by loan facility for any cost overruns not covered by the construction contract. Other Parties: Other parties such as insurers, equipment suppliers and engineering and design consultants will also be involved. Most of the parties too will involve their lawyers and financial and tax advisers. Sub Module: 3.4 Public Private Partnerships
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Advantages of BOT Projects: 1. The government gets the benefit of the private sector to mobilize finances and to use the best management skills in the construction, operation and maintenance of the project. 2. The private participation also ensures efficiency and quality by using the best equipment. 3. The projects are conducted in a fully competitive bidding situation and are thus completed at the lowest possible cost.

Contract Process
Contract process is the key to forge a partnership with private sector. It involves 26 inter related steps. These are given in Table xx below. Table xx Contract Process Checklist
1. 2. 3. 4. 5. 6. 7. 8. 9. Establish a zone within municipality for involvement of private sector; Designate a lead officer to oversee the process; Set overall timetable for the project; Undertake service selection process; Determine which services are undertaken by the private sector; Obtain Ministry of Interior approval; Identify appropriate client; Form a contract team; Determine appropriate tender strategy; to be 14. Prepare tender conditions; 15. Prepare contract conditions; 16. Prepare specification of services; 17. Prepare tender documents; 18. Agree on a list of contractors to be invited to bid - at least four and not more than eight; 19. Invite tenders from selected contractors; 20. Ensure all contractors receive the same information; 21. Impose time limit for tender questions; 22. Bid Receiving Committee opens Tenders and certifies receipt of same; 23. Evaluate tenders received; 24. Award contract and issue notice to proceed; 25. Contractor commences work; and

10. Develop contractor questionnaire; 11. Prepare advertisement giving key details of the proposed contract; 12. Advertise for potential contractors in local (national, if appropriate) media; 13. Undertake contractors; evaluation of potential

Source: HUDCO/HSMI Study on Public-Private Partnership.

Guiding Factors for Contract Document

Development of contract is a logical follow-up of bidding process. Contract has to be prepared keeping in view the mandate of municipal government and provide the services accordingly. In this regard six elements are the guiding factors such as Equity; Customer Satisfaction;
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26. Monitor contract payments.

performance

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Compliance of Relevant Legal Provisions and safety net; Insurance and Concessions; Guarantee and Penalties.

Equity Most municipal services particularly the basic services are closely linked to equity. A minimum desirable level of access to them is essential. Partnerships should be able to ensure the minimum access at affordable rate. In this regard, quantity and quality has to be marketed in such a way that equity and social justice is maintained. This is particularly important in relation to water supply, safe sanitation, parking places, management of solid waste etc. Tirpur project for instance has a provision of cheaper water for domestic use as compared to industrial use. Customer Satisfaction Second important aspect of contracts is to ensure customer satisfaction. User satisfaction has to come through a proper identification of product. Demand and willingness to pay should be properly assessed and parameters should be fixed to promote user satisfaction. Specific checks and balances should be developed to monitor the delivery as per contract document. Compliance of Relevant Legal Provisions and Safety Net While preparing contract document specific care has to be taken to follow the provision of various Acts in the interest of users/consumers and labour. These include Child labour Act, Insurance, medical Aid, provision of procedure of grievance reporting and redressal etc. Incentives and Concessions Participation of other stakeholders would also require provision of certain incentives and concessions. These include incentives given by the central and state government to promote participation. These are in the form of rebate in the income tax and other taxes, availability of soft loan and raising funds from primary capital market. Guarantee and Penalties Municipal Governments have to also provide a range of guarantees depending upon the requirement of the project e.g. guarantee to ensure minimum flow of traffic in case of toll roads or the guarantee to adequate solid waste for a waste-processing operator. At the same time certain penalties are also to be included in the process of development of contract. These will ensure optimum compliance of contract document.

Risk Identification and Mitigation

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A proper feedback from guiding factors enables the identification of risks and corrective measures thereon. In this regard model contracts may be reviewed in to find solutions for specific requirements. Normally the partnership project face five types of risks namely 1. Development Risk Development risk is noticed during project planning and pre-construction phase. Project development begins when the project is conceived and ends with the financial closure of the project and commencement of the construction. This is largely related to BOT projects and its other variants. Development risks may include default on development entity, default on MOU provision, market risk affecting feasibility, political risks and legal risks. Development risk is tackled through a variety of performance guarantee. It enables the first party to transfer the rights for project development in case the second party fails to take up the task as scheduled without giving satisfactory evidence.

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2. Construction Risk These include the problems which may arise during the construction process. Construction risk involves 7 key areas namely (1) Completion risk; (2) Cost overruns; (3) Default of prime contractor; (4) Construction delays; (5) Bankruptcy of private development firm; (6) Default of government; and (7) Force majure risk Construction risks may be mitigated through use of performance guarantees. In this regard reputation of track record of the firm and backing from a repute and insurance company would be used as a tool to overcome construction risks. 3. Operations Risk Operation risk comes at third stage where by the predetermined standards of operation are not maintained. These include technological, market, management and partnership angles. These need to be checked through appropriate provision of performance and financial guarantees. 4. Financial Risk Fourth key area is financial risk. This involves three types of risks namely loan repayment risk, inflation risk and foreign currency risk. Loan Repayment Risk involves contractors inability to repay the loan resulting into takeover of the project by the lender. Suitable initiative covering careful financial analysis and cost recovery system of project need to be devised in this regard.Inflation risk deals with the increase in the prices. This will require suitable incentives to enable contractor to have enhanced resource mobilization/recovery in line with the changes in the price index. Foreign exchange risk is meant for the projects involving external funding. Variation in the exchange rate may have serious financial implications. In this regard SWAP arrangements are made in the form of guarantee by intermediary bank to take care of fluctuation of exchange rate. Under the FIRE Project SWAP arrangement have been made for loan taken from US capital market which is used for development of commercially viable municipal projects in India. The guarantor charges some fee which needs to be suitably accommodated in the project proposal. 5. Legal Risk Fifth area is legal risk whereby compliance of legal provision has to be ensured. These risks deal with the application of various Acts, Bye-laws, Rules and regulations e.g. Labour Act, Child Labour Act, pollution Acts etc. Suitable mechanism has also been evolved to settle disputes between municipal body and partners.

Risk Mitigation Framework

The measures for risk mitigation, as indicated above along with respective risk should be carefully considered for suitable incorporation in the project document. A summary or risk mitigation options is given in Table 8. Sub Module: 3.4 Public Private Partnerships
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Module 3 - Project Development Managing Risk through Partnership Contracts Typical arrangement
Development risk Typically this risk is transferred to the private operator. It means the risk linked to design of goods and services, and the operator could be penalised if the required standards are not met. The municipality should ensure that the standards are very clearly specified. There should be clear specifications and time schedules for construction, agreed between the municipality and the private contractor. The latter then assumes the risk of meeting those criteria, and the contract should provide for appropriate penalties if these criteria are not met. It must also be clear who carries the risk of cost over-runs (probably the private partner). The municipality should put in place effective monitoring mechanisms to ensure compliance with agreed-upon standards. The private party is normally made responsible for all operating risks, and is expected to manage all operating costs, including staff costs. For this reason it is important to clearly distinguish between capital and maintenance expenditures and to indicate who will be responsible for which aspects. Any restrictive conditions or incentives should be clearly defined up-front, in order to allow the contractor to incorporate them in preparing a cost estimate at the bidding and contracting stages. The municipality should put in place effective monitoring mechanisms to ensure compliance with agreed upon standards. Contractually, the private operator is mostly expected to identify the demand for the service and users willingness to pay. The operators risk assessment will affect the pricing projected in its bid. The municipality should attempt to provide bidders with as much information as possible to facilitate accurate projects and pricing. Risk is normally managed through an agreed formula and procedure outline that sets the framework for future increases. It is important not to grant the private operator free reign to adjust tariffs, but it would also probably find the risk unacceptably high if government wants to retain this power for itself. It is in all parties interests to ensure affair and mutually acceptable formula and procedure. Ideally, this risk should be placed on the private partner as it relates directly to demand and operation risk, and the operator has the incentives to achieve targets. The private party should carry its own credit risk, but the municipality should ensure that clarity exists as to what will happen if the private party becomes incapable to deliver the services, especially through insolvency. Contracts must ensure uninterrupted service. Suitable clauses should be added to avoid barriers on non-compliance of legal procedures regarding wages, insurances, safety net etc.

Construction risk

Operation and maintenance risk

Financial Risk

(i) Fixation (ii) Tariff collection (iii) Credit

Legal Risks

Enforcement Mechanism/Implementation of the Project

Enforcement Mechanism and monitoring and evaluation system are linked to the regulatory part of municipal functions. This enables municipal body to ensure compliance of contract document. In this case being the first party, municipal governments have to develop channels to monitor the delivery of services taken up by the partners in accordance with select indicators and evaluation system. Application of Enforcement Mechanism also requires suitable manpower at the disposal of municipal body and availability of other equipments and instruments depending upon the requirements. For instance enforcement mechanism for solid waste management need: A flying squad to check that the roads are cleaned and garbage is collected timely

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Weighing machines to weigh the garbage collected by the contractor, Design indicators to check that the safety net is provided by the contractor to its workers, Grievance redressal system to register and attend public complaints

Regulator
Partnerships among Indian cities are emerging gradually. Once these are consolidated significantly and a larger competition is established, there would be a need to have a regulatory authority to see that all the concerned parties are operating according to the rules of the game. Regulator also ensures the protection of consumers interest. Role of a regulator would be particularly needed in the context of smaller towns who due to scale of operations can not involve partnership on their own. In this case inter municipal cooperation has to emerge to pool together similar projects to involve other stakeholders. This will necessarily require a regulator in the interest of both the municipal body and the other partners.

Feed Back
Feedback is an essential part to promote sustainability and replicability of partnerships. A systematic framework has to be developed to record operation and evaluate such feed back as per prescribed norms. This is important to see that the financial benefits, the quality of services provided, the user satisfaction and the safety net to the workers are established in line with the provision and expectations. It is equally important to also carry out financial analysis of the partnerships. This should lead to a periodic assessment and evaluation. At the same these cases should also be documented for wider circulation and information to all the concerned. Finally it appears that the project cycle for municipal partnership has a sequence of actions and follow-up. These are interrelated actions and require development of expertise and skills among municipal governments. Thus, the applications of partnerships do not mean reduction of municipal role in the services. It should rather be seen as a facilitator to enable municipal governments to carry out their mandate more effectively.

Key Factors for Success of PPP Process

To succeed, a process for involving the private sector must meet two basic requirements: The option for private sector participation that is chosen must make sense in local conditions. The option must be implemented in a careful, thorough, and credible manner. The option has to make sense technically, financially, and politically. A technically sensible option is one that is well targeted to the problems (such as a need for improvements in operational efficiency or in service coverage and quality, or both) and is compatible with the existing legal and regulatory framework (or a framework that incorporates feasible changes). A financially sound option is one that can be financed at a tariff that consumers are willing to payor with the aid of a politically viable subsidy scheme. A politically sound option is one that has political support, both within the government and among stakeholders. Successful implementation requires, first and foremost, strong political commitment. It also requires rigorous management, a high degree of technical skill, careful attention to the concerns of stakeholders, and transparency and fairness. Beyond strong political commitment and careful Sub Module: Managing Risk through Partnership Contracts
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preparation, what often makes the difference is an open, competitive process for selecting a partner. Requiring prospective partners to compete with one another for the contract is the most effective way of ensuring that the best-qualified partner is chosen. Competitive processes almost always yield better terms on private sector transactions than negotiated contracts. They also tend to stand up better to political scrutiny-and have a lower risk of being overturned if there is a change in government. Competition is particularly important when the company that wins the competition will have a sole (or monopoly) right to provide water and sewerage services to customers. The extent to which competition is achieved-and the extent to which this translates into the best possible outcomes for consumers-depends on how the bidding is organized and on what mechanisms are put in place to guide the relationship with the private sector and to sustain competitive pressures. Finally, it requires listening to prospective private sector investors, to find out their concerns about the local environment and their ideas about what is possible. Getting a good private sector arrangement isnt simply a matter of writing a good contract. Private sector arrangements are based on a partnership between the public and private sectors. Establishing a good partnership requires defining the governments future roles and responsibilities and ensuring that all the pieces are in place so that it can fulfil them. An important part of this is putting monitoring and regulatory frameworks in place. Another is working out exactly which risks and responsibilities the government will retain once the arrangement is in place-and how it intends to manage them. PSP transactions must be executed in a transparent and competent manner, with the assistance of qualified transactions advisers. Maximizing competition from qualified bidders through a welldesigned tendering process which enjoys broad public support is one of the surest way assuring the best outcome for consumers. Prospects for success will be greatly influenced by: Creating a competent team at the city level (or with representatives of the towns interested in creating a regional utility) with sufficient authority to take or expedite key decisions ("Project Steering Committee"), and supported by the State's Sector Reform Team (since key decisions would also be needed at the State level); Hiring a reputable Transactions Adviser (Consultant) once there is broad agreement on private sector participation; Developing and executing an appropriate public consultation program and incorporating feedback into the transaction design; Putting in place appropriate safeguards for current government employees and contractors who may be affected by the PSP transaction; Pre-qualifying prospective private partners who have relevant operating experience and financial strength to meet sector objectives8 ; Finalizing core terms and conditions of the transaction through structured sharing of technical, financial, legal and institutional information with pre-qualified firms9 and keeping the public and other stakeholders abreast of developments. The terms and

Marketing efforts will be boosted if: (i) a reputable transactions adviser is involved; (ii) the quality of preparation can assure prospective bidders that due diligence costs will not be high; (iii) simple and objective criteria will be used for selection; (iv) there is minimal scope for post-bid negotiations; and (v) there is no "favored" bidder. 9 Leases, concessions and divestiture arrangement will typically require establishing a data room with relevant sector and utility information, possibly posting information on the web to facilitate access, procedures for fair access to data and the data room, structured pre-bid conferences, etc.

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conditions should clearly allocate rights, responsibilities, means and risks to the parties best able to manage them, with the pre-bid consultation process used to market-test this allocation and manage the expectations of the various stakeholders and bidders; Defining the conditions which would trigger the bankruptcy of a service provider, and the caretaker arrangements which would be invoked; Finalizing tender documents, attempting to make selection of the winning bidder based on a single criterion; Opening bids in public with clearly established procedures for technical and financial evaluation, restricting post-bid negotiations to non-core issues, and closing the transaction after prompt completion of any "conditions precedent" which may have been included in the tender.

Capacity must continue to be strengthened at the local level to manage the PSP contract and monitor utility performance, and at the State level to improve the quality of regulatory support. Transfer of distribution system operation and management typically involves substantial conflicts of interest, and adding to transaction risk and complexity. Depending on the nature of the PSP contract, local authorities would typically need to: approve adjustments in tariff rates and structures, provide investment capital, and possibly provide working capital to make up any short-falls resulting from below-cost tariffs and non-payment by customers who cannot be disconnected; monitor utility performance and pubic service obligations; implement labor actions - retrenchment, retraining, severance, employment promotion, etc.; implement programs to build local contracting capacity; ensure adequate supply of raw water; enforce law and order, and other agreements under the PSP contract; and create the sound utility governance structures discussed above.

Recognizing that there will be conflicts between private operators and disaffected stakeholders, State government can play an important role as a neutral broker to nurture the partnership through the early stages. If the private partner is unable to meet performance obligations, even after best efforts of local and state authorities, and bankruptcy or contract abandoned procedures are invoked, the independent State Regulator could make its own assessment and decide to bring in a private or public operator from another town/city as a caretaker until another PSP transaction can be designed and executed.

10

In many instances, even getting to contract closure may require explicit undertakings by the State government ranging from compensation for any adverse changes in the legal framework to timely provision of state subsidies and fair water allocation under river water sharing agreements.

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In addition to supervising implementation of the sector reform policy, the State's Sector Reform Team and/or Economic Regulator can complement local capacity to manage the public-private relationship.. For example, it could set up early warning systems and mediate disputes before formal' arbitration procedures are invoked.10

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Legal framework determines the extent and feasibility of private participation of facilities of a particular sector. Legal framework comprises two parts - statutory framework and contractual framework. Besides defining the feasibility the legal framework also affects the economic viability of private participation in an infrastructure project. The legal framework is also the primary source of risk distribution in infrastructure projects.

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PPP - Case Studies

Case Study 1: Public Private Partnership in Water Supply - Navi Mumbai, Maharashtra Abstract: Despite being a new planned city, Navi Mumbai Municipal Corporation (NMMC) was plagued with serious problems in the water supply system. There was poor maintenance, high leakage rates, intermittent supply, poor service and poor coordination and accountability. Beginning in about 2002 the NMMC responded to these problems by developing a Public Private Partnership to improve overall operation and maintenance of the municipal water supply system. Approximately three quarters of the people working on water supply work for private contractors rather than for the NMMC. City Profile: Navi Mumbai is a planned city, officially started in 1970 and developed as an environmentally friendly landscaped area with parks, gardens and promenades along the waterfronts. The development plan for Navi Mumbai envisages planning and development of various nodes or townships embracing an IT Park, a Biotech Park and an International exhibition center and hopes to make Navi Mumbai the Silicon Valley of India. The current population is approximately 12 lakh with an expected total population of 20 lakh with 7 lakh jobs. The Navi Mumbai Municipal Corporation (NMMC) was constituted in 1991 and contains 8 wards and 162.5 sq. km. Navi Mumbai is located in the State of Maharashtra on the South Konkan coastline, between the Sahyadri Mountains and the coast, northeast of Mumbai and about one hour from the Mumbai Airport. Situation prior to the Initiative: Sub Module: Managing Risk through Partnership Contracts
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The water supply system was initially developed by CIDCO (City and Industrial Development Corporation) and was handed over to the NMMC (Navi Mumbai Municipal Corporation) in 1999. Initially NMMC tried to manage the water system by relying on its own staff but due to limitations of staff and infrastructure as well as the rapidly growing demand, particularly from slums and gaothans (pre-existing villages incorporated into Navi Mumbai), there were a number of serious problems and by 2003 the system was characterized as follows: Lack of co-ordination Lack of complaint attendance and communication system Poor maintenance and no preventive maintenance Frequent breakdowns and inordinate delay in repairing breakdowns High Leakages with no accountability 51% NRW, 21% NRW Intermittent supply providing only a few hours of water supply each day Contamination of water supplies during distribution Poor billing and collection No water audit and no energy audit

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Brief Description of the Initiative: This is a Comprehensive Performance Based Operation and Maintenance Contract providing bonuses for excellent work and penalties for improper or inadequate service and for negligence. The initiative also focuses on improving overall coordination, accountability and providing Indias first large scale sustainable continuously pressurized 24/7 supply system. The contractors employed are all locally based firms with extensive water supply experience in Maharashtra. The program further specifies that contract employees and city employees will receive comparable wages. The overall intent of the PPP program is not to reduce wages but to improve management and quality of service. Project Implementation Process: The Navi Mumbai Municipal Corporation (NMMC) established a committee consisting of the Commissioner, Shri. Sunil Soni, Shri. Sanjay Desai, Executive Engineer (Water Supply) and Shri. Annadate, Water Supply Consultant. This committee responded effectively to the growing dissatisfaction with the existing water service and determined to establish a Performance Based Comprehensive Contract for Water Supply. The basic rationale for this project was to improve the quality and efficiency of water service delivery. Contracts were awarded through a competitive bidding process with bids limited to local firms with extensive water supply experience in Maharashtra. The first contract was awarded in 2003. This contract was subsequently replaced in 2005 by another contract that will run until 2009. Results Achieved: The improvements achieved through this PPP have been very impressive. Reduction in Unaccounted for Water (UFW ) loss from 21% to 15% Reduction in Non Revenue Water (NRW) from 51% to 21% Increase in meters providing working meters at all household connections Increase in hours of supply now providing 24/7 supply to half the population including BPL families in slums. Reduction in Electricity requirements by 7.78% Reduction in Water requirements by 10% Water billing and cost recovery improved by 15% Reduction in Complaints by 80% Major improvements in water coverage and water access, including access by the poor. Improvement in Quality of water leading to more than 50% reduction in incidence of waterborne disease including: (a) Gastro 331 to 150, (b) Dysentery 273 to 4 and (c) Hepatitis B 27 to 13 Lessons Learnt (1) Key Factors in Success

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Previous experience with PPP in other sectors such as Solid Waste management and Transport, Use of local contractors, Reducing labor opposition by maintaining parity between government and private sector employees, Clear accountability with bonuses and penalties tied directly to objective standards of performance, and Developing a strong Public Awareness Program

(2) Strict enforcement of all terms of contract was critical Disconnection for non payment, Identification and penalization of illegal connections, and Requirement to replace non-working meters. (3) Value of Energy and Water Audits, helping to identify both the magnitude of the problem and priority areas for improvement (4) Value of volumetric tariffs providing both incentives to discourage waste by high volume users and keeping costs low for the poor (5) Value of good public awareness programs (6) Value of 24/7 water Improving water quality and reducing waterborne disease, Improving customer satisfaction and reducing complaints, Reducing coping costs for storage, pumping and treatment, which are especially important for the poor. and Demonstrating that 24/7 water can be provided for rich and poor without increasing costs or water requirements. (7) PPP can provide major benefits without involving a transfer of assets. (8) Although private contractors were directly involved in providing the service, NMMC remained accountable for supervising Sustainability: This program has already been in operation for several years and looks as though it will be quite sustainable. Through a well designed Public Private Partnership NMMC has managed to bring about major improvements in quality of service without increasing the water rates. Some of the best indicators of sustainability include: Major improvements in service and customer satisfaction, Reductions in water loss, both UFW and NRW, Improvements in billing & collection efficiency and cost recovery, No significant opposition from labor unions, Maintaining a Pro Poor Policy, Maintaining a Pro Poor Policy, and Providing 24/7 attention to assuring accountability and good operation and maintenance rather than only monitoring the construction phase. Transferability: Sub Module: Managing Risk through Partnership Contracts
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Key factors in transferability of this approach to other Urban Local Bodies include at least the following: Training in the analysis and implementation of Public Private Partnerships including Case Studies of both successes and failures, site visits and direct contact with counterparts who have implemented these programs. Experience in Bench Marking urban service performance so that stakeholders can become aware with the range of service quality and efficiency levels and the steps needed to improve them Prior experience with PPP in any sector in the same ULB Pro business attitude in the community is a major plus factor Development of a strong Public Awareness program involving all major stakeholders in discussions of the preexisting problems, the role of the PPP and the expected benefits. All stakeholders need to understand that regardless of who fixes the leaks and pumps the water that the ULB will still remain fully responsible for providing good quality and efficient service. Recognizing that PPP performance based management contracts are generally less controversial and less complicated than PPP involving capital investment and/or lease transfer of assets Development of a strong Pro Poor Policy to assure that vulnerable members of the community will not lose out because of private sector involvement. Maintaining good relations with local unions and employees by assuring that the focus of the PPP will be on improving service rather than reducing wages or the number of workers Developing a strong program to respond to public complaints and assure accountability Questions for Discussion 1) Describe the project development process covering aspects such as project conceptualization, rationale, procurement, contract, technology, implementation, impact and lessons 2) Identify the enabling factors as well as constraints and bottlenecks in the implementation of the initiative 3) Discuss the project financing model 4) Identify the benefits to NMMC and private operator 5) Identify the key risks and mitigation measures for both NMMC and private operator 6) Suggest measures for improvement 7) Is the scheme replicable to your town? Suggest your approach for the same.

Case Study 2: Tirupur PPP in Water and Wastewater Treatment Project

Abstract Tirupur, the textile city of India, faced problems associated with shortage of water supply and wastewater treatment. To address the acute shortage of water supply and to facilitate wastewater treatment a project was started in the year 2002 through PPP. It is the first of its kind in the water sector in India. The stakeholders involved in this project were New Tirupur

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Area Development Corporation Limited (NTADCL), Mahindra-Mahindra, Tirupur Municipality, Tirupur Exporters Association (TEA), Infrastructure Leasing and Financial Services (IL&FS), The Tamil Nadu Corporation for Industrial Infrastructure Development (TACID) and the Indo-US Financial Institutions Reform and Expansion (FIRE), USAID and the World Bank. The project aims at providing efficient living environment to the citizens of Tirupur and an infrastructural support to the textile industry. City Profile Tirupur is rightly tagged as knitwear town of India where commerce precedes everything. Tirupur, a city in Coimbatore District is located in the South West part of Tamil Nadu. It is just 45 kms away from Coimbatore, which is an active commercial center. It has a population of 3, 51,501 with a population density of 12927.584 persons / sq. km. Situation before the Initiative Tirupur, being a textile export trade center required huge amount of water to carry out the business activity and consequently generated water based effluents from the same. But the facilities in place fell short of the requirements. This resulted in depletion of ground water table as firms largely depended on this source. Some part of requirement is met by water tanker facility. Absence of wastewater treatment facility deteriorated the ground water quality due to intrusion of waste effluents and waste water generated by firms and households respectively. Description of the Initiative The project is the first public-private partnership in the water and sanitation sector in South Asia. A Special Purpose Vehicle (SPV) was formed to shoulder the responsibility of augmenting funds and implement the project on a Build-Own-Operate-Transfer (BOOT) basis. There were two components in the project. One deals with water supply to industrial units and villages (located outside the limits of Tirupur municipality), while the other pertains to water supply and provision of sanitation inside the municipality. Exhibit 1: S.No. Stakeholders 1 NTADCL (SPV) 2 Mahindra led Consortium 3 Tirupur Municipality 4 Tirupur Exporters Association 5 IL&FS 6 TACID 7 FIRE 8 USAID 9 World Bank 10 S.B. Billimoria and Company

Function/Role Distribution of water and revenue collection BOOT Contractor Assistance to SPV in water distribution Textile Firms Representative Funding Agency Getting Approvals Technical Assistance Loan Guarantor/Facilitator Long Term Aid External Auditors

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Project Details The overall project was split into three separate contracts, two awarded on an engineer, procure and construct (EPC) basis and one to operate and manage (O&M) the finished facility. The EPC 1 work, which pertains to building the water intake, the transmission pipeline from the river to Tirupur and the master-balancing reservoir, is being done by the Hindustan Construction Company. The EPC 2 contract, which pertains to providing main feeder pipelines and distribution networks, overhead and ground level storage tanks and the sewerage network in the Tirupur town area is being done by Mahindra & Mahindra / Larsen & Turbo joint venture. The third contract-operation and maintenance (O&M) was awarded to Mahindra Water Utilities Ltd. The duration of the concession period is 30 years. Exhibit-2 S.No. Type of users Pricing system 1 Wayside unions, town and Rs. 3.50 per 1,000 liters village Panchayats (KL) 2 Urban domestic consumers Rs. 5/KL. 3 Industry Rs. 45/KL.

Results Achieved This project has improved living standards of about 800,000 residents including 80,000 slum inhabitants in Tirupur town and its surrounding areas. More than 600 textile firms in and around Tirupur are relieved of tanker dependency and receive water from the project on continuous basis. The project also increased the supply of water to domestic consumers as it provides 185 million liters of potable water per day. It also provided the town with its first sewerage system. Moreover, a low cost sanitation for slum areas has been built as part of the project. Lessons Learned Distribution and Revenue Collection by the SPV will help to achieve high efficiencies in the distribution segment. Cross-subsidization of tariffs from a high percentage of industrial consumers will help keep the domestic tariffs at low levels and hence ensure social acceptability of a project. The presence of public sector companies amongst the promoters leads to greater cooperation between the promoters and other government agencies. Sustainability

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The project proved to be a great success. The reason is obvious that there was a demand for such initiative and Tirupur being a textile hub will continue to create more demand with time. Dynamic pricing system for different service users takes care of social issues and at the same time ensures financial viability of a project in the long run. On the other hand wastewater treatment facility would enhance environmental quality in and around Tirupur. Transferability This kind of project is replicable in other municipalities provided there is demand and need for such project. It is also possible to persuade private player(s) to fund the project provided, if concerned government authority ensures return on investment to the private partner. Moreover, a well structured and planned project like the one at Tirupur is bound to be a successful at other municipalities having similar geographical conditions.

Case Study 3: Karnataka 24X7 Urban Water Supply Project through PPP
Introduction The urban water sector in Karnataka is suffering from inefficiencies such as unreliable service quality and limited coverage, sub-optimal resource allocation, mismatched capacity investments, lack of requisite technical manpower, poor operation and maintenance (O&M) practices, un-economic tariff structure/levels, poor collection efficiency, high levels of unaccounted and non-revenue water, poor service coverage. On the other hand service coverage in the three cites of Hubli-Dharwad, Gulbarga and Belgaum was estimated to be less than 50%. The Karnataka Urban Water Sector Improvement Project is formulated to overcome these deficiencies. This is a project for reforms in Water Sector at the State and city level The primary objectives of the project are reforms and service improvements through Private Sector Participation. For this purpose, the cities of Hubli-Dharwad, Belgaum, and Gulbarga are selected for improvement of water supply services. The total cost of project is Rs. 237 Crores. Karnataka Urban Infrastructure Development & Finance Corporation (KUIDFC) is implementing the project with the World Bank assistance. Other partners involved in the project are Karnataka Urban Water Supply & Drainage Board (KUWS&DB), City Municipal Corporation of Belgaum, Gulbarga and Hubli-Dharwad, C.G.E, Seureca, Paris, France and NGOs. The Project & Components The Karnataka Urban Water Sector Improvement Project (KUWASIP) aims to implement the strategy enunciated in the Urban Drinking Water & Sanitation Policy of Government of Karnataka. It is also focused on the phased approach for project development. The project mainly comprises of the following two components: 1. Sector Development & Technical Assistance: The first component of the project comprise of following activities: Establishment of Karnataka urban water supply council,

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Review and establishment of the regulatory and legal framework, Water & sanitation sector investment and tariff framework, Strengthening of urban water supply and sanitation service delivery in ULBs, Creation of water & sanitation information system and bench marking of service provision, and Tariff design for continuous water supply

2. Physical Investments: The second component of the project comprises of the following activities: Priority investment works which are implemented by Karnataka Urban Water Supply and Drainage Board (KUWS&DB) to increase the bulk supply to the project cities and Refurbishment of distribution system to transform the existing system into a 24 x 7 water supply system, which includes 2 years of operations. This component is implemented in the 5 selected Demonstration Zones, spread over the three cities by a Private Operator.

Project Partners:
Hubli-Dharwad, Belgaum, and Gulbarga were identified for the implementation of Phase I of the project with the focus on Continuous (24x7) water supply in selected Demonstration Zones of the three cities. The next phase of the project focuses on scaling up to the rest of the areas in three cities and also to more cities in the state of Karnataka. The following diagram illustrates the partners involved in the project development

Funding agency: World Bank

Contract Supervision

Indian funding agency: KUIDFC

PIU & TA Final beneficiaries: Municipal corporations of . Hubli-Dharwad . Belgaum . Gulbarga

Operator: VEOLIA Water India

Hubli Dharwad Belgaum S. Belgaum N. Gulbarga

Project Structuring:

5 demo zones

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Associated organization: Karnataka Water Supply and Drainage Board

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Consultancy firms were selected through competitive bidding. A private entity called Operator was selected to implement the project in demonstration zones. Technical Auditor provided quality certification for all works and Operators performance. Core of the project is a performance-based contract with private sector firm for rehabilitation, operation and management of water service in demonstration zones in Hubli-Dharwad, Gulbarga and Belgaum. The role of private sector is limited to demonstration of improved service. Assets remain with the ULBs; staff continues to be on ULB rolls though deputed to the operator, no investment risk to private operator, no role in tariff fixation and bill collection though the operator would develop a computerized billing and collection software system. Thus It is a fee based management contract. A leading law firms assistance was taken in drafting the contract document in view of the involvement of private sector operator. Review of the existing legal regime was done prior to the finalization of contract. The operators contract period is for 3 years through a single contract for all three ULBs. The contract is between five parties, namely KUIDFC, KUWSDB and three ULBs and Operator with well-defined obligations for all parties and the Operator. Penalties (maximum of 10%) and termination for failure to meet the obligations were also included in the contract. Operator performance targets were clearly defined in the contract till the end of implementation period and during O&M period. Roles and responsibilities of the Operator: Preparatory period A - Survey, design, estimation; preparation of draft/final investment programme. Preparatory period B - Selection of sub-contractors (contract document preparation, tender process management); meeting performance targets for preparatory period B. Demonstration of performance targets in preparatory period B and O & M period. Customer grievance redressal.

Operator Performance Targets: Following are the performance targets to the operator At the end of Implementation Period: To demonstrate continuous pressured water supply to every customer in each demonstration zone. Metering of minimum of 90% property connections. Maintenance of computerized records of readings. Reduction of the losses to 30litre/ connection/ day/ in each demonstration zone. Operation of customer service centers at demonstration zones on a 24-hour basis. Sub Module: Managing Risk through Partnership Contracts
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Operation and Maintenance Period: Following are the performance target for the Operator during the O&M Period: Continuous pressurized water supply Reduction in emergency stoppages

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Metering of 100% property connections and public stand posts Billing of 100% customers on monthly and volumetric basis Reduction of water losses System connection requests to be completed within 7 days Round the clock customer service centre Redress all the customer complaints within the time frame prescribed in the contract Repair leaks appearing on the surface within 24 hours

O&M phase has commenced on April 2008. The continuous pressured (24x7) water supply was provided in five demonstration zones viz., (i) Belgaum (South), (ii) Belgaum (North), (iii) Gulbarga, (iv) Hubli and (v) Dharwad, which represent about 10% population in each city. The situation after implementation of the project is as follows. Bulk Supply in MLD Service Level (LPCD) City Before After Before After Initiative Initiative Initiative Initiative Belgaum 57 84 123 182 Garbage 25 55 46 101 Hubli-Dharwad 111 113 123 125 There is an improvement in supply of bulk water to Belgaum, Gulbarga and Hubli-Dharwad by 27 MLD, 30 MLD and 2 MLD respectively. Savings to an extent of about Rs.1.50 crores per annum is anticipated in energy charges in Hubli-Dharwad. There is a overall improvement in distribution of water in the three cities. Key Challenges during the project development, implementation, O & M: Since the project is one of the first models of Private Sector Participation in water supply, it has experienced the following challenges: Sub Module: Managing Risk through Partnership Contracts
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Key Challenges - KUIDFC Perspective: Peoples misunderstandings about PSP, tariff reform and doubts about feasibility of 24x7 water supply Pressures of differing expectations - even of partner agencies. Impatience / unrest of non-demo zone residents in chosen cities. Contract model & document format chosen - gray areas. Conservative mindset of client staff to many issues, differing from conventional contracts. Curbing un-authorized / illegal connections and transition from flat to volumetric tariff. Key Challenges - Operators Perspective: Procedures for procurement of goods and works Lack of professional contractors in the market Availability of quality goods in the market Current customer management practices Un-realistic time frames High expectations of the client

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Scaling up of 24X7 water supply in all three ULBs on PPP basis: With the successful implementation of the 24X7 in five demonstration zones, KUIDFC is now planning to upscale of 24X7 water supply to all three ULBs on PPP basis. KUIDFC is the nodal agency for implementation of the project. Approximate cost estimated is about 735.00crores for the following three cities. o Belgaum Rs. 220 crores o Gulbarga Rs. 150 crores o Hubli-Dharwad Rs. 360 crores Broad investment structure The break-up of investment is as follows. 1. Investment by Private Operator 2. GOI funding under VGF 3. State Government Funding 4. ULB contribution Total Lessons Learnt: Overall the project has been quite a learning experience with the Operator bringing in the latest technology for pressure testing, HDPE pipes up to the consumer points, which is welded together without any joints. Since it is developed as a single network in a demo zone, there is no need for a valve man to open and close valves, as there are no valves in the system. The present water losses in the demo zone are measured at about 3% whereas it is nearly 50% in non-demo zones. More and more households are requesting for new water connections. Nearly 13000 new connections have been given in Hubli Dharwad. Some people are requesting for two connections due to assured water supply. Due to increased pressure, the water reaches upto 20 feet (1st floor) without need for water to be stored in overhead tanks or to be pumped with electric motors as is usually done in the urban areas elsewhere in the State. Almost all public stand posts are now removed except a few for the purpose of usage for non-drinking purpose or for use by cattle etc. Because of metering and volumetric charging, the low quantity consumers with a 6000 litres to 10,000 litres consumption per month under Type I have been getting a minimum base water charge of Rs. 48 whereas the Type II users who are using more than 10,000 to 15,000 water supply are getting water charges a little higher than Rs. 100, which they have accepted without much problem. However, the Type III users who are the large users and take water for gardens, washing cars etc., are complaining because of higher bills. Though they realize that it is as per consumption, they complain because they were paying merely Rs 48 per month but now end up paying up to Rs. 400 to Rs. 600 per month based on the consumption of 15,000 litres and beyond. Such users (Rs. in crores) 367.50 (50%) 147.00 (20%) 147.00 (20%) 73.50 (10%) 735.00

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are slowly realizing that the billing is based on realistic consumption and therefore are reducing their consumption of water. Due to availability of water 24 hours all through the week, many people are not storing water any longer. Earlier when there was intermittent supply (once in three days), people used to throw away stored water when the water supply commenced so as to take fresh water. Now this wastage is not there. With metering and volumetric based billing consumers are not wasting water any longer. Since most of the public taps are now closed because of 100% house service connections are given in the demo zones. Many unauthorized connections are authorized now. Many people are coming forward for taking second connection for tenants or upper floors. Volume of water consumption has come down due to the 24 hours water supply, as there is no spillage in the demo zones. Due to lower and realistic consumption of water, KUWS&DB is saving water and is able to divert the same to other localities. Quality is being checked on a regular basis and indicates that there is greater confidence by the users as they feel there is no need to further filtering of the water Earlier the water used to be let into an underground sump inside the consumers premises and later pumped into a rooftop water tank. With 24x7 supply, the energy cost is saved. Earlier large sumps used to be built while constructing houses, but due to 24x7 assured supply, it is no longer necessary to have a sump and the consumer saves this cost. Earlier more number of vessels was required for water storage but this is no longer the case Nearly 24,500 houses are benefited by this system due to assured supply; it has been found that water requirement has gone down and there is a saving of nearly 50% of water at bulk supply point.

Questions for Discussion 1) 2) 3) 4) What are the benefits/ positive aspects of this initiative? What are the major risks for developing and sustaining this PPP initiative? Can these risks be mitigated? What are the key lessons from this initiative and potential for replication elsewhere?

Case Study 4: Kolkata Provision and Management of Water Supply and Sewerage System through PPP at Sector V, Salt Lake
Introduction Sector V in Salt Lake is a self-contained industrial area developed initially by the Kolkata Metropolitan Development Authority (KMDA) with the objective of promoting industrial development. The area was developed in 1990s and attracted a number of large software firms such as WIPRO and INFOSYS. Sector V area is spread around 430 acres. The recognized industrial units are around 500 but the number could go up to around 650 if we include the unrecognized units. The working population is around 60000. The area was managed by KMDA till 2006 and the Urban Development Department has decided to constitute an industrial authority named Naba Diganta Industrial Township Development Authority in that year for its

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administration. At present the NDITDA looks after the overall administration under the control and guidance of KMDA. Though Sector V was provided with basic infrastructure such as electricity and roads, it did not have an organized water supply and sewerage system. The industrial units were expected to make their own arrangements through bore wells and septic tanks. This has resulted in largescale exploitation of ground water. Though government has banned extraction of ground water, a special case and exemption was made for industrial units in Sector V due to lack of organized water supply system. In this context KMDA has identified the need to develop a comprehensive water supply and sewerage system for Sector V and formulated a specific plan. KMDA has also identified the potential for developing Public Private Partnership (PPP) for this purpose. KMDA has proposed to develop the water supply and sewerage system through a BOT Concession model for 30 years for capital works and operation and maintenance. The private operator was expected to create the facilities such as storage facilities and distribution network for water supply and treatment facility and distribution network for sewerage and also maintain the facilities for a 30-year period. It was originally envisaged that the private operator would make all the investments towards capital costs and recover the same through connection costs and user charges. However, the government has later provided for a capital grant and other support to the private operator in view of inclusion of additional components to the project. After going through a process of competitive bidding, the government has selected the consortium of JUSCO and Voltas for construction and maintenance of water supply and sewerage system on a BOT Concession basis for a period of 30 years. Project Partners The key partners of the initiative are the UDD, KMDA, NDITDA and the Consortium of JUSCO and Voltas. The development agreement is primarily between KMDA, NDITDA, JUSCO and Voltas for the project while the Urban Development Department of the state government has facilitated the process by granting various approvals. The role of KMDA was to conduct the bidding and select the operator. Together KMDA and NDITDA are responsible for providing the necessary support to the operator in project implementation. The consortium of JUSCO and Voltas have established a Special Purpose Vehicle named Naba Diganta Water Management Limited for the project. A tripartite agreement is also envisaged between SPV, Township Authority and individual customers for providing water supply and sewerage connections. Bid Structuring and Tendering Process The bid structuring and tendering process including bid documentation was developed and managed in house by KMDA. KMDA has provided pre-bid document in two volumes where Volume I gave general instructions and Volume II presented detailed technical parameters. However, KMDA has not developed draft agreement and the same was done after the selection of the operator. The tender was issued on July 3 2006 and a pre-bid conference was held on July 24 2006. The last date for submission was in August 2006 but was extended to September 2006. The bidding process was a single stage process with a three-stage screening and evaluation. The bid document outlined the pre qualification criteria and the prospective bidders were required to submit their technical and financial bids in separate envelopes. In the first stage the bidders were assessed against the pre-qualification criteria and those meeting the same would be short-

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listed for second stage evaluation. During the second stage evaluation the technical bids were evaluated and scored and those who receive more than 60 percent of score would qualify for the third stage evaluation of financial bids. The criterion for financial bids was that the bidders quoting lowest combined user charge for water and sewerage would be selected. The pre-qualification criteria required that the private operator should have been involved in development of water and sewerage facilities for the past five years. The private operator should have a net worth of Rs 50 crores and should have implemented at least a single project worth of Rs 10 crores either in water supply or sewerage in the last five years. It was found that only four private operators have met the above criteria and hence the same were short-listed for evaluation of technical bids. During the technical evaluation the SPV of JUSCO and Voltas was the only one found to be technically qualified and hence they were selected as the private operator in November 2006 to implement the project. However, it took about one year for development and signing of the agreement between the parties. This was mainly due to change in the project components, negotiations on user charges and modifications to project finance model. The development agreement was signed during November 2007 between KMDA, NDINDTA and the SPV. Development Agreement The development agreement has been developed and signed by both the parties through a partnership based approach. Significant changes have been made to the scope of work and financing approach in view of the requirements by both the parties. The scope work at the time of bidding did not include construction of underground reservoir but later a need was felt for the same. JUSCO and Voltas have quoted Rs 48 per KL as the combined user charge but the public partner has negotiated to bring it down to Rs 25 per KL. To compensate for the increased cost and decreased user charge the public partner has agreed to provide a grant to the extent of 35 percent of capital cost through the JNNURM programme. The public partner has also agreed to provide land at free of cost while the private operator has agreed to lower the user charge and also undertake additional construction. Sub Module: Managing Risk through Partnership Contracts
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Scope of Work The project activities included development of both water supply and sewerage system. The scope of work related to water supply is as follows: Construction of underground reservoir Pump house Rising main 3.5 km Elevated service reservoir Distribution network 19.5 km

The scope of work related to sewerage system consists of the following: Sewer trunk mains and laterals 17 km Manholes 700 units One intermediate pumping station One sewerage treatment plant

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Project Financing The type of model for PPP is the BOT concession where the private operator would build all the necessary assets and also run the system and recover the costs through user charges. The total cost of the project is around Rs 60 crores of which the water supply component constituted around Rs 26 crores and the sewerage component remaining Rs 34 crores. The Government of India grant under JNNURM constituted about Rs 21 crores while the remaining Rs 39 crores are being invested by the private operator. Another concession given by the public agency is the provision of bulk treated water from KMC at a subsidized rate of Rs 5 per KL as against existing rate of Rs 15 per KL. In addition to the capital costs the private operator would undertake the operation and maintenance of the system at his cost for next 30 years. The revenues for the operator consist mainly the connection costs and the combined user charge. The government has provided the necessary land at free of cost to enhance the financial viability to the operator in addition to providing 35 percent of capital cost as the grant. User Charges The user charges comprise of two components viz. connection costs and tariffs. Towards connection costs the customers are required to pay non-refundable connection charges at the rate of Rs 10 per square feet of built up area as per the development agreement. A combined user charge or tariff would be levied at the rate of Rs 25 per KL after providing the connection. There is also a provision for regular increases in tariff based on inflation and rise in power costs. User charge will be increased by 3 percent every year after five years. User charges will also be increased in proportion to increase in electricity tariff. Since the tariff proposed is volumetric in nature all the connections would be metered. Project Implementation Process The project implementation was expected to be completed in 18 months after signing the development agreement subject to release of JNNURM grant and sub lease of land which is May 2009. However there was a significant delay in making available land by public agency to the extent of one year. As a result the proposed date of completion of the project is 2011 but the private operator has aimed to complete it by March 2010. There has been a significant progress in the construction of facilities in last few months. The operator has taken up the work based on possession certificate and right of way though the lease agreement is yet to be signed. With regard to water supply, works related to rising main and elevated service reservoir are almost completed while works related to ground service reservoir and distribution network is in progress. With regard to sewerage system all works related to distribution network, pumping station and treatment plant are in progress. It is estimated that the project would be completed by March 2010. The operator with support from the township authority has initiated discussions with the industrial units for entering in to tripartite agreement for providing the connections. The working of the project is as follows. The treated water from KMC would first come to the underground service reservoir having a capacity of 1 MGD. This would be pumped through the pumping station located at the site to the ESR having a capacity of 0.5 MGD through a rising main of 3.5 length. From ESR water will be supplied to the distribution network on a 24 x 7 basis to all the industrial units. With regard to the operation of the sewerage system, each industrial unit would be connected to a manhole and trunk line through an inspection pit. From

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the trunk line the sewage will flow in to the intermediate pumping station and storage well and from here it would be pumped to the sewerage treatment plant. The sewage would be treated at the plant and treated wastewater would be let off in to the near by pond. The system is designed for 100 percent secondary treatment of wastewater. By November 2009, about 80 percent of work related to water supply and 60 percent of work related sewerage system was completed and the balance work would be completed and the system commissioned by March 2010 Risks, Bottlenecks and Constraints There were not many risks anticipated at the time of request for proposal and bidding. The KMDA has prepared a concept plan and identified the necessary technical parameters that needed to be addressed. The proposal envisaged passing on capital investment risk and revenue and demand risk to the private operator. The proposal also envisaged a financially selfsustainable model with recovery of revenues through user charges by the private operator and hence public agency has not offered any subsidies including supply of treated bulk water and allotment of land. However, after the selection of the bidder and going through the biding process, it has been realized that the project cannot be self-sustainable without sharing the capital investment and revenue risk by the public agency particularly since a few additional technical works such as construction of underground reservoir have been incorporated in to the project and the tariff proposed by the operator is found to be high by the public agency. Hence the private operator has negotiated ahs negotiated with the public agency to share the capital investment risk by requesting for 35 percent of grant through JNNURm programme. The private operator has also requested for providing treated bulk water from KMC at a subsidized rate and for providing land free of cost. The public agency has agreed for both the requests since the private operator has accepted the suggestion of a lower user charge of Rs 25 per KL and also for undertaking additional technical works. Thus, the risks though could not be anticipated at the time of biding have been addressed by the public agency and the private operator in a mutually agreed manner after the selection of the private operator and this has been negotiated and incorporated in to the development agreement. However, the demand and revenue risks are not completely addressed and continue to be with the private operator. These risks are in the form of providing water supply and sewerage connections and generating adequate revenues to meet the O&M and capital costs. Discussions have revealed that most of the existing units have made their own investments and they need to be persuaded to get connected to the new system. The government has decided to ban extraction of ground water once the system is developed and this is likely to persuade the existing units to move towards to the new system. There are also risks of industrial recession or sickness, which could delay setting up of the new units or shut down of the existing units. These factors are likely to affect the revenues of the private operator. However, these risks are proposed to be addressed in an amicable manner through a tripartite agreement between the public agency, private operator and the individual customer and the public agency has agree to provide continuous support in this regard.

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The other risks relate to project completion and operational risks. The project completion period was envisaged to be 18 moths subject to release of funds under JNNURM programme and sub lease agreement for land allotment. There were delays with regard to both but these have been now addressed through discussions. The process of laying of distribution lines has become time consuming in view of the need to shift a number of cables and also seek permission from the various stakeholders such as municipality, housing cooperatives etc but the private operator has been successful in overcoming these constraints. The private operator has made significant progress and is likely to complete the project and make it operational by March 2010. The operating risks relate to availability of treated bulk water to meet the growing demand, uninterrupted supply of power and effectiveness of sewerage intermediate pumping station. The KMC has presently agreed to supply 1 MGD of water as this is considered to be the present demand. But the demand is likely to go up to 1.5 MGD in near future and subsequently to 3 MGD by the end of project period. The private operator sees a risk in the availability of this water since this a prerequisite for 24 X 7 water supply while KMC does not have adequate water to meet the growing requirements. The 24 X 7 requires continuous pumping and this calls for uninterrupted power supply. The private operator originally envisaged 3 intermediate pumping stations for sewerage but the public agency has allotted the land for only one IPS. In view of this the private operator has decided to enhance the capacity of IPS by three times but there are concerns about the efficacy of the IPS to meet the performance of three as originally envisaged. However, the private operator is confident to overcome these constraints in view of their vast experience and expertise in developing and operating water supply and sewerage systems across the country. Project Outcomes and Impact The water supply and sewerage PPP project for Salt Lake can be considered as first of its kind and path breaking. It is the first integrated water supply and sewerage project being implement through PPP in the country. The project is also one of the few projects are that are being implement through BOT Concession model. Sub Module: Managing Risk through Partnership Contracts
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The project is one of the few projects that have been completed as per the original proposal and with relatively less relatively less delays and can be considered as quite successful. The project has demonstrated a strong partnership approach between the public agency and the private operator. Most importantly the project has demonstrated the effectiveness of JNNURM funding in leveraging the PPPs in the water supply and sanitation sector, which are not attractive to the private sector in the first place. The project is likely to improve the environment and living conditions, prevent ground water extraction, provide 24 X 7 good quality water supply, ensure 100 percent of waste water treatment and thereby promote sustainable industrial development. Key Lessons for Replication The PPP project for Salt Lake has demonstrated that the PPPs are doable and implementable through proper project structuring and development and a true partnership approach between the public agency and the private operator.

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The project has demonstrated that the PPP projects can be made financially viable by leveraging public funds and the JNNURM programme could play a key role in this regard. Ensuring a fair rate of return for the private operator and creating enabling conditions is also key for the success of PPP projects. The PPP project also shows that the success PPPs depend on addressing a number of risks that are specific to the project site and context and many not be foreseeable right at the beginning of the project. But these can be successfully mitigated through a partnership and give and take approach by the public agency and private operator. The key underlying factors for the success are the policy and enabling support of the urban development department followed by the capacities and commitment of the public agency and the private operator. Questions for Discussion: 1) 2) 3) 4) What are the benefits/ positive aaspects of this initiative? What are the major risks for developing and sustaining this PPP initiative? Can these risks be mitigated? What are the key lessons from this initiative and potential for replication elsewhere?

Case Study 5: Alandur Peoples participation in underground sewerage project

Abstract Alandur municipality falls under the purview of Kanchipuram district of Tamil Nadu State. Being a residential suburb of Chennai, it required infrastructural facilities at par with other cities/towns. To deliver better utility services Mr. R.S. Bharati, Chairman of Alandur municipality, in 1996 has initiated a project based on public private partnership model. The project was carried out in two phases. The concession agreement signed between municipality and private contractor was based on BOT. Willingness to pay survey was conducted to assess financial viability and social acceptability of the proposed project. City Profile Alandur is a part of the Chennai Metropolitan Agglomeration Area (CMAA). Alandur has a population of about 1, 45,000 (Census 2001). Rapid urbanization during 1980s and 90s at the peripheral vicinity of Chennai resulted in the creation of this satellite town. It is given the status of Selection Grade Municipality by Municipal Administration Department. Situation prior to the initiative Prior to the project initiation Alandur did not had proper sewerage system and as a consequence majority of the residents depended on water borne sanitation facilities. The households either had septic tanks or holding tanks. The overflow of sewage from septic tanks was let into the storm water drains resulting in stagnation of water and thereby creating a breeding ground for mosquitoes and diseases. This had resulted in increased health hazards and an adverse affect on the ground water quality.

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Motivation for the Initiative The financial incapability of the municipality and the increasing pressure on the citys infrastructure became the cause of initiative. Need motivated the administration to find out an innovative solution to overcome its financial weakness. The motivation also came from political members, and the citizens. Financial institutions came forward to fund this project. Government supported the local body by allotting small grants for the implementation of the project. Details of the Project It was proposed to lay underground sewerage network in the city. The main features of the project were identified as: Construction of 120 km of branch and main sewers to form an underground sewerage network in the city. Construction of sewage pumping station Construction of a sewage treatment plant. The Sewage Treatment Plant will be constructed on BOT basis. The relaxation period as per Terms of Reference (TOR) is 14 years. The Municipality will be paying an agreed rate to the contractor against the quantity of sewage treated. Exhibit 1: Project components Component Branch Sewers Main Sewers Pumping Main ( 800 mm) Pump House Pump sets Sewage Treatment Plant Quantity 101 Km 19 Km 5.5 Km 5 nos. 2 Units (12 MLD each)

Exhibit 2: Structure for collecting citizens contributions Type of property One-time deposit (Rs. per unit) Residential property 5,000 Commercial property 10,000 Industrial property 10,000

Monthly tariff (Rs. Per unit) 150 450 750

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The initial stipulation of the World Bank to collect a deposit of Rs.5, 000 from 10,000 households to prove that there is enough people participation in this project, before calling for tenders for financial and project participation by various agencies involved. The elected representatives and officials of the local body persuaded the citizens to make financial contributions towards the project. The Chairman, Municipal Council of Alandur, played the instrumental role in the campaign. Land for the pumping station and STP was acquired by the Municipality. A strategy was adopted to collect peoples contributions in a structured manner. The amount to be collected from the citizens was correlated with the type of the property. Exhibit 2 shows the structure for collecting money from the citizens in favour of the implementation of sewerage network scheme.

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Strategies adopted On all the holidays (including Saturdays and Sundays), discussions with residents and peoples associations were organized. During these sessions, people were motivated and were convinced to participate in the implementation of the project. Scheme was explained in detail to the office bearers of the various residents associations during the subsequent meetings. As a result of these meetings, people showed interest and started paying voluntarily. The residents were also motivated through advertisements in local cable TV network, and newspapers. People were also informed about the scheme through pamphlets and announcements. Several collection centers were set up in the city to collect money from the people. The municipality also organized facility of house-to-house collection of money.

Resource mobilization Uniqueness of the initiative is bringing-in of peoples money to develop public infrastructure. The innovative financing mechanism of the initiative pulled peoples participation and generated their concern right from the stage of conception of the sewerage network scheme for the City of Alandur. The direct financial contribution made by the citizens was a big factor in meeting the financial requirements of the project. The total project was estimated to be around Rs. 340 million. Contribution came from a number of resources through loans and grants. The exhibit below shows the various sources of funds involved in the project financing: Exhibit 3: Sources of funds Source State Government Grant TUFIDCO Loan TUFIDCO Grant Interest from Public Deposit Public Contribution TNUIFSL Loan Total Contribution (Rs. million) 30.0 160.0 10.0 20.0 80.0 40.0 340.0

Exhibit 4: Various stakeholders of the initiative World Bank through its Supported Financial Institutions

Tamilnadu Urban Finance and Infrastructure Development Corporation (TUFIDCO) Tamilnadu Urban Development Fund (A common pooled financing mechanism developed aid the infrastructure financing needs of the local bodies of Tamilnadu, who cannot approach the capital market based on their low credit rating)

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Tamilnadu Urban Finance Infrastructure Finance Services Limited, acting as a consultant for project preparation / implementation / monitoring for the project. Citizens of the city

Problems faced The main issues and problem faced by the local body was to convince citizens about the need for the project. It took a lot of effort and time to explain them the importance and need of their deposit to generate an initial amount for the project implementation. Citizens of the city residing around the proposed pumping mains raised the objections. Some delays were also caused to get permission from the State Highway Authority, as there was a requirement to excavate certain section of the highways to lay down the sewers. Loose soil and high water table were the in favourable geographical conditions that created obstructions in the progress of work. Project implementation Though there were a number of hurdles in front of the urban local body to implement this project, still the dedicated approach of the municipal officials has taken it near the successful completion. The exhibit below shoes the various stages of phase I the project: Exhibit 5: Stages of phase I of the project Stage of the project Date of commencement of the project Laying of SW Pipe Main Sewers) Pumping Station Pumping Mains Sewage Treatment Plant Schedule / present status March 1, 2000 Achived Achieved Completed Completed Completed

Testing of all main sewers and Branch Work in progress Sewers for unobstructed flow Connection from Residences to the Work in progress Sewerage System Results Achieved Infrastructure: The city now has a proper wastewater disposal and treatment system. The city can now get rid of soak pits that will check the further contamination of the ground water to a considerable extent. Environment: Underground drainage network has considerably improved the hygienic conditions in the city. Accountability: Direct involvement of citizens in project financing formally gives them a status of stakeholders of the project. It has stimulated the dormant sense of citizens

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accountability towards citys infrastructure and has made them realize that they can also participate actively in development of the city. Rapport between the ULB and the citizens: Citizens involvement right from the stage of conception of the project has helped to develop a rapport between the urban local body and the citizens being the partners of the same initiative. Moreover, the successful completion of the project has also proved that public money was not misused. This will be certainly of a great help to the urban local body in future on similar initiatives. Lessons Learned

Mobilizing peoples participation for infrastructure projects is possible through the collective efforts and transparent proceedings. Inter departmental coordination and involvement of stakeholders throughout the project implementation assures the timely completion of the project. Concern of the stakeholders also provides strength and motivation to the implementing agency to overcome the problems that may occur during the project implementation.

Sustainability Once the infrastructure is created, its sustainability depends on the level of operation and periodic maintenance exercises in future. Regular monitoring and periodic surveys to assess the condition of pipeline at various locations in the city can equip the urban local body in future with a required database to address the problems related to the sewerage network. In order to sustain citizens participation the procedures need to be transparent and easily understanding. Transferability Development of an underground sewerage network is a conventional engineering practice. Yet, the unique feature of this initiative is that the municipality succeeded in persuading the people to make financial contribution for their own betterment. This is what is called beneficiary participatory approach that reduces financial burden borne by the municipality on the one hand and gives a feeling of ownership to the citizens. This is a perfect model of participatory approach and can be replicated with effectiveness in other municipalities.

Case Study 6: O&M of Street Lighting in Cities through ESCO - Vijayawada

Introduction The total streetlights in Vijayawada prior to the initiative were around 27000 and these were managed entirely by the Municipal Corporation officials. The Engineering Section of the Corporation was responsible for capital works and operation and maintenance of streetlights. The capital works are undertaken through contractors with budgetary expenditures coming from the Corporation. The O&M activity is managed with the help of around 60 temporary staff appointed for the purpose. The total annual expenditure on power charges towards street lights was Rs 411.18 lakhs and annual maintenance expenditure on materials and labor was Rs 53.04 lakhs. Brief overview of PPP including rationale

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The Vijayawada Municipal Corporation (VMC) is incurring an expenditure of nearly a crore rupees every month towards energy bills for water supply, street lighting, drainage pumping stations and buildings. As part of its Silver Jubilee Celebrations from June 2006 to May 2007, the VMC has set itself the objective of becoming the countrys first energy efficient City. An energy audit of the Corporation has already been done, and different components of the Energy Conservation Action Plan has been initiated. It was proposed to introduce energy saving technologies into street lighting. One of the major problems associated with introducing PPP was the need to get the Council to support and approve the same. The politically left-dominated Council was wary of such privatization, and was repeatedly pointing to the failed service contract of street lighting in 2002-03. Then the street lighting in certain zones in the city was handed over to a labor contractor to operate and maintain. The labor contract obliged the contractor to maintain and replace the consumables, for a period of one year, in return for a tender determined unit maintenance rate for each category of light. This contract failed, with the contractor not having made any investment and hence no stake in the system. The successful bidder had no previous experience, and had undercut the rival bidders by quoting very less rates. He ultimately pulled out, not being able to bear the maintenance expenditure. This highlights the perils associated with a badly designed or implemented O&M contract, whose legacy lives long after its failure, bringing disrepute to the entire process itself. Bid structuring and tendering process Prior to this PPP initiative, a small area was selected and the technology piloted. In June and July, 2005, energy saver devices were installed by M/s.Servomax India Ltd., in the Sambamurthy Road central road lighting. Results from the two-month long experiment showed 35% saving in power consumption. The VMC engineers visited Bangalore and studied the technology implemented in the Outer Ring Road Energy Saving Project, initiated by the Bangalore Development Authority through an Energy Saving Company (ESCO). After studying the utility and convenience of these systems, the VMC also decided to implement Energy Saving Project for street lighting through an ESCO. Open bids were called for implementation of Energy Saving Project for Municipal Street Lighting, as a full-fledged Operation and Maintenance (O&M) contract through an ESCO, on 30.9.2005. In response to the tender, bids were received from five firms of which only two qualified in the techanical bid. The qualified firms were M/s.Real Energy, Secunderabad, and M/s. ELPRO Dimensions Ltd., Bangalore. Out of the above firms, M/s.Real Energy emerged as successful bidder, as the firm has quoted for 41.5% saving of energy and out of it, the firm offered to take 92.7% as their share towards cost of installations and maintenance of street lighting and to transfer 7.3% to VMC. The VMC is presently spending nearly Rs 60 lakhs annually towards maintenance of street lighting. The details of the two bids are detailed below in the Table 1. Table1: Comparison of Two Bids S. No. 1 2 Description As per bid of M/s. Elpro Dimension Ltd 30% 90% As per bid of M/s. Real Energy 41.5% 92.7%

Expected Energy Savings Percentage share of savings to ESCO on

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energy units saved Percentage share of savings to customer (VMC) on energy units saved Percentage share of VMC in terms of percentage of total current consumption [(1) x B)] For maintenance of street lighting including labour and materials (to be paid to the bidder by VMC)

3 4

10% 3%

7.30% 3.029%

Rs.45.00 lakhs No extra p.a. + 10.2% amount service tax + 10% extra every year

An Empowered Committee was constituted for selection of the ESCO and in identifying the appropriate technology for the VMC and in scrutinizing the same. Before giving approval, a team of Corporators from all parties in the Council, headed by the Mayor visited Nasik Municipal Corporation on 17.5.06 to study the performance of Energy Saving Project, which was implemented by /s.Sahastronics Ltd., the partner firm of M/s.Real Energy. After studying the performance of Energy Saving Project in Nasik Municipal Corporation, the Council in its Resolution No.61, dt.29.5.06, approved the energy saving project for Municipal street lighting including maintenance in city area and also approved the bid of M/s.Real Energy with the certain conditions, which included enhancing performance guarantee from Rs.15.00 Lakhs to Rs.50.00 Lakhs. The contract was finally implemented from 01.12.2006, more than a year after the tenders were called and six months after the tenders were approved by the Council. In the Government itself, it took nearly six months and approval by seven different Secretariat Departments before the Project could be operationalized. This unduly long delay again highlights the problem of bureaucracy associated with implementing such reforms in Government. Contract documentation The contract document was prepared drawing from the experiences of the private partner and in consultation with the VMC. The contract document included the obligations of both the parties, measurement and verification of energy consumption, billing mechanisms, incentives and penalties. The contract also provided for dispute redressal primarily through Commissioner VMC. Project financing model The private operator has adopted a shared revenue and performance based management contract model. Under this model the operator would undertake all the investments during the first year and the revenues from energy savings would be shared between the operator and Corporation over a period of five years. At the end of five years, the operator would transfer all equipments to the VMC. The operator has proposed to undertake investments to the extent of Rs 384 crores in the form of equipment. The anticipated revenues are from power saving to the tune of 41.5 percent over the base year. The share of Real Energy is 92.70 percent of the total power saved. The annual expenditure on power was Rs 411 lakhs and 41.5 percent of this representing the total savings in power is

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estimated to be Rs 170 lakhs of this the share of Real Energy, which is 92.70 percent, is Rs 158 lakhs per annum. Technology Lighting LUX level is controlled by a microprocessor, based on incoming voltage and the time of the night. The system provides a programmable interface to adjust the lighting level according to the traffic pattern on the street. The system has an inbuilt data logger for storing energy data for six months. Switching on and off of the panels is done automatically according to inbuilt data base of sunset and sunrise times of the city. The panels are provided with self-protecting and diagnostic features. These are the latest and most advanced panels available in the world. The lighting controls are provided with digital energy meters and GSM/GPRS modems and IP server. Real time energy data is transmitted to a central data base server. The system will provide reports of energy consumption per day, per week or per month and provide online monthly bills to APTRANSCO. Energy data can be viewed and reports accessed from anywhere through internet. IN addition to energy metering the system will also help in identifying defective panels and fused lamps in a circuit and help in maintenance. Project implementation process The first and foremost step in the implementation of the project was contract agreement. It took more than six months for singing the agreement since the VMC and MAUD wanted to vet the agreement with other departments before finalization. Following this the private operator has initiated developing the baseline information and installing the panels simultaneously. In all 400 panels were proposed but the installation progressed phase wise with each phase comprising of 30 to 40 panels. Each panel has automatic timers for switch on and switch off, meters for measurement of power consumption and mechanisms for graded illumination. The panel could be used to generate the baseline information when it is put on save-off mode. Once the baseline information is generated this could be put on power-save mode to operationalize the system. The baseline information once agreed by both the parties would be the basis for payments by the VMC. Though it was initially agreed to use the measurements of meters of panels installed by the private operator and also to generate the bills, later VMC asked the private operator to make these bill comparable to the meters installed by APTRANSCO. As a result now the bills generated by APTRANSCO are taken as the basis for payment of bills. Regular and periodic monitoring is done by the VMC at various levels. The Commissioner takes a review of the performance once in fortnight. Senior engineering officials conduct site inspections. Councilors from respective electoral wards also provide feedback on the functioning of the system. Questions for Discussion 1. 2. 3. 4. What are the benefits/ positive aspects of this initiative? What are the major risks for developing and sustaining this PPP initiative? Can these risks be mitigated? What are the key lessons from this initiative and potential for replication elsewhere?

Case Study 7: Vlappilsala Solid Waste Compost Plant: Thiruvananthapuram, Kerala

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Abstract: In the context of rapid urbanization, many Urban Local Bodies across the country have adopted Public Private Partnership as a way to strengthen the Service Delivery and thereby reducing the urban challenges. Given that context, the corporation of Thiruvananthapuram had made commendable move by installing a Solid Waste Management Plant at Vilappilsala in the district of Thiruvananthapuram through a Public Private Partnership with a local group called M/S POABS, having its registered office at Kulloor (P.O), Thiruvalla. City Profile: Thiruvananthapuram, the capital city is located in the south west corner of India is the first city corporation formed in the state of Kerala. In earlier nineteens the city was adorned as one of the cleanest city in India. However due to the rapid urbanization including growth of urban population, construction of multi-storied flats, booming up of constructions, private hospitals, roadside eating places, hotels and restaurants contributed adequately to the increased production of Solid Waste in the city. According to the study of Centre for Environment and Development (CED) that 50% of the waste generated in the city was suitable for composting, the pressure from the local residents of Vilappilsala against the open dumping of waste, the High Court direction to install Solid Waste Treatment Plant and the suggestion of subject experts to produce manure from the waste and generate revenue were the contributing factors to go for a composting plant in Vilappilsala. However, the corporation was struggling due to the limited financial, technical and human resources to make it in practice. This had promoted the council of Thiruvananthapuram Corporation to go for a PPP model Solid Waste Treatment Plant in the newly purchased land at Vilappilsala. The construction, operation and maintenance of the plant was awarded to M/S POABS group of Thiruvalla during the period 1999-2000 and the plant started functioning in the year 2000. Situation prior to the initiative: Sub Module: Managing Risk through Partnership Contracts
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The historical journey through the memoirs of Thiruvananthapuram Corporation has exposed the rationale in selecting the location at Vilappilsala for the landfill and compost plant. In the city limit of Thiruvananthapuram, there was a garbage dumping yard at Vallkkadavu adjacent to Trivandrum Airport. The corporation authorities were forced to call off this site in 1985, as per the direction of the Government for the safety of Civil Aviation. This had put tremendous pressure on corporation authorities to find a suitable place for dumping the garbage. Initially the garbage was dumped in private places and in almost all low lying land areas which had been reclaimed with garbage resulted in increased flooding. As years went on, the situation became very grave and started mounting the waste even at Putharikandom maidan, an open ground in the heart of the city. The issues due to the accumulation of the waste called on public protest due to the increased health problems of neighbouring residents and the near by drains filled with filth and foul smells. Thus the disposal of Solid Waste became a major headache for Thiruvananthapuram Corporation. To sort out the burning issues, the corporation authorities accelerated the process of purchasing a new suitable dumping yard. Even though various sites had been identified, the corporation was not able to purchase it due to various reasons beyond the

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control of the corporation. At last in the year 1994, the corporation had purchased about 12 acres of land in Vilappilsala, which was about 12 KM away from the city corporation. However, due to repeated local resistance, the corporation was not able to utilize this yard for dumping. The Supreme Court verdict and the protest from the public called urgent attention of the corporation authorities to install an appropriate Solid Waste Treatment Plant in Thiruvananthapuram. Brief description of the initiative: The City Corporation entered into a BOOM (Build Own Operate Maintain) pact for the garbage treatment plant at Vilappilsala, with the POABS Group. Towards that end, the city corporation had given the proposed land at Vilappilsala for a period of 30 years on a leasehold basis to POABs group. The option made by the POABs group of EXCEL industry that the entire money (6.35 crores) would be invested by the tenderer was accepted by the committee for the PPP. The tenderer would also pay one percent of the sale price of the compost produced (about 3 lakhs per year) to the corporation as royalty and rupees one per square meter per year as lease rent for the land given for setting up of the compost plant. In addition to it, a penalty clause to pay Rs.49,000.00 per day to POABs if the corporation fails to deliver 300 metric tons of waste per day at the plant site for more than 10 days at a stretch was also added. The amount of penalty varies on the basis of the investments to be made by the tenderer to cover his losses. The period of 30 years from the effective date on which the possession of the site was handed over by the TMC to POABS on a leasehold basis under an agreement pursuant to these presents including such successive period by which the lease may be renewed mutually. Project Implementation Process: The agreement was executed in 1999 between Municipal corporation a statutory body governed by the provisions of Kerala Municipality Act 1994 represented by the secretary of the corporation (LESSOR), Thiruvananthapuram and M/S POABS Group, a company incorporated under the provisions of Companies act 1956 and having its registered office at Kulloor (P.O) Thiruvalla designated as LESSEE. POABs Group has entered in to an agreement with EXCEL industries Bhopal for setting up a compost plant in Thiruvananthapuram. The lessee has been appointed as a Franchise by EXCEL Industries which has the necessary technology and expertise in the treatment of Municipal Solid Waste. The Excel industry has undertaken the responsibility of serving the technical assistance and marketing support to the POABs Group. EXCEL, the franchiser of POABS has showcased effective process for conversion of MSW and other organic waste into Bio organic soil enricher (the Technology) for application of bio remediation and other techniques in treatment thereof, and is interalia engaged in the business of construction, erection, installation and operation of Solid Waste treatment plant for treatment and processing of MSW. EXCEL the Franchiser of POABS has offered to design, construct and install on the site Treatment plant, Celrich Plant and other operation facility for treatment and processing of the stipulated quantity of MSW in two phases. The guaranteed MSW shall be treated by POABS so as to render the same environmentally and hygienically innocuous and processed to manufacture Bio Organic Soil Enricher (Organic

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manure) by constructing, installing and commissioning separate plants for treatment and processing at its own cost and consequent to which the said plants would always belong to and also be owned, operated and maintained by POABs Group on its own or through its subsidiary / joint venture company during this agreement subsists. It was envisaged to achieve the target by POABS Group by undertaking the said project on a Build own Operate Maintain basis. TMC shall provide necessary sanction to POABs Group in Lease in respect of the permission and right to erect, install, set up the plant and also the right to receive and treat the guaranteed MSW. Further, it would not entail any financial burden on TMC towards capital and recurring expenditure for setting up, operation, maintenance of such treatment plants. POABs is making all investments towards capital and recurring expenditure in respect of the plants on the assurance that TMC shall grant lease and guaranteed MSW in term of the stipulated quantity. This agreement and lease proposed to be granted by TMC to POABS subsist and further, TMC shall render all possible assistance and provide all such facilities as area envisaged under this agreement to POABS. The period of stabilization would be the interim period beginning from the date of mechanical completion till the day on which the respective full load capacities achieved by POABS. It should be in either case not later than 3 months from the corresponding date of Mechanical completion of process plant. According to the agreement Full load capacity means the stage when the Plants or the plant as the case may reaches the level of treating and processing the quantity corresponding guaranteed MSW pertaining to the process plant. Closure of POABS agreement: There has been a series of discussions with POABS group, TMC and Government of Kerala to find out a solution for the various problem faced by the factory including sale of compost. The Clean Kerala Mission, a mission set up by the government of Kerala for coordinating management of Municipal Solid waste studied the issues and presented a report to the state Government in August 2006. The study pin pointed a few important areas for the immediate attention of the Municipal Corporation. Sub Module: Managing Risk through Partnership Contracts
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The density of manure produced at Vilappilsala is 1250 kg/ square meter which was higher than the compost produced at other ULBs in Kerala. The area of the established plant was only 7088 square metre which was sufficient for treating a maximum of only 93.5 tons per day of Municipal waste. Sale price of the manure varies from Rs.3.9 to 4.59 with an average of Rs.4.23/kg. The study pointed out that the plant could be operated on profit in the existing conditions even if the manure is sold at Rs. 2/ kg. The total capital investment for the project was estimated to be Rs. 5.76 crores as against claim of Rs. 8.3 crore by POABS. The monthly operating cost cumulated to a total of Rs.50,00,000.00 to Rs. 60,00,000.00 per year with an yearly maintenance cost of Rs. 15,00,000.00.

Subsequently, the Government of Kerala appointed an expert committee consisting of director of Clean Kerala Mission, representatives of POABS group and an independent expert to discuss the issues. The POBs group suggested three alternatives before the group.

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1. Taking over of the factory as existing and paying the capital cost and liabilities incurred by POABs. 2. Compensation for shortfall of supply as per agreement which comes to Rs. 6.72 crores as on February 2007. 3. Processing based on tipping fees. Listening to the suggestions of POABS group, the committee has made two options. 1. Takeover of the plant by paying a cost of Rs.6.19 crore and short fall compensation of Rs. 6.72 crores. 2. Continuing the existing system by giving shortfall compensation and provide tipping fee of Rs. 560/- per ton for an assured quantity of 180 MT. However TMC objected to these suggestions as it would put tremendous financial burden on the corporation. The technical committee further looked into the issues in detail and put forth the following suggestions. 3. The plant had the capacity to treat only 156 tone per day and hence TMC was not obliged to pay any shortfall compensation. 4. In case of continuing the existing setup, monitoring of rejects should be made mandatory and M/S POABS should enhance the capacity of the plant. 5. There was no justification in tipping fee recommended as it did not take in to consideration of the financial disposal of waste. 6. Marketing support should be provided for sale of the compost by the Government through the agriculture department. 7. Incase, M/S POABS refused to continue the arraignment with the suggested alterations, TMC might consider take of the factory after providing compensation for the capital investment to the tune of 520.53 Lakhs. TMC take over the plant: POABS expressed their inability to continue to operate the plant unless their suggestions were accepted in the meeting called by the Minister of Local Self Government on 01/08/2007. TMC expressed its desire to take over the factory to tide over the problem if other alternatives were not available to operate the factory without interruption. A committee was constituted by the Government to finalize the modalities of taking over and paying back the amount to POABS. The committee consisted of Director of Urban Affairs, Finance member of KWA (Kerala Water Authority) and State quality coordinator, KSRRDA. The committee submitted its recommendation before the Government for the final decision. Finally it was decided to hand over the plant to TMC by paying a compensation of total capital investment to the POABs group. The following were the expected advantage that persuaded TMC to suggest takeover of the factory.11 1. The problem of sale of compost could be addressed in a better way as the agriculture department could workout a mutually agreed agreement for purchase of compost from TMC ns both being part of Government.
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Detailed Project Report, Solid Waste Management, Project Implementation Unit, Corporation of Trivandrum

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2. TMC would be able to sell compost at a lesser cost than that being claimed by M/S POABS as the capital and interest liability of capital expenditure incurred could be met by TMC / Government. 3. Modification/augmentation of existing structure and addition of newer facilities can be done by TMC. POABS was not in a position to carry out the same due to their increasing liability. 4. The existing agreement does not conform to the Municipal Solid Waste Management Rule 2000 and hence needs alterations to which POABS was not fully agreeable. 5. The operation of the plant could be given to another agency based on a new terms and conditions. The agency could be appointed for shorter periods and could be changed as needed. 6. TMC could solve the environmental issues associated with the functions of the factory by making suitable investments. 7. Alternate technologies could be adopted so that a combination of technologies made available for management of MSW and for the reduction of area required for sanitary land fill. Present Position: The management of operation of the plant was given to Centre of Environment Development (CED) on a temporary work arrangement. CED is a Non Governmental Organization (NGO) committed to the Environmental causes and showcased models in Solid Waste Management related research and consultancy services. Eventhough, there is no formal contract between Trivandrum Corporation and CED, the management of compost plant has been taken over by CED. According to Dr. Babu Ambat, the director of CED, the plant can run profitably even selling the compost at a price of rupees two per kilogram. Followed by the withdrawal of POABs, many of their staff was retained by CED as they have adequate knowledge of the job and also to support their livelihood. To enhance the staff motivation considering the hazardous nature of work, the salary of workers were raised two to three times. Unlike earlier, the new system of Kudumbashree units in waste collection has also enhanced the collection efficiency. Looking into the lessons learned from the previous contract, the corporation authorities were looking for a suitable private agency to hand over the project. Challenges / Lessons learned: 1. The Capacity required for the Municipality to Monitor, Manage and enforce the agreement was abysmal. This often called public protest and environmental issues. Forexample, there was no leachet plant or stoppage of leaches in Vilappilsala which resulted the pollution of drinking water sources due to seepage. Further, the seepage from the dumped garbage was going directly to the nearby river, from which four drinking water projects were drawing water. Apart from this, garbage was being spilled by the transport Lorries, making life difficult for the residents along the route to the plant. 2. Another major issue was the penalty of Rs.49,000/- per day to be paid to the POABs group by the corporation authorities if the corporation fail to supply 300 tones of waste per day. Looking in to the studies conducted by CED in 1999 projects that the maximum day to day generation of waste in Trivandrum would turn only up to 290 - 300 tones. Given that context, the municipality had the capacity to collect a maximum of only 150

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tones. Hence the rationale of entering into a penalty clause of Rs.49,000 per day was not a studious step. 3. The Nature of Private Partys role in PPP was completely of business purpose with out considering the environmental issues. Even now the residential areas surrounded to the plant get foul smell making a lot of public protest. According to the local residents, when the land value of neighbouring places got multiplied the value of Vilappilsala was weakened. There was no proper system to check the quality of air, water and cross media pollution. Indeed, the refuse and pollution created by the plant had seriously affected the health and social well being of the neighbouring community. Many of the neghbouring families were forced to vacate the place. Indeed, the PPP never put a vision on such environmental issues. 4. Test for PPP (Criteria for affordability, Cost effectiveness, Substantial technical, operational and financial risk transferred to the private party) with a proper DPR was not been initiated before envisaging the Vilappilsala Plant. There was no designated officer for the regular monitoring and coordination of PPP and no policy guideline was in place for a PPP. 5. Although the concept of segregation of household waste in to degradable and non degradable was introduced, it was not happening at house hold level. A campaign mode education programme to be initiated along with proper guidelines to make it in practice. Proper orientation with penalty provision to be introduced for the effective segregation of waste. 6. The Lorries carrying the waste have two compartments separating degradable and non degradable. Unfortunately the aluminum separation in most of the lorries were completely broken. Hence the separated waste even get mixed while transporting the segregated waste in to the Plant. 7. Marketing of compost produced was another major challenge faced by POABs group. Constant support from the state government and TMC was significant in selling the compost to the farmers through Agriculture department and Local Administration Department. Accumulation of non sold compost, day to day payment of interest to the financial institutions, public protest on environmental issues, increased production cost of compost, lack of expertise of POABS in the management of Plant, lack of ownership of ULB in resolving the issues raised at Vilappilsala were the serious issues faced on day to day basis at Vilappilsala. 8. The bitter experience of PPP further put pressure not only the TMC but also all the ULBs in Kerala in promoting PPP in service delivery. 9. No effort was made in the entire operation of Vilappilsala plant to have a mechanism of building ownership of community people, awareness generation, and in the redressal of public grievances 10. The timely support of Municipal Corporation was not extended to POABs group in resolving the administrative issues. For example, the city was headed for a garbage crisis when the Kerala State Electricity Board (KSEB) turned off power supply to the unit for non-payment of dues. This happened as the company failed to remit the outstanding payment of Rs.1.93 lakhs to the KSEB. The plant managers, however, maintained that the district Panchayath was yet to clear a pending payment of Rs.70 lakhs for the off take of the organic fertilizer manufactured as a byproduct. A number of such issues were probing in the smooth functioning of the plant.

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Questions for Discussion 1) 2) 3) 4) What are the benefits/ positive aspects of this initiative? What are the major risks for developing and sustaining this PPP initiative? Can these risks be mitigated? What are the key lessons from this initiative and potential for replication elsewhere?

Case Study 8: Bus Rapid Transit System (BRTS) Case Study: Ahmedabad, Gujarat, India
Introduction The Ahmedabad Municipal Transport Service (AMTS) functioning under the Ahmedabad Municipal Corporation (AMC) is responsible for providing the public transportation system in the city. Ahmedabad has about 14.5 lac vehicles growing at a rate of 1 lac per annum with two wheelers accounting for 73% of the total vehicles. An average trip length of a public city bus in the city presently is 6.8 km and there are about 6.7 lakhs public city bus passenger trips per day. Over the years, the Ahmedabad Municipal Transport Service (AMTS) has seen a rapid decline in its bus rider ship levels, on account of stiff competition from rising two-wheeler ownership levels, lack of route rationalization and inability to upgrade its infrastructure to cater to the existing public transport demand in the city. Brief overview of PPP including rationale The financial performance of AMTS, as is common with other City Transport services in the nation, records losses in its operations. Some of the reasons contributory the losses could be a lack of political will to raise fares corresponding to the increase in the input prices, providing concessional travel facilities to large number of students, non-payment of travel charges by police personnel in the city, besides typical unidirectional movement of commuters in the morning peak and evening peak, late night and early morning services, lower speed of buses resulting into lower productivity of personnel as well as buses, etc. As a restructuring policy, to improve transit service, AMC invited private operators to participate in provision of public transport on a kilometer scheme. Further to improve the public transport system Bus Rapid Transit System is proposed for Ahmedabad city. As AMTS is not in a position to invest on new buses and their maintenance, Ahmedabad Municipal Corporation encouraged for privatization of bus services in BRTS also. Bid structuring and tendering process Step -1: Approval from competent authority and Advertisement in newspaper: Approval from the Municipal Commissioner of Ahmedabad. The Notice Inviting Tenders for bus procurement; and operation & maintenance of BRTS, Ahmedabad was published on May 21, 2008. Step 2: Pre Bid Meeting: pre-bid meeting was held for any clarifications and replies to the queries raised by prospective Bidders at 11.00 AM on 31.05.08 at the office of the Ahmedabad Municipal Corporation. Step 3: Bid Submission: The bidders are required to submit a Proposal that: (i) is in compliance with this RFP Document, (ii) clearly indicates the compliance of the Bidder with the

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technical and financial qualification criteria specified in this Proposal and (iii) clearly provides the rate per kilometre that the Bidder will require to be paid by the Janmarg in order to procure, maintain, and operate the number of city buses specified in RFP. The Bids must be received by Janmarg, at the specified address, latest by 16.00 hours on 07.06.08 being the Deadline for Submission of Bids. Milestones Due Dates: Issue of RFP Documents to short listed Bidders Last date for receipt of pre-bid queries Pre-bid Meeting Last date for receipt of Bids Date of Opening of Technical Bids 21.05.08 29.05.08 31.05.08 07.06.08 09.06.08

Step 4: Opening of technical bids and Evaluation: Technical Bid received by Janmarg in response to this RFP opened by Janmarg in the presence of Bidders representatives who chose to attend the opening of Technical Bid at 1530 hrs on 09.06.08 in the office of Ahmedabad Municipal Corporation, The Bidders names, the presence or absence of requisite Bid Security and such other details as Janmarg in its sole discretion may consider appropriate, will be announced at the opening of Technical Bid the Qualification Bids. In order to be qualified technically, the Bidder must meet both the Technical Eligibility Criteria and the Financial Eligibility Criteria as detailed below: Technical Eligibility Criteria: In case of Single Bidder Ownership of 40 buses or 200 taxis in aggregate by either the bidder alone, or together with its subsidiary / parent company, provided that the bidder and the relevant parent / subsidiary are registered companies under the Companies Act, 1956. OR Sub Module: Managing Risk through Partnership Contracts
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Experience of operations of a minimum of 40 buses or 200 taxies for a consecutive period of three years anytime during the past five years, through an explicit contract/concession In case of a Consortium a. Ownership of 40 buses or 200 taxis owned in aggregate by all members of the consortium. OR b. Experience of operations of a minimum of 40 buses or 200 taxies for a consecutive period of three years anytime during the past five years, through an explicit contract/concession, by any one member of the consortium. Financial Eligibility Criteria: Average Annual Turnover equal to or above Rs. 300 lakh or foreign currency of equivalent value during the last three consecutive financial years for which audited financial reports are available, from the business of transport. In case of consortium only those members shall be considered who hold 11% or more equity.

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For the purposes of compliance with both technical and financial eligibility criteria, all bidder/s should produce suitable documentary evidences of experience such as firm registration documents, asset ownership/operation proof, contracts, clients references and certificates in support of their claims for the above. Step 5: Opening of Financial bids and Evaluation: After the evaluation of Technical Bid has been completed, Janmarg opened the Financial Bids of only those Bidders who qualify the prescribed criteria for the Technical Bid. Decision of Janmarg in this regard is final. The bidders are required to first select the type of Bus for which they are prepared to bid from amongst the Design Options After having selected the Design Options, the bidder is required to quote for provision of 25 AC and 25 non-AC buses, in terms of Rs per km, under each Design Option it has selected. For the purposes of evaluation of the lowest financial quote, Janmarg calculated the average of the quote for the AC buses and the non-AC buses under each Design Option Janmarg selected the Design Option for the bus based on receipt of the bids and its suitability to its business plan. The lowest bidder under the selected design option was determined as the successful bidder for the purposes of being considered for award of the contract under Service Provider Agreement. Step 6: Issuance of Letter of Acceptance: It is clarified that the issuance of the Letter of Acceptance followed by signing of the Agreement (as aforesaid) and thereafter the Successful Bidder will commence supply of the buses for the BRTS Project. Step 7: Implementation of Contract Document: the Contract document was prepared and issued on October 2008; six months after the tenders were called. Contract documentation The contract document was prepared by AMC with the technical assistance from CEPT University. It has prepared drawing from the experiences of the previous contract agreement between AMTS and private operator in providing bus service and also from the experience of Latin America countries like Bagota and Curitiba. This Contract is granted for the provision of the Buses for operating over a distance of 7,50,000 kms for each AC Bus and Non-AC Bus. The Contract will expire once each of the Buses constituting the Fleet has traveled the Contracted Bus Kilometers applicable to it. Project financing model Project Costs: The cost includes bus procurement and their maintenance. For 50 buses assuming each costs 40 lacks around, the cost would be 20 crores for procurement of 50 buses. Annual maintenance cost per bus is say 1.5 lakhs 2 lakhs. Annual maintenance cost for 50 buses is 75 lakhs to 1 crore. Project Revenues: The revenue streams of the project include: Advertisement charges on the buses and bus related facilities, Passenger fare. The bus cost was assumed to be 40 lakh. The revenue earned per bus depends on various factors such as fare prices, the capacity of the buses, the vehicle utilization per day as well as the

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average occupancy of the bus during the day. Considering the above, first year operations were simulated. Operator can claim 20% of the revenue derived from the display of advertisements on and inside its Buses only. From the analysis, it is evident that with 20% raise in existing bus fare, the operations through private sector are feasible. The benefits are in the form of savings in vehicle operating costs and travel timesavings to AJL/AMC. Technology The buses operating in the BRT system could be Indian buses, manufactured in India and eventually assembled in Ahmedabad. Clean bus technology to reduce emissions is essential. In this regard, we recommend exploring possibilities of having standard buses with required modification in floor height, seating arrangements etc. The bus design shall be energy efficient, environmentally friendly, safe and secured for transportation of passengers besides the following main attributes amongst others: 1) Passenger comfort 2) Ergonomically designed drivers work area 3) Ease of repair and maintenance 4) Aesthetically designed interiors and exteriors 5) Ease of boarding and alighting for all passengers 6) Ease of accessibility to persons with disabilities Project implementation process The BRTS project is implementing in a phased manner. It is recommended to have 50 buses to start with plying on one circular corridor covering around 50 km of length in a closed system. Another 100 buses will run on 5-6 radial corridors identified as feeder in a mixed system. The total fleet size can be gradually increased to 1,000 in next ten years with increase in demand. The Special purpose vehicle SPV Ahmedabad Janmarg Limited AJL is formed and selected Charted Speed Private Limited to Procure, Operate, and Maintain twenty five (25) airconditioned buses and twenty five (25) non air-conditioned buses, which will operate as part of the Bus Rapid Transit System for a period of 5 years. This is basically service based contract where Private operators procuring buses as per the specifications decided by the authorities and operating services under the overall supervision and regulation of the SPV. The private operators will be operating the buses on kilometer scheme. The ownership of the buses will be with the private operator. Private operator will submit an invoice at the end of each 10days specifying: Registration number of each Bus that travelled as part of the Bus Service, Bus Kilometres travelled by each Bus as part of the Bus Service in the relevant week and Janmarg within period of seven days need to be make payments The private operator is expected to procure all machinery required to maintain buses. Bus operator purchase the agreed number of buses and operate them as per the schedule provided by Janmarg, which shall be modified from time to time.There are no daily guarantees or individual bus guarantee for the number of operated Kilometers. Janmarg solely provides a guarantee of an average of 62500-km/bus/year spread over the operators fleet. Janmarg will undertake an evaluation of the Service Providers performance every six months and, based on such evaluation, Janmarg may award the Service Provider a bonus if the

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performance parameters specified for bonus payment have been met by the Service Provider during the period for which the evaluation is being undertaken. It is expected that the first 15 km will be operational by May 2009, with the rest of the network being opened up in a phased manner. Questions for Discussion 5) 6) 7) 8) What are the benefits/ positive aspects of this initiative? What are the major risks for developing and sustaining this PPP initiative? Can these risks be mitigated? What are the key lessons from this initiative and potential for replication elsewhere?

Implementation Issues in PPPs: Exercises on Risk Allocation and Development of key performance indicators:

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Annexure 1:
3.2.5.1 Demand Assessment for Water Supply Services
Current Status Assessment - Water Supply: While assessing the water supply sector in the city it is important to look at reliability of the service. It is important to look at the following parameters: a) Source Augmentation: In many cities of India, the existing source of water is not adequate to meet the requirements of the people, and augmentation is essential to meet future requirements. There is a need to assess rainfall patterns, catchment areas, groundwater recharge, rainwater harvesting mechanisms, traditional water supply systems such as wells, step wells, tanks, etc. to explore any possibilities of reviving these to supplement the existing water source. b) Storage facility: Many a times a lake or dam is the main source of water supply in a city. However, over time due to siltation, live storage of the dam starts getting reduced. It is therefore important to identify such problems and suggest required measures. It is also required to maintain an O & M Schedule, for water supply assets, for regular maintenance and energy consumption optimization. Inadequate summer storage may be a major problem in the cities located in arid and semiarid zones, due to erratic rainfall pattern. Therefore it is important to analyse the rainfall pattern and probability of rainwater harvesting and ground water recharge potential. c) Treatment Capacity: The city may have an advanced treatment facility or treatment may be through a simple disinfection facility. However, based on the quality criteria as mentioned in national norms, an appropriate treatment facility needs to be commissioned. Based on the present and future demand it is essential to augment the treatment capacity too. Sub Module: Managing Risk through Partnership Contracts
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d) Distribution System: The existing water distribution system may be old and suffering from leakages etc. thus reducing its carrying capacity. Therefore the existing distribution network may need complete overhauling by replacing old and obsolete pipe line with new distribution network. On the other hand, the existing distribution network may be inadequate in its capacity. Therefore the system may need comprehensive rehabilitation which needs to be assessed through a detailed study. Assessment of historic water systems by qualified conservation architect for conservation and possible reuse may be undertaken. e) System Losses (Transmission & Distribution): Losses and Unaccounted for Water ranges between 20 to 30 percent in many Indian cities. Apart from unaccounted for water, leakages leads to contamination of water at household connections and low pressure in Water Supply. Only rehabilitation of the old pipe lines is not the solution and it is important to carry out necessary studies to identify the underlying technical causes of the problems. f) Service Levels: It is a reality that in many Indian cities, coverage of water supply is limited. Thus, the pockets which are not covered need to be identified along with

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number of house service connections. There may be some pockets where the situation becomes worse in the summer season, like the frequency of supply in some pockets may be daily in normal season, which deteriorates to once in three or seven days in the summer season. It is also important to identify the peripheral areas of the city, where water supply is inadequate in terms of quantity and quality. The inadequate service coverage may also be due to inadequate network coverage which is mostly along the road network.
Based on the household survey and SWOT analysis a ward or zone level infrastructure status mapping should be done. Ward or zone level demand mapping is very important as it gives clear indication of level of satisfaction, quality of service available and identify service gap in the ward or zone, and decision makers can plan for specific service in specific ward. In any urban area demand of water vary in different ward. Considering the census data, a ward wise water demand table 3.1 has been prepared as an illustration. The ward wise variations in households, density and water demand can also be interpreted in a spatial map/graphs. Table 3.1: Ward Wise HH Population, Density and Water Demand in xxxx municipal corporation
Ward # 1 1 2 3 Ward Name 2 Xxxxxx xxxxxxx Number of Households 3 11734 11511 Current Year Population 4 54570 61106 Population Density (Per Sq. Km) 5 39543 44931 Water Demand (mld) 6 53.0 59.4

Design Period Water Supply

Water supply projects may be designed normally to meet the requirements over a thirty year period after their completion. The time lag between design and completion of the project should also be taken into account; this should not exceed a duration ranging from two years to five years depending upon the size of the project. Table 3.9 provides details of design periods for different water supply components.
Table 3.9: Design periods for project components # Items 1 Storage by dams 2 Infiltration works 3 Pumping (i) pump house (ii) electric motors and pumps 4 Water treatment units 5 Pipe connection to several treatment units and other small appurtenances 6 Raw water and water conveying mains Clear water reservoirs at head works, balancing tanks and service 7 reservoirs 8 Distribution system
Source: CPHEEO, 1999

Design Period (in years) 50 30 30 15 15 30 30 15 30

Per Capita Water Supply Basic Needs: Per capita Supply (expressed in lpcd) is one of the frequently used performance indicator,
which provides an overall indication of the adequacy of the water supply to meet the needs of the citizens. Communities should be provided with adequate piped water supplies for the following purposes/ requirements as applicable: Domestic needs (drinking, cooking, bathing, washing, toilet flushing, gardening, individual a/c) Institutional needs

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Public purposes (street watering/washing, flushing of sewers, watering of public parks etc) Industrial and commercial uses (including central air conditioning) Fire fighting Requirement for livestock Minimum permissible Unaccounted for Water (UFW)

Factors affecting water consumption:

Consumption of water is affected by a number of factors as mentioned below: a) Size of City: Larger the size of city, more the water consumption. b) Characteristics of Population and Standard of Living: In high value residential areas, or in a suburban community of a city, the per capita consumption is high Slum areas of large cities have low per capita consumption c) Industries and Commerce The type and number of different industries also affect consumption. Commercial consumption is that of the retail and wholesale mercantile houses and office buildings. d) Climatic conditions In hot weather, the consumption of water is more compared to that during cold weather e) Metering The consumption of water when supply is metered is less as compared to that when the water charges are on flat rate basis. CPHEEO Recommendations: Domestic and non-domestic needs: The following table 3.10 represents the per capita water demand for domestic and non-domestic needs as per CPHEEO manual of Water Supply and treatment
Table 3.10: Recommended per capita water supply for designing schemes S. Classification of towns/cities No 1 2 3 Towns provided with piped water supply but without sewerage system Cities provided with piped water supply where sewerage system is existing/contemplated Metropolitan and Mega cities provided with piped water supply where sewerage system-is existing/contemplated Recommended Maximum Water Supply Levels (lpcd) 70 135 150

Source: CPHEEO Third edition 1999, Manual on Water supply & Treatment Note: (i)In urban areas, where water is provided through public stand posts, 40 lpcd should be considered (ii)Figures exclude "Unaccounted for Water (UFW)" which should be limited to 15%. Figures include requirements of water for commercial, institutional and minor industries. However, the bulk supply to such establishments should be assessed separately with proper justification.

Institutional Needs: The water requirements for institutions such as offices, factories, schools, hotels, restaurants, hospitals, railway station, airports and cinema halls and theatres need to be provided in addition to the provisions indicated in the previous table, where required, if they are of considerable magnitude and not covered in the provisions already made.
Table 3.11: Institutional requirements (Individual) S. Institutions No 1 Hospitals (Including Laundry) Number of beds not exceeding 100 Number of beds exceeding 100 2 Hotel 3 Hostels 4 Nurses home and medical quarters

Water Supply (lpcd) 340 (per bed) 450 (per bed) 180 (per bed) 135 135

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5 6 7 8 9 10 11 12 13 14 Boarding Schools /Colleges Day schools / Colleges Restaurants Office Factories (Where bath rooms are provided) Factories (Where no bath rooms are provided) Junctions and intermediate stations where mail and express trains stops (Both Railways and Bus station)is provided Terminal Stations Intermediate stations where mail and express trains does not stop Airports- Sea port Cinema Halls and Theatres (per seat) 135 45 70 (per seat) 45 45 30 70 45 45 (25 where no bathing facilities provided) 70 15

Fire Fighting Demand: In designing water supply schemes, it is usual to provide for firefighting demand as a coincident draft on the distribution system along with the normal water supply to the consumers as assumed. A provision in kilolitres per day based on the formula of 100 p i.e., (100*square root of p) where, p = population in thousands can be adopted for communities larger than 50,000. One third of the fire-fighting requirements should desirably form part of the service storage. The balance requirement can be distributed in several static tanks at strategic locations / points. These static tanks may be filled from the nearby water sources (if available) such as ponds, streams or canals by water tankers wherever feasible. Industrial Needs: While the per capita rates of supply recommended will ordinarily include the requirement of small industries (other than factories) distributed within a town, separate provisions would be required to be included for meeting the demands likely to be made by specific industries located within the urban areas. The forecast of this demand would be based on the nature and magnitude of each such industry and also on the quantity of water required per unit of production.
Table 3.12: Water Requirement for different kind of Industries Industry Automobile vehicle Distillery Fertiliser Leather Paper Special quality paper Straw board Petroleum refinery Steel Sugar Textile Unit of Production Vehicle (Kiloleter Alcohol Tonne 100Kg(Tanned) Tonne Tonne Tonne Tonne (crude) Tonne Tonne (cane crushed) 100Kg (goods) Water Requirement in (KL/Unit) 40 120-170 80-200 4 200-400 400-1000 75-100 1-2 200-250 1-2 8-14

Assessing the Water Demand for a City

The water requirement norms for all such uses should be taking into consideration and demand is estimated. Also a quick survey of consumption patterns and life styles and population percentage of a particular society or income group or housing typology should be carried out to estimate or cross check actual demand. A typical water requirement rate is presented in table 3.14
Table 3.14: Water Requirement Rate as per WHO standards and IS Codes Use Drinking Cooking Water Requirement Rates (in liters) WHO standards IS Codes 3 5 5+20 (washing) 5 Adopted water Requirement Ltrs. 5 5

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Bathing Washing of utensils Washing of house Washing of house Flushing Total 135 15 15 15 30 238 55 10 10 20 30 135 55 10 10 20 30 135

3.2.5.2 Demand Assessment for Sewerage System

Waste water disposal systems can be either the on-site type or the kind where water-borne wastes are disposed off-site into a water body or on land. To keep overall costs down, most urban systems today are planned as an optimum mix of the two types depending on various factors. The design of the sewerage system should be based on the design criteria given in the Manual on Sewerage and Sewage Treatment, December 1993 published by CPHEEO and also on the prevailing standard engineering design practices.

Current Status Assessment Sewerage and Sanitation While assessing the Sewerage and Sanitation sector in the city, it is important to look at the following parameters: a) Existing system Separate sewerage or combined sewerage system b) Existing and future sources of waste water Existing as well as likely future sources of water e.g. domestic, commercial, industrial should be analysed c) Conveyance system Existing city level conveyance system their capacities and capacity currently utilised should be analysed. Gap between exiting conveyance system available and current as well as future projected demand should be identified d) Treatment facilities Treatment facilities, location, their capacity and capacity currently utilised, possible locations for new facilities to be proposed should be analysed. Gap between existing treatment facilities available and current as well as future projected demand should be identified e) Collection network Some of the aspects to be analysed in the collection network are: Sub Module: Managing Risk through Partnership Contracts
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Existing areas and population covered and not covered Existing network, pipe diameters, capacities and condition of the pipelines Pumping facilities, location, capacity and capacity currently utilised Losses, infiltration and leakages in the collection network Gap between existing conveyance network available and current as well as future projected demand should be identified f) Existing waste water generated and per capita waste flow should be analysed. Rate of waste water flow depends up on quantum of water supplied to the community and rate of infiltration.
For sewerage projects following aspects should be studied and analysed: Existing system Separate sewerage or combined sewerage system Existing and future sources of waste water Existing as well as likely future sources of water e.g. domestic, commercial, industrial should be analysed Existing conveyance system Existing city level conveyance system their capacities and capacity currently utilised should be analysed. Gap between exiting conveyance system available and current as well as future projected demand should be identified

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Treatment facilities Treatment facilities, location, their capacity and capacity currently utilised, possible locations for new facilities to be proposed should be analysed. Gap between existing treatment facilities available and current as well as future projected demand should be identified

Collection network Some of the aspects to be analysed in the collection network are: Existing areas and population covered and not covered Existing network, pipe diameters, capacities and condition of the pipelines Pumping facilities, location, capacity and capacity currently utilised Losses, infiltration and leakages in the collection network Gap between existing conveyance network available and current as well as future projected demand should be identified Existing waste water generated and per capita waste flow should be analysed. Rate of waste water flow depends up on quantum of water supplied to the community and rate of infiltration

Demand Assessment
The demand assessment of Waste Water Disposal Services should consider the following norms and standards. quality as well as quantity of the sewage generated Population Equivalent waste water network and treatment requirements To cross check the actual demand, a quick survey on the following may be essential consumption patterns and life styles population percentage of particular society or income group housing typology Quantity Norms: As per the CPHEEO norms, sewage generated will be considered as 80% of the water reaching the consumer end. Such assumption will lead to more realistic sewage flow considerations and economical design of sewerage system. The sewage flows considered for design of the sewerage system will comprise of sewage emanating from domestic, commercial and industrial premises. An infiltration allowance of 5 % should be considered based on the past experience. Population Equivalent: The population equivalent is a parameter useful in the conversion of the contribution of wastes from industrial establishment for accepting in to sanitary sewer system. As per the CPHEEO the average daily per capita contribution of suspended solids and BOD are 90 gms and 45 gms respectively which is used for estimating population equivalents.

Design Period
The length of time up to which the capacity of a sewer will be adequate is referred to as the design period. Sewerage projects may be designed normally to meet the requirements over a thirty (30) year period after their completion. The period between design and completion should also be taken into account which should be between three to six years depending on the type and size of the project. The project components may be designed to meet the periods mentioned in table 4.1
Table 4.1: Design Periods for components of sewerage system and sewage treatment S. No 1 2 3 Component Collection System i.e. Sewer Network Pumping Stations (Civil Works) Pumping Machinery Recommended Design Period 30 years 30 years 15 years Clarification The system should be designed for the prospective population of 30 years as its replacement is not possible during its use Duplicating machinery within the pumping station would be easier/cost of civil works will be economical for full design period. Life of pumping machinery is Generally 15 years

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4 Sewage Treatment Plant Effluent disposal and Utilization 30 years The construction may be in a Phased manner as initially the flows may not reach the designed levels and it will be uneconomical to build the full capacity plant initially. Provision of design capacities in the initial stages itself is economical.

30 years

3.2.5.3 Demand Assessment for Solid Waste Management Projects

In India, Solid Waste Management (SWM) is the primary responsibility and duty of the municipal authorities. Since this activity is non-exclusive, non-rivalled and essential, the responsibility for providing the service lies within the public domain. The activity being of a local nature is entrusted to the urban local bodies. State legislation and local acts that govern municipal authorities include special provisions for collection, transport and disposal of waste. To a large extent, the municipal authority undertakes the task of solid waste management, with its own staff, equipment and funds. In a few cases, part of the said work is contracted out to private enterprises.

Current Status Assessment Solid Waste Management For any solid waste management projects the following aspects should be studied and analysed: a) Existing waste generation (Land Use Wise) domestic, institutional, industrial, construction, bio medical Waste composition
b) Waste composition

c) d) e) f) g) h) i) j)

Major Generation/Litter Points Waste collected, waste segregated and waste recycled Existing areas and population covered and not covered under waste collection system Gap between existing system available and current as well as future projected demand should be identified Waste transportation system Waste Treatment and scientific disposal Waste to Energy options Options for involving private players in various components ranging from waste collection to disposal to reuse. Sub Module: Managing Risk through Partnership Contracts
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k) Land availability for Land fill facilities

Composition of Waste
Solid waste generation is mainly from domestic, trade, commercial, agricultural and industrial activities and from public services. In Indian cities, it is a combination of various heterogeneous waste materials a mixture of vegetable and organic matter and inert matter such as glass, metal, stones, ashes, textiles, wood, grass, and so forth. Its main sources are residential premises, business establishments and street sweepings. The composition of municipal waste in terms of it physical and chemical characteristics (based on surveys conducted across 43 cities) is given in tables 5.1 and 5.2. It would be useful for the cities of various to consider the above while assessing the demand of solid waste generation in their respective cities. As may be observed, municipal solid waste in Indian cities is mixed in nature and has a large proportion of compostable material and inert materials. The Central Public Health and Environmental Engineering Organization (CPHEEO) have published a comprehensive manual on municipal solid waste management for the guidance of ULBs.
Table 5.1: Physical Characteristics of Municipal Solid Wastes in Indian Cities

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Population Range (in million)

Number Of Cities Surveyed

Paper

Rubber, Leather And Synthetics

Glass

Metals

Total Compostabl e matter

Inert

Percentage 0.1 to 0.5 12 2.91 0.78 0.5 to 1.0 15 2.95 0.73 1.0 to 2.0 9 4.71 0.71 2.0 to 5.0 3 3.18 0.48 >5 4 6.43 0.28 Source: Background material for Manual on SWM, NEERI, 1996

0.56 0.35 0.46 0.48 0.94

0.33 0.32 0.49 0.59 0.8

44.57 40.04 38.95 56.67 30.84

43.59 48.38 44.73 49.07 53.9

Table 5.2: Chemical Characteristics of Municipal Solid Wastes in Indian cities

Populatio n Range (in million) Number Of Cities Surveyed Moisture Organic matter Nitrogen as Total Nitrogen Phosphoro us as P2O5 Potassium as K2O C/N Ratio Calorific value* in kcal/kg 1009.89 900.61 980.05 907.18 800.7

Percentage 0.1 to 0.5 12 25.81 37.09 0.71 0.5 to 1.0 15 19.52 25.14 0.66 1.0 to 2.0 9 26.98 26.89 0.64 2.0 to 5.0 3 21.03 25.6 0.56 >5 4 38.72 39.07 0.56 Source: Background material for Manual on SWM, NEERI, 1996

0.63 0.56 0.82 0.69 0.52

0.83 0.69 0.72 0.78 0.52

30.94 21.13 23.68 22.45 30.11

Quantity of waste
The current municipal solid waste generation is estimated to be approximately 0.4 kilograms per person per day. Waste generation ranges from 0.2 kilograms to 0.6 kilograms per capita per day in cities ranging from 1 lakh to more than 50 lakh population.

Density of waste
Knowledge of the density of a waste i.e. its mass per unit volume (kg/m ) is essential for the design of all elements of the solid waste management system viz. Community storage, transportation and disposal. For example, in high income countries, considerable benefit is derived through the use of compaction vehicles on collection routes, because the waste is typically of low density. A reduction of volume of 75% is 3 frequently achieved with normal compaction equipment, so that an initial density of 100 kg/m will 3 readily be increased to 400 kg/m . In other words, the vehicle would haul four times the weight of waste in the compacted state than when the waste is loose. The situation in low-income countries is quite different: a high initial density of waste precludes the achievement of high compaction ratio. Consequently, compaction vehicles offer little or no advantage and are not cost-effective.
3

Moisture Content
Moisture content of solid wastes is usually expressed as the weight of moisture per unit weight of wet material. Moisture Content (%) = (Wet weight dry weight)*100/wet weight A typical range of moisture contents is 20 45% representing the extremes of wastes in an arid climate and in the wet season of a region having large precipitation. Values greater than 45% are however not uncommon. Moisture increases the weight of solid waste and therefore the cost of collection and transport. Consequently, waste should be insulated from rainfall or other extraneous water.

Demand for Solid Waste Management

The information regarding waste quantity and density coupled with waste generation rate (by weight), is important while assessing the payload capacity of the collection equipment. It is possible to estimate the number of vehicles required for the collection and transportation of waste each day.

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3.5.3.4. Demand Assessment Roads and Transport: Current Status Assessment Roads and Transport The transport sector includes aspects of movement of people and goods, means of transportation, traffic management and the road infrastructure. Therefore it needs to be reviewed with a holistic perspective. The key issues pertaining to the transport sector can be summarised as: a. Absence of integration of landuse and transport b. Absence of integration of different modes of transport c. Absence of adequate mass rapid transportation systems (density, area coverage, quality of services) leading to uncontrolled growth of personal vehicles d. Absence of adequate studies to find appropriate solutions for the ever growing private vehicles e. Absence of policy and implementation to regulate public versus private transport f. Insufficient carriageway width to accommodate high volume of traffic g. Absence of travel demand management measures h. Improper traffic junctions i. Chronic parking problems in core areas j. Very high risks for pedestrians and cyclists from motorized traffic k. Absence of pedestrian walkways, separated paths, and level crossing facilities l. Absence of appropriate bicycle paths and separated lines. m. Narrow bridges and inadequate number of railway over bridges. Various types of encroachments Absence of proper link roads Unscientific route selection of public transport Inadequate bus terminals Lack of awareness of traffic rules by general public Sub Module: Managing Risk through Partnership Contracts
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For road projects following aspects should be studied and analysed: a) Missing linkages b) Intersections on the road c) Existing and proposed land use d) Employment generation nodes e) Traffic and circulation pattern f) Condition of the road g) Right of Way h) Existing road network and road hierarchy i) Freight corridors j) Existing and proposed carrying capacity k) Existing infrastructure on the road l) Accident data m) Over Bridges Carrying capacity and utilised capacity n) Traffic surveys required to be conducted in connection with the preparation of road projects such as (a) Traffic Counts, (b) Origin Destination Surveys, (c) Pedestrian surveys

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Annexure 2 3.5 Design Criteria for Urban Infrastructure Services

3.5.1 Design of Water Supply Projects
The planning of water supply systems is based on certain basic design considerations. Engineering decisions are required to specify the area and population to be served, the design period, per capita rate of water supply, water needs for other purposes in the area, pressures requirements for piped water supply, water quality standards, nature and location of facilities to be provided, the utilization of centralized or multiple points of treatment facilities and points of water supply intake and waste water disposal. The following basic design parameters should be kept in mind before designing this component

3.5.1.1 Water Quality and Quantity

The water to be used for urban water supply systems may vary both in quantity and quality as well as in the degree of treatment required; seasonally, monthly, daily and sometimes even hourly. The public health engineer may use his ingenuity to mitigate the variations in quantity by provision of storage, which may be drawn upon during peak demand. Variations in quality can be managed by provision for the introduction of suitable process adjustments in the water treatment plant. Variations in water quantity may be managed by the following methods. (a) Water Conservation: Water conservation has to be aimed at optimal use of available water resources; prevention and control of wastage of water and effective demand management. (b) Increased water availability and supply & demand management: Increase of water availability can be achieved through augmentation of water resources by storing rainwater on the surface or below the surface. Water supply management aims at improving the supply by minimizing losses and wastage and unaccounted for water (UFW) in the transmission mains and distribution system. Water demand management involves measures which aim at reducing water demand by optimal utilization of water supplies for all essential and desirable needs.

3.5.1.2 Design Period

Water Supply Projects may be designed to meet the requirements over a 30 year period after completion. The time lag between the design and completion of the project should also be taken into account which should not exceed two to five years. This thirty year period may be modified in regard to certain components of the project depending upon their useful life or the facility for carrying out extensions when required.

3.5.1.3 Population Forecast

For population forecast please refer Annexure 1

3.5.1.4 Per capita water Supply

For per capita water supply please refer Annexure 1

3.5.1.5 Water Quality Standards

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The Environmental Hygiene Committee (1949) recommended that the objective of a public water supply should be to supply water "that is absolutely free from risks of transmitting diseases, is pleasing to the senses and is suitable for culinary and laundering purposes" and added that " freedom from risks is comparatively more important than physical appearance or hardness" and that safety is an obligatory requirement and physical and chemical qualities are optional within a range. The physical and chemical quality of drinking water should be in accordance with the recommended guidelines mentioned in table. Ceased with the introduction of the Manual on Water Supply and Treatment, third edition-revised 1999, Ministry of Urban Development, Government of India, wherein the following Water Quality norms have recommended and presented in table 3.3 Table 3.3 Recommended Guidelines for Physical and Chemical Parameters
S. No. Characteristic *Acceptable **Cause for Rejection

31

Pesticides (total, mg/l)

Absent 0.1 1.0

Refer to WHO guidelines for drinking water quality Vol I-1993

RADIO ACTIVITY 32 Gross Alpha activity (Bq/l) 33 Gross beta activity (Bq/l)

0.1 1.0

Recommended guidelines for physical and chemical parameters (Refer table above) The figures indicated under the column Acceptable are the limits upto which water is generally acceptable to the consumers. Figures in excess of those mentioned under acceptable render the water not acceptable but still may be tolerated in the absence of an alternative and better source but upto the limits indicated under column Cause for Rejection above which the sources will have to be rejected.

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1 Turbidity (NTU) 1 10 2 Colour (Units on Platinum Cobalt scale) 5 25 3 Taste and Odour Unobjectionable Objectionable 4 pH 7.0 to 8.5 <6.5 or> 9.2 5 Total dissolved solids (mg/l) 500 2000 6 Total Hardness (as CaCO3) (mg/l) 200 600 7 Chlorides (as Cl) (mg/l) 200 1000 8 Sulphates (as SO4) (mg/l) 200 400 9 Fluoride (as F) (mg/l) 1.0 1.5 10 Nitrates (as NO3) (mg/l) 45 45 11 Calcium (as Ca) (mg/l) 75 200 12 Magnesium (as Mg) (mg/l) < 30 150 If there are 250 mg/l of sulphates, Mg content can be increased to maximum of mg/l with the reduction of sulphates at the rate of unit per every Units of sulphates 13 Iron (as Fe) (mg/l) 0.1 1.0 14 Manganese (as Mn) (mg/l) 0.05 0.5 15 Copper (as Cu) (mg/l) 0.05 1.5 16 Aluminium (as Al) (mg/l) 0.03 0.2 17 Alkalinity (mg/l) 200 600 18 Residual Chlorine (mg/l) 0.2 >1.0 19 Zinc (as Zn) (mg/l) 5.0 15.0 20 Phenolic compound (as Phenol) (mg/l) 0.001 0.002 21 Anionic detergent (mg/l) (as MBAS) 0.2 1.0 22 Mineral Oil (mg/l) 0.01 0.03 TOXIC MATERIALS 23 Arsenic (as As) (mg/l) 0.01 0.05 24 Cadmium (as Cd) (mg/l) 0.01 0.01 25 Chromium (as hexavalent Cr) (mg/l) 0.05 0.05 26 Cyanides (as CN) (mg/l) 0.05 0.05 27 Lead (as Pb) (mg/l) 0.05 0.05 28 Selenium (as Se) (mg/l) 0.01 0.01 29 Mercury (total as Hg) (mg/l) 0.001 0.001 30 Polynuclear aromatic hydrocarbons (g/l) 0.2 0.2

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It is possible that some mine and spring waters may exceed these radio activity limits and in such cases it is necessary to analyze the individual radio-nuclides in order to assess the acceptability or otherwise for public consumption.

Bacteriological Quality of Drinking Water Organisms

All water intended for drinking E coli or thermo-tolerant coliform bacteria b,c Treated water entering the distribution system E. coli or thermo-tolerant coliform bacteria b Total coliform bacteria Treated water entering the distribution system E. coli or thermo-tolerant coliform bacteria b Total coliform bacteria

Guideline value
Must not be detectable in any 100-ml sample

Must not be detectable in any 100-ml sample Must not be detectable in any 100-ml sample

Must not be detectable in any 100-ml sample Must not be detectable in any 100-ml sample. In case of large supplies, where sufficient samples are examined, must not be present in 95 % of samples taken through out any 12 method period.

Source: WHO guidelines for Drinking Water quality Vol. 1 - 1993

3.5.1.6 Unit Operations of Water Treatment Plant

The method of treatment to be employed depends on the nature of raw water constituents and the desired standards of water quality. The unit operations in water treatment include aeration, flocculation (rapid and slow mixing) and clarification, filtration, disinfection, softening, deferrization, deflouridation and water conditioning and many different combinations of these to suit these requirements. In case of ground water and surface water with storage which are well protected, where the water has turbidity below 10 NTU and they are free from colour and odour, plain disinfection by chlorination is adopted before supply. In surface waters with turbidity not exceeding 50 NTU and where sufficient area is available, plain sedimentation followed by slow sand filtration and disinfection are practiced.

Aeration
Aeration is necessary to promote the exchange of gases between the water and the atmosphere.

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Table 3.4 Recommended Treatment for different Water Sources to Produce Water with Negligible Virus Risk type of sources Recommended treatment ground water protected, deep well; essentially free of faecal Disinfection contamination unprotected, shallow wells; feacally filtration and disinfection contaminated surface water protected, impounded upland water; disinfection essentially free of faecal contamination unprotected impounded water or upland river; filtration and disinfection faecal contamination unprotected lowland rivers; faecal pre-disinfection or storage, filtration, contamination disinfection unprotected lowland rivers; heavy faecal pre-disinfection or storage, filtration, contamination additional treatment and disinfection unprotected watershed; gross faecal not recommended for drinking water contamination

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Figure 3.1: Typical Flow Diagram of a Water Treatment Plant

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The purpose of coagulation and flocculation is to remove particulate impurities, especially non settleable solids (particularly colloids) and colour from the water being treated. Non-settleable particles in water are removed by the use of coagulating chemicals. The most commonly used coagulant is ferric alum. However, Poly Aluminium Chloride (PAC) is also used as a coagulant. The advantages of PAC are i) it gets properly dispersed, ii) it does not have any insoluble residue, iii) it does not affect the settling tanks, iv) it is more effective than alum v) it requires less space (may be about 50%). The disadvantage of PAC is that it is less effective in removal of colour. Flocculation basin The objective of a flocculation basin is to produce a settled water of low turbidity which in turn will allow reasonably long filter runs. Following points should be considered during the operation of the flocculation basins. Where head loss through the plant is to be conserved as much as possible and where the flow exceeds 300 m3 / hr, mechanical mixing which is also known as flesh mixing is desirable. Multiple units may be provided for large plants. Normally a detention time of 30 to 60 seconds is adopted in the flash mixer. Head loss of 0.2 to 0.6 m of water, which is approximately equivalent to 1 to 3 watts per m3 of flow per hour is usually required for efficient flash mixing. The intensity of mixing is dependent upon the temporal mean velocity gradient, G. This is defined as the rate of change of velocity per unit distance normal to a section (or relative velocity of two flow lines divided by the perpendicular distance between them) and has the dimensions of and generally expressed as s-1. The turbulence and resultant intensity to mixing is

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based on the rate of power input to the water and G can be measured or calculate in terms of power input by the following expression: Where, G = Temporal mean velocity gradient, s-1 P = Total input of power in water, watts; 2 = Absolute viscosity of water, N.s/m ; and 3 Vol= Volume of water to which power is applied, m Two types of mechanical mixers of coagulant: Rapid rotation of impellers /blades Mixing with the aid of a jet / impingement on a jet Rapid rotation of impellers /blades: Propeller type impellers are commonly employed in flash mixers with high RPM speed of 400 to 1400 rpm Detention time should be of 30 to 60 sec. is provided. 3 Power requirements 1 to 3 Watts per m / hr The ratio of impeller diameter to tank diameter is 0.2 to 0.4 and The ratio of tank height to diameter is 1:1 to 3:1 is preferred for proper dispersal. Types of Slow Mixers 1. Gravitational or Hydraulic Type Flocculators (a.) Horizontal Flow Baffled Flocculator 2. Mechanical Type of Flocculator Paddle flocculators are widely used in practice. The design criteria are depth of tank = 3 to 4.5 m; detention time, t = 10 to 40 min. normally 30 min; velocity of flow = 0.2 0.8 m/s normally 0.4 m/s; total area of paddles = 10 to 25% of the cross-sectional area of the tank; range of peripheral velocity of blades = 0.2 0.6 m/s; 0.3-0.4 m/s is recommended; range of velocity gradient; G = 10 to 75 s-1 range of dimensionless factor Gt= 104 105 and power consumption; 10.0 to 36.0 kw/mld, outlet velocity to settling tank where water has to flow through pope or channel = 0.15 to 0.25 m/s to prevent settling or breaking of floes. For paddle flocculator, the velocity gradient is given by

In which CD = Coefficient of drag (0.8 to 1.9), 2 Ap=area of paddle (m ), 3 Volume of water in the Flocculator (m ) Vp= Velocity of the tip of paddle (m/s), VW= Velocity of the water adjacent to the tip of paddle (m/s) The optimum value of G can be calculated In which G= Optimum velocity Gradient, s-1 t = time of flocculation, min; and c= alum concentration (mg/l)

Clariflocculators
Clariflocculators are widely used in the country in water and wastewater treatment. The coagulation and sedimentation processes are effectively incorporated in a single unit in the clariflocculator. All these units consist of 2 to 4 flocculating paddles placed equidistantly. Settling zone: The rectangular tanks have lengths commonly upto 30 m but larger lengths upto 100 m have also been adopted. The length to width ration of rectangular tanks should preferably be from about

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3:1 to 5:1. the narrower the tank, the less chance there is for setting up of cross currents and eddies due to wind action, temperature changes and other factors involved. In very large size tanks where the depth is necessarily great, it may be advisable to provide longitudinal baffles to confine the flow to definite straight channels. The diameter of the circular tank is governed by the structural requirement of the trusses that carry the scraping mechanism. Circular tanks up to 60 m in diameter are in use but are generally up to 30 m to reduce wind effects. Square tanks are generally smaller usually with side upto 20 m. Square tanks with hopper bottoms having vertical flow have sides generally less than 10 m to avoid large depths. The decomposition of the sludge adversely affects the settling process. Depths commonly used in practice vary from 2.5 to 5 m with 3.0 being a preferred value. Bottom slopes may range from 1% in rectangular tanks to about 8% in circular tanks. The slopes of sludge hoppers range from 1.2:1 to 2:1 (Vertical: horizontal).

Sedimentaion
There are two types of Sedimentation tanks. (1) Horizontal Flow Tanks and (2) Vertical Flow Tanks 1. Horizontal Flow Tanks: in the design of a horizontal flow tank, the aim is to achieve as nearly as possible the ideal conditions of equal velocity at all points laying on each vertical line in the settling zone. The direction of flow in the tanks is substantially horizontal. Among the representative designs of the horizontal flow settling tanks, the following may be mentioned: 2. Vertical Flow Tanks: Vertical flow tanks normally combine sedimentation with flocculation. These tanks are square or circular in plan and may have hopper bottoms. The influent enters at the bottom.

Filtration
The purpose of filtration is the removal of particulate impurities and flocs from the water being treated. In this regard, the filtration process is the final step in the solids removal process which usually includes the pre-treatment processes of coagulation, flocculation and sedimentation. The degree of treatment applied prior to filtration depends on the quality of water. Typical surface loading rates and detention periods are presented in table3.1 Table3.1: Common Surface Loading and Detention Periods
Surface Loading m3/m2/d* Tank Type Range Plain Sedimentation Horizontal circular flow, Upto 6000 25-75 Typical Design 15-30 30-40 40-50 Value for Detention period, hr* Range 0.01 - 15 2-8 Typical value for design 3-4 2-2.5 1-1.5 Particles normally removed Sand, clay silt&

Alum & iron floc Flocculent

Vertical flow (upflow) clarifiers * at average design flow

Source: CPHEEO Manual 1999

Slow Sand Filter

Slow Sand filtration was the first type of porous media filtration used in water treatment. This process is known for its simplicity and efficiency. During the initial operational period of slow sand filters, the separation of organic matter and other solids generates a layer of biological matter on the surface of the filter media. Design Consideration: Design period 10 years

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Plant capacity: It would be convenient to convert the daily required volume to a design flow Q, the quantity of water to be treated per hour rather than per day. Thus for a given daily out put the size of plant depends on duration of filter operations. Filtration Rate and No. of filters : It is desirable to design filter for a normal filtration head of 0.1 m/hr. Min. of two filter units should be provided. This will restrict the over load rate to 0.2 m/hr when one unit is taken out for cleaning and would ensure uninterrupted productions. For a given area, the optimum number and size of filters which will be only 10% more expensive than the minimum 2 bed unit are given in TABLE.3.2 Table 3.2: Recommended Nos. of Slow Sand Filters for given Plan Areas. Area in sq. m. No. of Beds.
Upto 20 20 to 249 250 to 649 650 to 1200 1201 to 2000 2 3 4 5 6

Depth of Filter Box : The elements that determine the depth of the Filter Box and their suggested depths are free board (0.2m), supernatant water reservoir (1.0m), filter sand (1.0m), supporting gravel (0.3m), and under drainage system (0.2m) with a total depth of 2.7m. The use of proper depths for these elements can reduce cost of filter box considerably without adversely affecting efficiency. Table 3.3: Summary of Guidelines for Design of Slow Sand Filters
Description Recommended Design Value Description Recommended Design Value

Design Period Filtration rate Normal operation Max. overload rate Number of filter beds minimum Area up to 20sqm Area between 20-249 sqm Area between 250-649 sqm Area between 650-1200 sqm Area between 1201-2000 sqm

10years 0.1m/hr 0.2m/hr 2 3 4 5 6

Depth of Supernatant water Free board Depth of filter sand Initial Final (minimum) Size of sand Effective size Uniformity coefficient (U,C) Gravel (3-4laers)depth Under drain (Made of bricks or perforated pipes) Depth of filter box Effluent weir level above sand bed

1.0m 0.2m 1.0 0.4m 0.2 to 0.3 5 0.3 m 0.2 m 2.7m 20-

Filter Sand and Gravel: Undue care in the selection and grading of sand for slow sand filters is neither desirable nor necessary. Use of builder grade or locally available sand can keep the cost low. Similarly, rounded gravel, which is often quite expensive and difficult to obtain, can be replaced by hard, broken stones to reduce cost. Guidelines for design of Slow Sand Filter are in Table 3.3 .

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Rapid Sand Filtration Plant
Rate of Filtration: The standard rate of filtration through a rapid sand filter is usually 80 to 100 kpm / m2 (4-6-8 m / hr). Practice is tending towards higher rates (up to 10 m/hr) in combination with greater care in conditioning the water before filtration and with the use of coarser sand (effective size up to 1 mm). A careful arrangement would be to design the filter on the basis of average consumption at a normal rate of 4.8 m / hr but with the inlet and outlet control arrangements designed to permit a 100% overload for emergent occasion. Capacity of Filter Units: A maximum area of 100 m2 for a single unit is recommended for plants of greater than 100 mld consisting of two halves each of 50 m2 area. Also for flexible of operation a minimum of 4 units should be provided which could be reduced to 2 for smaller plants. Dimension of Filter Units: Layout of the plant, economy and convenience determine the relationship between the length and the breadth of the units. Where filters are located on both sides of a pipe gallery, the ratio of length to width of a filter-box has been found to lie, in number of installations, between 1.11 and 1.66 average about 1.25 to 1.33. A minimum overall depth of 2.6m including a free board of 0.5 m is adopted. Filter Sand: Filter sand is defined in terms of effective size and uniformity coefficient. Effective size is the sieve size in millimetres that permits 10% by weight to pass. Uniformity in size is specified by the uniformity coefficient which is the ratio between the sieve that will pass 60% by weight and the effective size. Shape, size and quality of filter stand shall satisfy the following norms : Sand shall be of hand and resistant quartz or quartzite and free of clay, fine particles, soft grains and dirt of every description. Effective size shall be 0.45 to 0.70 mm Uniformity coefficient shall not be more than 1.7 nor less than 1.3 Ignition loss should not exceed 0.7 % by weight. Soluble fraction in hydrochloric acid shall not exceed 5.0% by weight Silica content should be not less than 90% Specific gravity shall be in the range between 2.55 to 2.65 Wearing loss shall not exceed 3%

Box: Sample Calculation of Rapid Sand Filter

Step-1 : Suppose Water demand is 9 mld of a city Step-2 : According to Morrel and Wallance formula, the number of units of a filter plant,
N = 1.22 x Sqrt of Q =1.22x 3 = 3.66 say 3 nos.

Step-3 : Maximum water demand = demand x peak factor=1.8x9000000 per day Step-4 : Now let us assume rate of filtration is 4000 liter / hr/ sq.m

Hence per hour demand =(1.8x9000000) / 24 =675000 liter per hour

Hence Total area required for filter beds = water demand/Rate of filtration = 67500/4000 sq.m = 168 .75 sq.m Step-5 : Area of each unit = 168.75 / 3 =56.25 Assuming L=1.5 B; Hence 1.5BxB =56.25 B = 56.25Hence B=6.12 say 6.15 m. Hence L=1.5 x6.15=9.20 m
2

Preparation of Filter Sand: From a sieve analysis of the stock sand, the coarse and fine portion of stock sand that must be removed in order to meet the size specifications, can be computed in terms of p1, the

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Depth of Sand: Usually the sand layer has a depth of 0.6 to 0.75m, but for higher rate filtration when the coarse medium is used, deeper sand beds are suggested. The standing depth of water over filter varies between 1-2 m. The free board above the water level should be at least 0.5 m so that when air binding problems are encountered, it will facilitate the additional levels of 0.15 to 0.30 m of water being provided to overcome the trouble.

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percentage of suitable stock sand that is smaller than desired effective size d, which is also equal to 10% b of the usable sand P2, the % of the stock sand that is smaller than the desired 60 percentile size d2. The percentage of suitable stock sand p3 is than=2(p2-p1)because the sand lying between the d1 and d2 sizes will constitute half the specified sand. To meet the specified composition, this sand can contain 0.1p3, i of a sand below d1,size. Hence the percentage of p4, below which the stock sand is too fine to use, is P4=p1-0.1p3=p1-0.2(p2-p1) =1.2p1-0.2p2 Likewise, the %age p5 above which the stock sand is too coarse for use is p5=p2+0.4% of usable sand =p2+0.4x2(p2-p1) = p2 + 0.8(p2-p1) = 1.8 p2 -0.8 p1 Size of gravel and depth of gravel layer shall be determined in accordance with the following rules: For strainer or wheeler type under-drain system, gravel shall be 2 mm minimum size, 50 mm maximum size and 0.3 to 0.5 m deep and For perforated pipe under-drain system, gravel shall be 2 mm minimum size and 0.5 m in depth Wash water Gutter : The troughs are designed as free falling weirs or spillways, for free falling rectangular troughs with level invert, the discharge capacity Q in M3 / s may be computed from the formula Q = 1.376 x b x h 3/2 ; Where b is the width of the trough in m and h is the water depth in m. The pre-treatment units which form essential parts of a Rapid sand filtration unit include (a) Coagulation and flocculation with rapid mixing facilities and (b) Sedimentation units. Following different figures 3.2 and 3.3 shows different type of units being provided in various cities:

Disinfection
The primary objective of the chlorination process is disinfection, taste and odour control in the system, preventing the growth of algae and other micro organisms that might interfere with coagulation and flocculation, keeping filter media free of slime growths and mud balls and preventing possible built up of anaerobic bacteria in the filter media, destroying hydrogen sulphide and controlling sulphurous taste and odour in the finished water, removing iron and manganese, bleaching of organic colour. It can also be used for flushing pipeline before it is brought into operation after carrying out repairs etc. However in such case chlorinator is adjusted to apply chlorine or hypochlorite solution at the rate of 50 ppm. Heavily chlorinated water should be allowed to stand in the pipeline for at least 30 min. and preferably for 12 hours before being replaced with potable water. Chlorine reacts with water to form hypochlorous acid (HOCl) and Hydrochloric acid (HCl). This hydrolysis reaction is reversible. The hypochlorous acid dissociates into hydrogen ions (H+) and hypochlorite ions (OCl), free available chlorine is hypochlorous acid and hypochlorite ions. This free available chlorine can react with compounds such as ammonia, proteins, amino acids and phenol which may be present in the water, forming chloramines and chloro-derivatives which constitute the combined chlorine. Chlorination in presence of humic acid and fulvic acid forms Tri-halomethane (THM) which is a health hazard. The combined available chlorine has less disinfecting properties as compared to free available chlorine. For more details please refer to Manual on Water Supply and Treatment, (1999 Edition).

Water Treatment Plant

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Information, Operation, Maintenance, Records etc. of Water Treatment Plant are describes in the following: Plant Information Source:Surface - i. River ii. Reservoir iii. Dam iv. Lake v. Canal. Ground - i. Well ii. Tubewell iii. Infiltration well/gallery Intake:i. Location. ii. Pollution Source iii. Gates and Valves iv. Structural details. Treatment Process 1) Screens 2) Storage tanks/Pre-settling tanks 3) Pre-disinfection/Pre-chlorination 4) Aeration 5) Coagulation and Flocculation: (a) Mixing tank or Mixing channel, (b) Chemicals: lime, alum, or others. 6) Process may be of Conventional or tapered flocculation with independent tank or in form of clarifier. 7) Sedimentation: Tanks may be (circular or rectangular).If circular; it may have either clariflocculators with or without Scrapers. 8) Filters: Filtration process may be by Slow Rapid sand filter or slow sand filter but, in both the cases they will have filter box and filter media 9) Clear Water Tanks: Number and size clear water tank may be decided Capacity.

3.5.1.7 Distribution System

An accurate and detailed water supply distribution system can be designed after the following information is available. Detailed survey of levels of the area/zones/sectors. Zones and their individual water requirements. Detailed internal layout of some sectors especially reserved sectors (as per the layout plan). Internal road networks inside the sectors.

Generally a pipe is a closed conduit which is used for carrying fluids under pressure. Pipes are commonly circular in section. As the pipes carry fluids under pressure, the pipes always run full. The fluid flowing in a pipe is always subjected to resistance due to shear forces between the fluid particles and the boundary walls of the pipe and between the fluid particles themselves resulting from the viscosity of the fluid. As stated earlier the frictional resistance offered to the flow depends on the type of flow. As such different laws are obeyed by frictional resistance in laminar and the turbulent flows. Generally, water flowing through pipes in water distribution systems is assumed as laminar flow. On the bases of the experimental observation, the laws of fluid friction for laminar flow may be narrated as follows: Laws: The frictional resistance in the laminar flow is (i) Proportional to the velocity of flow, (ii) Independent of the pressure, (iii) Proportional to the area of surface in contact, (iv) Dependent of the nature of the surface in contact, (v) Greatly affected by the variation of the temperature of the flowing fluids. While designing the pipe section velocity through pipe section is assumed 0.8 to 1.6 m/s .As a rule of thumb for design assume higher velocity of 1.2 to 1.4 In normal case it is assumed 1.4 m/s With assumption of velocity diameter of the pipe section is determined by 2 3 Q= [(/4)d ] v (where Q in m /s)

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Design of Pressure Pipelines

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The pipe section and material is fixed for calculating head loss through the section. It is important to know the residual pressure of water flowing through the pipelines wherein the hydraulic gradient over its entire length lays above the crown / sofit of the pipelines. However the designed pipeline is governed by Hazen-Williams equation.

Minimum Pipe Sizes

Minimum pipe sizes (diameter) required and recommended by CPHEEO are 100 mm for towns having population upto 50,000 and 150 mm for those above 50,000. Pipelines having size less than 100 mm can be considered for dead ends.

Pipe and Material of Construction

Pipe materials generally used for water supply network are cast iron(CI), reinforced cement concrete(RCC), pre-stressed concrete, asbestos cement(AC), rigid PVC, ductile iron(DI), fibre glass pipe, glass reinforced plastic, fibre reinforced plastic, low density and high density polyethylene(HDPE), etc. The manufacturing process of AC pipes is known to be carcinogenic, and thus many water supply boards have stopped using AC pipes. RCC pipes are prone to O & M problems and are difficult to maintain. CI pipes are prone to corrosion, though they are advantageous over cost considerations as well as in terms of O&M. The HDPE pipe is the cheapest material, but their overall performance in many cities is far from satisfactory. The cost of DI pipe is very high, however, these pipes could be considered under adverse soil conditions. Considering the problems that each type of pipe material has, use of PVC pipes is the most suitable option. Equation Hf = (f L v )/(2gD) is known as Darcy Weishbach equation which can be used for computing the head loss due to friction in pipes. Where v is velocity of water flowing through the pipe. ,f frictional factor ,L length of the pipes ,g is acceleration due to gravity ,D Diameter of the pipe. But, f is independent of the pipe material and therefore not in use. The Standard HazenWilliams formula commonly in use for Head loss calculation through pipe section Q=3.110-4 c D2.63 S0.54 Where Q is in KLd, C is H-W coefficient, D is in mm, And S is hydraulic loss in mt / mt The values of the Hazen Williamss coefficient C for new conduits and the values as recommended in the Manual on Water Supply and Treatment third edition-revised 1999,Ministry of Urban Development, Government of India to be adopted for design purposes are recommended as under in table 3.6. Table 3.6: Recommended C Values Pipe Material
Unlined Metallic Pipes Cast Iron, Ductile Iron Mild Steel Galvanized Iron above 50 mm dia. # Galvanized Iron 50 mm dia and below used for house service connections. # Centrifugally Lined Metallic Pipes Cast Iron, Ductile Iron and Mild Steel Pipes Lined with cement mortar or Epoxy. Up to 1200 mm dia. Above 1200 mm dia. Projection Method Cement Mortar lined Metallic Pipes Cast Iron , Ductile Iron and Mild
2

Recommended C for New@ Pipes

130 140 120 120

140 145 130*

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Steel Pipes Non Metallic Pipes RCC Spun Concrete , Prestressed Concrete Up to 1200 mm dia. Above 1200 mm dia. Asbestos Cement PVC , GRP and other Plastic pipes
Source: CPHEEO manual 1990

140 145 150 150

@ The C value for new pipes included is for determining the acceptability of surface finish of new pipelines # The quality of galvanizing should be in accordance with the relevant standards to ensure resistance to corrosion throughout its design life. * For pipes of diameter 500 mm and above. The range of C values may be from 90 to 125 for pipes having diameters less than 500 mm. And Check the velocity of flow through pipe by equation V=4.56710-3CD0.63 S0.54 Where D is in mm and v is in m/s

Modified Hazen Williams Formula

Hfm = {[ L ( Q/Cr)1.81 ]/994.62 } D 4.81 Where q is in mld, D is in mm, Cr =1 Note: - 1. Standard HazenWilliam formula generally used for hydraulic designs of pressure pipelines is having certain limitations. The results obtained by its use suffer from considerable inaccuracies. Thus its use resulted generally in over- designing of pipelines. In spite of the fact that the modified H-W formula is more rational, it is not being widely used at present. One of the reasons may be non availability of design aids for the same. Calculate actual Hydraulic loss as actual length of pipe section H Loss = S L /1000 mt. ; Where, S = slope, L = length Calculate cumulative hydraulic loss adding 10% extra loss for unaccounted losses flowing direction of water through pipe. Now considering the reduced level of source of supply and tail end of the pipe section calculate the Residual Pressure.

Piped water supplies should be designed such as to distribute water to consumers on continuous 24 hours basis at adequate pressure at all points. Intermittent supplies are neither desirable from the public health point of view nor economical. For towns where one-storied buildings are common and for supply to the ground level storage tanks in multi-storied buildings, the minimum residual pressure at ferrule point should be 7m for direct supply. Where two-storied buildings are common, it may be 12m and where three-storied buildings are prevalent 17 m or as stipulated-by local byelaws. The pressure required for fire-fighting ring would have to be boosted by the fire engines. The distribution system would be designed for the following minimum residual pressures at end points as given in the table 3.7. Minimum Residual pressures are governed by Building Bye-laws of the city.

3.5.2 Design Criteria of Sewerage Projects

The objective of a public waste water collection and disposal system is to ensure that sewage or excreta and sullage discharged from communities is properly collected, transported, treated to the required degree and finally disposed off without causing any health or environmental problems. Waste water disposal systems can be either the on-site type or the kind where water borne wastes are disposed off-site into a water body or on land. To keep overall costs down, most urban systems today are planned as an optimum mix of the two types depending on various factors.

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Residual Pressure

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Main Considerations
In designing waste water collection, treatment, and disposal systems, planning generally begins from the final disposal point going backwards to give an integrated and optimum design to suit the topography and the available hydraulic head, supplemented by pumping if essential. Once the disposal points are tentatively selected, further design is guided by the following design considerations: (Engineering, Environmental, Process and Cost)

Engineering Considerations
Design period, stage wise population to be served and expected sewage flow and fluctuations. Topography of the general area to be served, its slope and terrain. Tentative sites available for treatment plant, pumping stations and disposal works. Available hydraulic head in the system upto high flood level in case of disposal to a nearby river or high tide level in case of coastal discharge or then level of the irrigation area to be commanded in case of land disposal. Ground water depth and its seasonal variation affecting construction, sewer infiltration, and structural design (uplift). Soil bearing capacity and type of strata expected to be met at the time of construction. Onsite disposal facilities, including the possibilities of segregating the sullage water and sewage and reuse or recycle sullage water within the households.

Environmental Considerations
Surface water hydrology and quality. Ground water quality. Coastal water quality Odour and Mosquito nuisance Public Health Landscaping

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Waste water flow and Characteristics Degree of treatment required Performance characteristics Other process requirements Cost considerations

Design Period
Sewerage projects may be designed normally to meet the requirements over a thirty year period after their completion. The period between design and completion should also be taken into account which should be between three to six years depending on the type and size of the project. The length of time up to which the capacity of a sewer will be adequate is referred to as the design period. Sewerage projects may be designed normally to meet the requirements over a thirty year period after their completion. The period between design and completion should also be taken into account which should be between three to six years depending on the type and size of the project. The project components may be designed to meet the periods mentioned in table 4.1 below: Table 4.1: Design Periods for components of sewerage system and sewage treatment

Population Forecast: Explained in Annexure 1

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Sewage Generation
As per the CPHEEO norms, sewage generated will be considered as 80% of the water reaching the consumer end. Such assumption will lead to more realistic sewage flow considerations and economical design of sewerage system. The sewage flows considered for design of the sewerage system will comprise of sewage emanating from domestic, commercial and industrial premises. An infiltration allowance of 5 % should be considered.

Sewage flows
Sewage flows for the design of sewers will include peak dry weather flows of domestic sewage from residential, commercial and institutional areas. Generally 80% of the water supply may be expected to reach the sewers unless there is data available to the contrary. However the sewers should be designed for a minimum waste water flow of 100 litres per capita per day.

Peak factors
The flow in sewers varies considerably from hour to hour and also seasonally but for the purposes of hydraulic design it is the estimated peak flow that is adopted. The peak factor or the ratio of maximum to average flows depends upon contributory population and the following values (refer table 4.2) are recommended.

Self Cleansing Velocities

Velocity of flow of waste water is assumed 0.6 m/s for deciding the size of sewer line. The flow velocity should not be less than 0.4 m/s and not greater than 2.44 m/s. Discharge of waste water is computed by Qf = future population per capita discharge Peak factor And Qt = 1.25 Qf With assumption of velocity diameter of the pipe section is determined by 2 3 Q= [(/4) d ] v (where Q in m /s)

Minimum size of sewers

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Minimum Size (diameter) of sewers in urban areas should be 150 mm and 100 mm in hilly areas. The Manning formula given below is commonly used for such design of sewer line. 2/3 V = (1 / N ) R S Where R = Hydraulic radius For circular conduit Hydraulic radius R = D/4 Hence For circular conduit , 2/3 1/2 V = (1/N ) 0.003968 D S 6 8/3 1/2 And Qt = (0.2693/10 ) (1/N) D S Where Qt = quantity of flow in mld D = dia . of the pipe in mm N = Manning`s coefficient of roughness S = slope of hydraulic gradient (generally slope of pipelines) Values of 1 in L (gradient) are obtained which are inverse values of slope i.e. 1/S The values of Manning`s Coefficient (Coefficient of Roughness) recommended for different pipe materials are given below. Table 4.7: Values of Z For Different Pipe Beddings Fraction of conduit on which lateral pressure acts m
0.00 0.3 0.5 0.7

Value of z for A Class Beddings

0.150 0.743 0.856 0.811

Other Beddings
0.000 0.217 0.423 0.594

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0.9 1.0 0.678 0.638 0.655 0.638

Negative Projective Conduits The load factor for negative projecting conduits may be determined by the equations (6.15) and (6.16) with value of k of 0.15. Provided the side fills are well compacted. Imperfect Trench Conditions The equations for positive projecting conditions will hold good for those conditions as well. Conduits under Simultaneous Internal Pressure and External Loading Simultaneous action of internal pressure and external load gives a lower supporting strength of a pipe than what it would be if the external load acted alone. If the bursting strength and the three edge strength of a pipe are known. The relation between the internal pressure and external loads which will cause failure may be computed by means of the formula t = T (1-s2) S .6.17 where t = internal pressure in kg/cm2 at failure when external load is simultaneously acting T = bursting strength of a pipe in kg/cm2 when no external load is simultaneously acting s = three- edge bearing load at failure in kg/linear metre when there is no internal pressure simultaneously acting. Relationship between the different elements in structural design The basic design relationship between the different design elements are as follows for grid pipes
Safe working strength = Ultimate three edge bearing strength Factor of safety

Recommendations The factor of safety recommended for concrete pipes for sewers is 1.5 which is considerably less as compared to that for most engineering structures which have a factor of safety of atleast 2.5. As the margin of safety against the ultimate failure is low, it becomes imperative to guarantee that the loads imposed on sewer pipes are not greater than the design loads for the given installation conditions. In the order to achieve this objective the following process are recommended. Width of the trench specified for a particular job should be minimum in consonance with the requirements of adequate working space to allow access to all parts and joints of pipes. Specification should lay proper emphasis on the limit of the width of trench to be adopted in the field which should not exceed that adopted in the design calculations. Any deviations from this requirement during the construction should be investigated for their possible effect on the load coming on the pipe and steps should be taken to improve the safe supporting strength of pipe for this condition of loading by adopting suitable Bedding or such other methods when necessary. The field Engineer should keep in touch with the Design Engineer throughout the duration of the project and any deviation from the design assumptions due to the exigencies of work should be immediately investigated and corrective measures taken in time. All pipes used on the work should be tested as per the IS specifications and test certificates of the manufactures should be furnished for every consignment brought to the site. Whenever shoring is used, the pulling out of planks on completion of work should be carried out in stages and this should be properly supervised to ensure that the space occupied by the planks is properly backfilled. Proper backfilling methods both as regards to selection of materials, methods of placing and proper compaction should be in general agreement with the design assumptions.

Sewer Appurtenances

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Manholes: Manholes are to be provided at all junctions, change of sewer size, gradient and direction. As
per the general practice the spacing of manhole is kept between 25 to 40 mt for all diameters. Spacing of Manholes adopted is as follows: a) Pipe dia of 300 mm 450 mm = 30 m b) Pipe dia of 500 mm 900 mm = 40 m c) Pipe dia of 1000 mm 1800 mm = 50 m However, additional manholes are to be provided on junctions of the street avoiding standard distance.

Scrapper Manholes: For sewers of diameters 600 mm and above, scraper manholes can be provided at
major junctions and at 135m centre to centre. Scraper manhole openings will be of minimum 900 to 1200mm sizes to permit lowering of sewer cleaning equipment.

Ventilation Shafts : Ventilation shafts need to be provided at the start of the sewer and along the
sewers at about 225 m interval. M.S. Ventilation shafts are recommended, as they are long lasting and chances of theft are minimal.

Sewage Pumping Stations

Types: The following types of pumps are used for sewage
Horizontal centrifugal pumps with flooded suction installed in the dry well Vertical pumps with pumps submerged in the wet well and the motor on a high level platform with connecting vertical shaft. Fully submersible pumps where motor is housed in the pump in submerged unit.

Design Considerations
Solid handling capacity: Inspite of the provision of screens, the impeller clearance has to be sufficient to handle solids entering the pumps accidentally. Usually, horizontal centrifugal pumps can handle solids upto 75 mm size and submersible pumps can handle solids upto 100 mm.

Sewage Treatment Plant

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Ease of Installation: Horizontal pump installations are more rigid and complicated where as submersible pump installation is flexible and simple. Cost of civil works: Horizontal pumps require separate dry well and civil works are expensive. Submersible installations are cheaper. Land requirement: Land requirement is less for submersible pump installation. Easy to Operate and Maintenance Less Power Intensive

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3.5.3. Design Criteria for Storm Water Drainage Projects

The purpose of providing storm water drains is to carry the rainfall (storm) runoff from the terraces, paved courtyards, footpaths, roads etc. of the developed area; so that the occurrence of flooding is reduced to the acceptable frequencies. Storm run off is that portion of the rainfall which drains over the ground surface. The estimation of such runoff reaching the storm water drains therefore is dependent on the intensity and duration of rainfall, characteristics of the drainage area and time required for such flow to reach the storm water drains. Storm water drains are not designed for the peak flow of rare occurrence of rainfall such as once in 10 years or more; but it is necessary to provide sufficient capacity to avoid too frequent flooding of the drainage area. There may be some flooding when the precipitation exceeds the design value, which has to be permitted. The frequency of such permissible flooding may vary from place to place, depending upon the characteristics of the drainage area. Though such flooding causes inconvenience, it may have to be accepted once in a while, considering the economy in the cost The estimation of such runoff reaching the storm water drains therefore is dependent on: Intensity and duration of rainfall Characteristics of the drainage area Time required for such flow to reach the storm water drains. Estimation of Run off The runoff reaching the drain is given by the rational method viz. Q = 10 CIA 3 Where,Q is the runoff in m / hour C is the coefficient of runoff I is the intensity of rainfall in mm / hour A is the area of drainage zone in hectares Storm frequency considered for the design is adopted as frequency of once a year. In absence of data from IMD, based on general equation by British Ministry of Health, the intensity of rainfall adopted for the design is 20 mm / hour and the duration of storm (t) in minutes, expressed by the mathematical formula adopted is as under :

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i = 1000 t + 20 Source: Sanitary Engineering by Prof. Vinayak N. Gharpure From this formula, for different values of intensities, corresponding values oft are worked out. These values of i &t are plotted on graph and the values of intensity (i) can be determined for any given time of concentration (tc) i.e. tc = inlet time + time of flow in the drain tc = t(i) + t(f) The portion of rainfall which finds its way to the drains is dependent on the imperviousness and the shape of the drainage area, apart from the duration of storm. The percentage of imperviousness for builtup area is considered as 90% and for the open area is considered as 20%. Therefore, the weighted average imperviousness of the drainage area for the flow, concentrating at a point is estimated. Diameter wise Length of Storm Water Drain Pipes in meter Besides, as required by the client, the storm water drains are proposed on both sides of the roads; so that road cutting is avoided while giving consumer connection to the plot holders. For the collection and disposal of storm water, RCC pipes are proposed as storm water drains. Manholes are proposed on straight stretches of pipe drains at distance of 30 m, staggered on both sides of drains. Besides, additional manholes are also provided at change of direction of drains as well as size of drainpipes. Catch pits, outlet structures are also proposed at various locations to collect and discharge the storm water in the drainage system.

Design Methodology
The following steps are followed for design of storm water drainage: First of all the length and area to be served by each pipe is worked out. Total area is assumed as divided in two parts; 50% built-up area and 50% open area. The percentage of imperviousness for built-up area is considered as 90% and for open area is considered as 20%. From this total impervious area is found out. Time of inlet (TI) is taken 25 minutes (Range is 5 to 30 minutes in CPHEEO Manual). Time of flow (TF) is found out considering velocity of flow 1 m/s. Time of concentration (TC) = TI + TF. From graph of I TC, I is found out and from graph of C TC, C is found out. (See Annexure No. 1 & Annexure No. 2) From all this runoff reaching the drain is given by Q = 10 CIA.
3

Where Q = Runoff in m /hour C = Coefficient of runoff I = Intensity in mm / hour A = Area in hectares From Q diameter is selected depending upon the availability of ground slope and Mannings Formula. Q = 1/n x (0.2693 x 10 ) D
-6 8/3

xS

1/2

Where n = Mannings co-efficient of roughness (consider 0.015) D = Diameter of pipeline in mm S = Slope of pipeline Q = Flow in MLd

Design of underground Strom Water Network

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Modified Rational Method
To design pipe or channel sizes and gradients using a version of the Rational Method. Gradients are designed to give adequate self-cleansing velocities and dry weather or storm flows. Sizes are designed using the rational formula to take the peak flows. The system may include overflow structures and detention storage. The program can calculate the required volume of storage. This is the simplest method in the package. In the event of less scanty/less rainfall data availability the rational formula has given should be used for design of storm water drainage network.

Hydrograph Design Method

To size pipes or channels for observed or synthetic rainfall events in a network with defined layout and levels. The network may include overflows, storage tanks and pumping stations. The method is a hydrograph routing method, which designs the pipes to take the peak flow.

Simulation Method
To simulate time varying flow with surface flooding or surcharge for observed or synthetic rainfall events in an existing or designed sewerage network. The network may include overflows, storage tanks pumping stations, and flap valves. The models, which go to make up the methods, are shown in the table 5.1 Table 5.1: Models for Different Methods of under ground storm water drainage Model
Rainfall Runoff Overland flow Pipe and Channel Ancillary structures

Method Rational
Intensity - duration relationship UK Wallingford runoff model Fixed runoff coefficients SCS runoff model Time of entry peak flows pipe full velocity Overflows On-line storage Linear reservoir model MuskingumCunge Overflows Pumps On-line and Off-line storage Muskingum-Cunge Backwater Overflows Pumps On-line & Off-line storage Tide levels Flap valves Surcharge

Hydrograph Simulation
Rainfall hyetographs

3.5.4 Design Criteria for Solid Waste Management Projects

3.5.4.1 Key Features MSW Rules 2000
The government of India / Ministry of Environment and Forest have modified Municipal Solid Waste (Management and Handling Rules) 2000 for the effective and scientific management of solid waste.

3.5.4.2 Composition of waste

Solid waste generation is mainly from domestic, trade, commercial, agricultural and industrial activities and from public services. In Indian cities, it is a combination of various heterogeneous waste materials a mixture of vegetable and organic matter and inert matter such as glass, metal, stones, ashes, textiles, wood, grass, and so forth. Its main sources are residential premises, business establishments and street sweepings. Indian mixed waste has a large proportion of compostable material and inert materials. The Central Public Health and Environmental Engineering Organization (CPHEEO) have published a comprehensive

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manual on municipal solid waste management for the guidance of ULBs. Physical and Chemical characteristics of municipal solid waste in Indian cities are presented in table 6.1 and table 6.2 Table6.1: Physical Characteristics of Municipal Solid Wastes in Indian Cities
Population Range (in million) Percentage 0.1 to 0.5 0.5 to 1.0 1.0 to 2.0 2.0 to 5.0 >5 Number Of Cities Surveyed 12 15 9 3 4 Rubber, Leather And Synthetics 0.78 0.73 0.71 0.48 0.28 Total Compostabl e matter 44.57 40.04 38.95 56.67 30.84

Paper

Glass

Metals

Inert

2.91 2.95 4.71 3.18 6.43

0.56 0.35 0.46 0.48 0.94

0.33 0.32 0.49 0.59 0.8

43.59 48.38 44.73 49.07 53.9

Table 6.2: Chemical Characteristics of Municipal Solid Wastes in Indian Cities

Population Range (in million) Percentage Number Of Cities Surveyed Moisture Organic matter Nitrogen as Total Nitrogen Phosphoro us as P2O5 Potassium as K2O C/N Ratio Calorific value* in kcal/kg

0.1 to 0.5 0.5 to 1.0 1.0 to 2.0 2.0 to 5.0 >5

12 15 9 3 4

25.81 19.52 26.98 21.03 38.72

37.09 25.14 26.89 25.6 39.07

0.71 0.66 0.64 0.56 0.56

0.63 0.56 0.82 0.69 0.52

0.83 0.69 0.72 0.78 0.52

30.94 21.13 23.68 22.45 30.11

1009.89 900.61 980.05 907.18 800.7

Moisture Content Moisture content of solid wastes is usually expressed as the weight of moisture per unit weight of wet material. Moisture Content (%) = (Wet weight dry weight)*100 / wet weight A typical range of moisture contents is 20 45% representing the extremes of wastes in an arid climate and in the wet season of a region having large precipitation. Values greater than 45% are however not uncommon. Moisture increases the weight of solid waste and therefore the cost of collection and transport. Consequently, waste should be insulated from rainfall or other extraneous water.

3.5.4.3 Collection of Municipal Solid Waste (MSW)

Following steps are involved in collection of Solid Waste: Littering of Municipal Solid waste shall be prohibited in cities, towns and urban areas. Organize collection of waste from houses (including those in slums and squatter settlements), hotels, restaurants, office complexes, and commercial areas through any of the methods such as community bin collection, door to door collection, collection on regular pre-informed timings and schedule by using bell ringing/musical vehicle. Manage biodegradable wastes from slaughter houses, vegetable markets, and so on by recycling them. Avoid mixing biomedical wastes and industrial wastes with municipal solid wastes and complying with separate rules prescribed for them. Collected waste shall be transferred to community bin through containerized hand carts or other small vehicles. Horticultural and construction/demolition waste or debris shall be disposed off following proper norms. Waste of any sort should not be burnt. Municipal authority shall notify waste collection schedule and method to be adopted for public benefit in a city or a town.

3.5.4.4 Segregation of Municipal Solid Waste

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Encourage citizens to segregate waste at the source and promote recycling or reuse of segregated materials by organizing awareness programmes. Ensure community participation in waste segregation by arranging quarterly meetings with representatives of local residents welfare associations and NGOs.

3.5.4.5 Storage of Municipal Solid Waste

The municipal authorities are required to establish and maintain hygienic and sanitary storage facilities by taking these steps: Create storage facilities in accordance with waste generation and population densities and should be placed such that it can be easily accessed by the users. Not exposing storage facilities to the open environment and maintaining them in an aesthetically acceptable and user-friendly manner. Storage facilities are to have a design that is easy to operate for handling, transfer, and transport of waste. Bins for storage of biodegradable waste shall be painted green, for recyclable waste the bins shall be painted white and for storage of other wastes the bins shall be painted black. Manual handling of waste is prohibited. If unavoidable due to constraints, it should be carried out with precaution and due safety of workers should be ensured.

3.5.4.6 Transport of Municipal Solid Waste

Vehicles used for transportation of waste shall be covered so as to prevent scattering of waste, being non visible to public, not creating nuisance due to bad odour ad remaining unexposed to open environment. Storage facilities set up my municipal authorities shall be daily attended for clearing of wastes. The bins or containers wherever placed, should be emptied and/or replaced before they start overflowing. Transportation vehicles shall be designed such that multiple handling of waste prior to its disposal is avoided.

3.5.4.7 Processing of Municipal Solid Waste

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Municipal authorities shall adopt suitable technology or combination of such technologies to make use of waste thereby lessening the burden on landfills. Following criteria shall be adopted: Biodegradable waste shall be processed by composting, vermin-composting, anaerobic digestion or any other biological processing for stabilizing the waste. The end product of any of these processes shall comply with the standards as mentioned in Schedule IV of MSW Rules 2000. Mixed waste containing recoverable resources shall follow the route of recycling, incineration with or without energy recovery.

3.5.4.8 Disposal of Municipal Solid Waste

Land filling shall be restricted to non-biodegradable, inert waste and other waste that are not suitable either for recycling or for biological processing. Land filling shall be carried out for residues of waste processing facilities as well as preprocessing rejects from waste processing facilities. Land filling of mixed waste shall be avoided unless the same is found unsuitable for waste processing.

3.5.4.9 Design System for SWM

Calculate household in the area based as per Capita Waste Generation Calculate weight of waste generated from H/H = Population per capita waste Decide density of Waste generated. Calculate Volume = Weight waste Density

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Segregate waste 40% Wet and 60% Dry Litter bins at 50 to 100 mt. distant from H/H., 1 tricycle for 300 to 400 shops required.; 1 handcart for 15 to 50 H/H ; 1 Auto tripper for 1000 H/H

3.5.4.10 Street sweeping

Derive the Total road length and covert it in single lane. 1 labour can sweep 750 mt. per single lane Primary container capacity to be taken 40 liter to 100 liter. Calculate primary collector container

3.5.4.11 Secondary storage

Capacity of Secondary container 1 cmt volume 2 cmt volume 3 cmt volume 4 cmt volume Calculate secondary containers

= [(Projected Population 0.210)Density] Decided container

3.5.4.12 Sample Financial Estimates for implementation of SWM Plan

Total population (2001) : 30,871 (Household size : 4.5) Total population (2005) : 38,097 ( as per above HH size) Total Households (HHs) : 8466 (Source: Economical Survey, NSSO,2002) Non-Slum HHs : 7485 (Source: Property Tax data, 2005) Slum HHs : 981 ( Above No 3. No. 4 )

Solid waste generation (2005) Assuming one person generates 220 gm / day : 8.38 tonnes /day Assuming 30 % extra for other institutes : 10.89 tonnes/day A. Total waste generation: 11 Tonnes per day The Solid Waste management includes the following components: Door to door waste collection from all residential and commercial area Street sweeping Secondary storage of wastes at fixed locations on streets Transportation of waste from secondary storage points to the landfill site Disposal, Composting of waste B. Door to door waste collection from all residential and commercial area a. Collection of waste from non-slum residential HHs In this areas, Tricycles and Auto tippers will be provided. Total HH = 7485 One Auto tipper can collect waste from 1000 HHs. If 3 auto tippers are provided : no of HH covered : 3000 One Tricycle can collect waste from 300 HHs. No of Tricycles required = 4485 / 300 = 14.95 = 15
Requirement: Auto tipper = 3; Tricycle = 15; Workers = 18

b. Door to door waste collection from slum areas In this area, community bins of capacity 40 liters will be provided for every 15 HHs. No of HHs = 981

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No of community bins required = 981 / 15 = 65.4 To empty those bins, 3 handcarts will be provided.

Requirement: Handcarts = 3; Workers = 3; Community bins = 65

c. Door to door collection from commercial areas In this area, tricycles will be provided which will cover, 400 shops each. Total shops (commercial properties) = 1773 (source: Property tax data, 2005) No of tricycles required = 1773 / 400 = 4.43 = 5
Requirement: Tricycles = 5; Workers = 5

Assuming 3 km stretch of roads covered by commercial area, where litterbins of 40 liters capacity each, will be provided to collect the waste generated by the passer-by. Providing one litterbin per 60 meters of road length. No of litterbins required = 3000 / 60 = 50 nos.
Requirement: Litterbins = 50

C. Street Sweeping: The roads in the whole town will be divided into 4 categories as per the requirement of sweeping: Total road length in town: 65 km (including NH no 8) One Sweeper will sweep 1000 RML (running meter length) of road per day. Road Class
A B C D

Frequency of cleaning
Daily Twice a week Once a week Once a fortnight

RML for sweeping KM

12 18 30 5

Workers required
= 12 = (18 * 2 )/6 = 6 = (30*1)/6 = 5 = (5 * 0.5 )/6 = 0.41 = 1

Requirement: Workers = 24; Handcarts = 24; Brooms = 24; Supadi, patra = 24; Community bins = 65

Containers: Size 4 cum = 6; Size 2 cum = 8

E. Transportation of waste from secondary storage points to the landfill site

Two tractors will be deployed for the collection of waste from above containers as well as bulk generators and other sources as per requirement.

Staff requirement: Existing Staff: 48 Table 6.5: Requirement of Workers S. No Activity Primary Collection
1 2 3 4 5 Total Door to Door collection of waste (Res+com) Waste collection from slums Street Sweeping Transportation (2 vehicles) Absentees (8 %)

No of workers
18 + 5 3 24 8 4 62

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D.Secondary storage of wastes at fixed locations on streets Assuming 60 % of the total waste generated to be wet waste = 6.6 tonnes/day Dry waste = 4.4 Tonnes/day Providing containers of size 4 cum (storage capacity = 1.6 tonnes) for wet waste collection and of size 2 cum (storage capacity = 0.8 tonnes) for dry waste collection. Number of containers required = 4 cum size : 4 + 2 (extra for replacement) = 6 2 cum size : 6 + 2 (extra for replacement) = 8

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3.5.4.14 Case Study of Rajkot DPR

The detail design of the proposed site is given below. The total area required for the land fill site is mainly depends upon (a) Present population of the city, (b) Population growth rate, (c) Quantity of solid waste generated, (d) Characteristic of the solid waste, (e) The active period for which the solid waste is to be dump, and (f) Area required for infrastructural facility. As per 2001 census the population of the Rajkot city is 10.02 lacs which is growing at the rate of 4.05% annually. As per the house hold survey and actual quantification at Sold Waste Processing plant, it is observed that waste generation in Rajkot city is about 325 gm/capita/day. Integrated Solid Waste Processing Plant at Rajkot is operated by a private operator and is functioning very efficiently since December -2005. It is recorded that about 68 % of total waste is being processed and converted in to about energy pallet, manure green cock and eco bricks. Rajkot Municipal Corporation Landfill Estimation of the area, height and capacity required for land fill site. (Refer CPHEEO Manual Annexure: 17.1 )

Present population = 1243250 Average annual Growth rate = 4.00% Design active period =30 years. Present waste generation = 325 gms /capita /day Total waste generation per year at present = 1243250*325* 365/(1000*1000) = 147480 tones Total biodegradable waste goes to processing plant is 68 % of total waste = 147480 *0.68 tones = 100286 tones Total non biodegradable waste goes to land fill site is 32% of total waste. = 147480 * 0.32 = 47194
tones

Estimated rate of increase = 4.00% (as same as popul.Growth )

Proposed life of land fill in year = 30

Waste generated after 30 years = 153068 tones Total waste generated after 30 years = 3003929 tones Total volume of waste in 30 years (taking density of the waste is 0.90 t/cum. As inert waste is more) =
3003929/0.85 = 3534034 cum.

system

and allowing the total ht. 10mt. so taking k = 0.25 = 0.25 * 3534034 = 883508cum. Volume likely to become available within 10 years Due to settlement, as waste having more inert material Taking m =0.05 = 0.05 * 3534034 = 176701 cum. First estimate of landfill capacity = 3534034+353403+883508-176701 = 4594244 cum. Area required for land filling for 10mt. ht. = 4594244/10 = 459424 sq.mt. Area required for infrastructural facility = 15% of land filling area = 0.15 * 459424 = 68914sq.mt. Total area required = 459424 + 68914 = 528338 sq.mt. Total area required in hectare = 528338/10000 = 52.83 hectare Say = 53 hectare

3.5.4.15 Environmental Settings

Potential Landfill Site Identification: In order to select a site for conducting detailed Environmental Impact Assessment, one site was identified in the beginning as potential sites for waste disposal. The description of the site is as under: Eg: Site No: 01; Name of the Site: Nakaravadi ; Location: Near Pipalia Village ; Survey No: 222/P ; Total Land Area = 80 Hectare

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Total volume of daily cover in 30 years Taking 10 cm. soil cover for lift ht. 1.5m. = 0.1 * 3534034 = 353403 cum. Total volume req. for liner system & cover system assuming 1.5mt. thick liner and 1mt. thick cover

Module 3 - Project Development

Location Knock out Criteria: A Location Criteria given in Guidelines developed for the Management of Municipal Waste by the Ministry of Urban Development was used to select the site on prima facie as the first step of site assessment and investigation. The objective of this step is to exclude the areas, which can be discarded for the setting up of landfill. The selection of an appropriate site for a landfill is dependent on several criteria, some of which absolutely exclude the possibility of establishing a landfill in certain sites. The following key factors are considered in evaluating these criteria: Existing or planned drinking water protection and catchments areas High flood prone area Area with unstable ground like swamps, moors and / or marshes Areas with an extreme morphology (steep slopes, danger of landslides or avalanches etc.) Areas endangered by swallow holes, collapse sites, deep digging etc. Areas nearer than 500 meters to populated areas Closer than 100 meters to river boundaries Areas nearer than 20 km to airports National parks, nature protection areas and nature monuments, areas with a large number of fauna and flora, Historical, religious or other important cultural sites or heritage

3.5.4.13 Design Criteria of Landfill Site Selection

The term landfill is used to describe a unit operation for final disposal of Municipal Solid Waste on land, designed and constructed with the objective of minimum impact to the environment by incorporating eight essential components as described by CPHEEO Manual, 2000. This term encompasses other terms such as secured landfill and engineered landfills which are also sometimes applied to municipal solid waste (MSW) disposal units. The term landfill can be treated as synonymous to sanitary landfill of Municipal Solid Waste, only if the latter is designed on the principle of waste containment and is characterized by the presence of a liner and leachate collection system to prevent ground water contamination. Land filling will be done for the following types of waste: Co-mingled waste (mixed waste) not found suitable for waste processing; Pre-processing and post-processing rejects from waste processing sites; Non-hazardous waste not being processed or recycled.

Sample Terms of References for Design of landfill site & EIA sets for following objectives : To visit the proposed site, in order to assess whether the site confirms to the preliminary location criteria for site identification. To collect the baseline information on the quantity of waste generation, type of waste. To estimate the land area required for the disposal of the solid waste generated for 30 years. To collect the information in and around the proposed site area limited to technical aspects such as Air, Surface Water, Soil, Geology, Hydrogeology and Meteorology To develop surface drainage pattern of the site area at regional and local level in order to ascertain the surface drainage runon direction as well as magnitude To develop the Land Use & Land Cover Mapping based on Remote Sensing IRS-1C To carry out the Soil Investigation of the proposed site area. To carry out the ambient air quality monitoring in order to ascertain the background contamination level. To carry out the ground water quality monitoring in order to ascertain the background contamination level. To assess potential impacts on all components of environment resulting from the construction & operation of a Municipal Landfill Facility. To carry out Risk Analysis and suggest abatement methods for adverse environmental impacts likely to occur during the operation of Municipal landfill facility.

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Land filling will usually not be done for the following waste streams in the municipal solid

Module 3 - Project Development

3.5.5 Design Criteria for Road Projects

In urban areas road development takes place along existing roads, requiring enhancement of capacity of existing roads. The road alignments are planned at the time of preparation of DP Development plans. Development takes place in such a way that carving out a new alignment becomes practically impossible. Thus only alternative is to use available Right of Way and provide capacity in phases. Ultimately all the capacity is utilised and a bypass to traffic is required. Thus enough ROW must be reserved / provided for in the development plan itself looking to the future requirements. The width and layout of urban road cross-sections depend on many factors, the chief amongst them being the classification of road, design speed and the volume of traffic expected. Other considerations are requirements of parking lanes, bus-bays, loading-unloading bays, occurrences of access points, volume of pedestrians and cyclists, width of drains, location of sewer lines, electricity cables and other public utility services. Actual width of each element should be based on traffic volumes and other functional requirements explained in parts 6.2.1 through 6.2.11 of IRC 86-1983.

3.5.5.1 Road width and Designs Traffic Volumes

The road width carriage way, should be designed to accommodate the design traffic volume assessed in demand assessment. This is restricted by Right of Way provided in the development plan. Design traffic is arrived at from traffic surveys and socio economic profile of area influenced by the road. The road should be designed to accommodate the peak traffic volume computed for the end of design life. A design period of 15-20 years should be adopted for arterials sub-arterial and 10-15 years should be adopted for local and Collector Street. A higher design period should be taken for small towns and lower period for large cities. For high volume streets and busy intersections, peak hour volumes should be used to determine the width of road. The design of main traffic routes in built-up areas should be based on peak hour demands and not as in rural area on average daily traffic. Right of Way recommended for the various categories of urban roads are given in table 2.1

3.5.6 Standard Manuals for Reference

Water Supply Projects: Manual on Water Supply and Treatment Plant third edition revised 1999 constituted by Central Public Health and Environment Engineering Organization (CPHEEO), MoUD, New Delhi, GoI Sewerage Projects: Manual on Sewerage and Sewage Treatment - second edition 1993 constituted by CPHEEO, MoUD, New Delhi, GOI Solid waste Projects: (1) Municipal Solid Waste (Management and Handling) Rules, 2000, AND (2) manual on Solid Waste Management- First edition 2000 constituted by CPHEEO, MoUD, GoI Road Projects: Manual of Ministry of Road Transport and Highway (MORTH) Indian Road Congress (IRC codes) IRC 86-1983 Geometric Design for Urban Roads in Plains. IRC 81-1997 Flexible Road Pavements BIS code 2720 various parts for tests on soils BIS Code 2386 various parts for tests on aggregates

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Annexure 3: List of approved Water Supply Projects under JnNURM
(Source Augmentation, Hydraulic Modelling, Continuous (24X7) Water Supply, Water Audit, Non Revenue Water, Water Quality Monitoring, Rationalisation of Water Tariffs, O&M Cost Recovery, PPPs)
S.N 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. Project Name Diversion of Krishna Water to Secunderabad providing Inlet and Outlet Mains (Water supply Trunk Mains) of North and South Musi river Krishna Drinking Water Supply Project - Phase II Providing Water Supply facilities in unserved areas Augmentation of water supply utility in Vijayawada Municipal Corporation Providing Water supply pipe line from TSR to Yendada and to Kommadi junction for augmenting water supply Augmentation of Water Supply to Gajuvaka Area Providing water supply distribution system to Gajuwaka area of GVMC (Phase II) Augmentation of Drinking Water Supply to the 32 peripheral areas of GVMC Augmentation of Water supply for Itanagar Drinking Water Supply Scheme for South Guwahati West Zone within Guwahati City Upgradation of water supply infrastructures for proper monitoring and automation with remote computerized surveillance system to 24x7 water supply Conservation of drinking water by harvesting of the tertiary treated sewage for irrigation of green spaces in Chandigarh Augmentation of Water Supply Scheme including extended area of RMC Pipeline from Narmada Main canal to Kotarpur WTP; 330 MLD Intake Well in Sabarmati river near Kotarpur; Water Treatment Plant at Rasaka Catchments development and drainage for Water Bodies Development and Flood Relief Project Water Supply Project for Rajkot Water Supply Project for Pal-Palanpur Area Water Supply Project for Vesu Urban Settlement of Surat Urban Development Authority Augmentation of Sarthana, Katargam and Rander Water Works of SMC Water Supply scheme for New North Zone area of Surat Municipal Corporation Water Supply Source augmentation Water Supply scheme for Tangnar (Srinagar) Augmentation of Additional 100 MLD of water from CWSS stage IV Phase I Bulk flow metering system for Bangalor ewater transmission network Integrated Water Management and Reuse of Waste Water in Vrishabhavathi Valley plus Drawings Augmentation of Water Source to Mysore city from River Kabini Remodelling of Water Supply Distribution Network for Mysore city Upgrading Surface Water Drainage System of Central area of Kochi Water Supply System to Kochi Part I Improvement ot Water Supply Water Supply to Gas affected areas Narmada Water Supply Project Yeshwant Sagar Water Supply System Augmentation Scheme Reorganization of water supply scheme for Ujjain City. City Hyderabad Hyderabad Hyderabad Vijayawada Vijayawada Vishakhapatnam Vishakhapatnam Vishakhapatnam Vishakhapatnam Itanagar Guwahati Chandigarh Chandigarh Raipur Ahmedabad Ahmedabad Rajkot Surat Surat Surat Surat Vadodara Srinagar Bangalore Bangalore Bangalore Mysore Mysore Cochin Cochin Thiruvananthapuram Bhopal Bhopal Indore Ujjain Approved Cost * 8120 23222 60650 3548 7231 2340 3976 4600 24074 7725 28094 2026 3672 30364 5383 10475.43 8562 995

14068.65 18404.35 4105 14837 1226 1531 47133 10881.99 19454 978 20117 8716 1418 30604.16 2375 6686.44

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36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. DPR for additional 110 MLD Water supply scheme of THANE Middle Vaitarna Water Supply Project for Mumbai-IV Water Sector (Leak Detection) Water Audit Projects Energy Audit Projects for Water Supply Expansion and upgradation of water supply distribution network in Nagpur city Water Supply Pench IV (Part 2) Water Supply Pench IV (Part 3) Water Supply Pench IV (Part 4) Recycle and Reuse of Waste Water Lifting water from Pench Reservoir and conveying upto Mahadulla by mortor lined MS pipeline in lieu of canal Water Supply for Nanded (South) Improvement to water supply in North Nanded Ongoing works of Water Supply Projects Construction and Improvement of Drains to prevent contamination of natural water bodies and development of Heritage sites along in Pune (Environental Restoration/ Preservation of Mula Mutha River Ecos Water Supply proposals (4 Nos.) for Pimpri Chinchwad 24 x 7 piped Water supply for Puri city Water Supply, Sewerage and Sewage treatment for Amritsar Water Supply Distribution for Ajmer and Pushkar Water Supply Transmission for Ajmer City Panna Meena Baori and its environs (Preservation of water bodies) Improvement of water supply to Porur Town Panchayat Construction of sump cum pump house over 90 cusec canal near Poondi reservoir for raw water treatment plant Improvement of water supply to Maduravoil Ullagaram Puzhuthivakkam Municipality Comprehensive Water Supply scheme Improvement of water supply in Tambaram municipality Providing Water Supply and Sewerage System infrastructure along IT corridor in Chennai (7 packages) Sea Water Desalination Plant at Minjur Comprehensive Water Supply scheme for Avadi Municipality Improvements to Water Supply System in Chennai Nerkundram Village Panchayat Improvement of Water Supply Improvement to Water Supply Scheme Anaiyur municipality DPR on Water Supply scheme to Anaiyur municipality Thirupparankundram municipality DPR for combined water supply scheme to Thiruppakundram municipality and Harveypatty Town Panchayat Water Supply to Madurai Corporation Improvement works & System Improvement (Phase-I and Phase-II) Water Supply project for Agra Water Supply Component of Allahabad city Water Supply scheme for inner old area of Kanpur city Vol I and II Water Supply Works of Lucknow (Phase I Part I Vol.I to V) Water supply for Meerut city Water Supply Component Priority of Varanasi Greater Mumbai Greater Mumbai Nagpur Nagpur Nagpur Nagpur Nagpur Nagpur Nagpur Nagpur Nagpur Nanded Nanded Nashik Pune Pune Puri Amritsar Ajmer-Pushkar Ajmer-Pushkar Jaipur Chennai Chennai Chennai Chennai Chennai Chennai Chennai Chennai Chennai Chennai Coimbatore Madurai Madurai Madurai Agra Allahabad Kanpur Lucknow Meerut Varanasi 7118 132950 329.77 2500 2503.62 3793 6196 8059.27 10460.68 13011 14463.7 4945 9087 5052 9996 35862 16690 17934 16642 18873 431 1235.79 911 2330

3261.6 4177 8780 10384 32200 1917 11374.3 788 969.57 5931.6 0 8969 27094.89 38861 27301 11102

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Module 3 - Project Development

77. 78. 79. 80. 81. 82. 83. 84. 85. 86. 87. 88. 89. 90. 91. 92. 93. Water Suply reorganisation scheme (Phase I) Water Supply reorganisation scheme (Part I) (Zone A and B) Augmentation and Renovation of Water Supply Scheme Part I 22.7 MLD Water Supply Project in Jamuria under Asansol Urban Area, West Bengal 42 MLD Water Supply Project in Raniganj under Asansol Urban Area, West Bengal Water Supply Scheme for Asansol Municipal Corporation Water supply scheme for baruipur Municipality Underground Water Reservoir-cum-Booster pumping station at Gandhi Maidan, Akra Integration of Maheshtala underground reservoir with existing water distribution network 24x7 water supply scheme for Chandannagore Municipal corporation I 10 MGD Water Treatment Plan at Uluberia 15 MGD Water Treatment Plan at Bansberia Water Supply Scheme for added areas of Howrah Municipal Corporation Development and Management of Water Supply and Sewerage System at Sector V under Naba Diganta Industrial Township Authority Water Treatment Plan at Dhapa 30 MGD Phase-I Water Supply for Barrackpore and North Barrackpore Municipal Area kolkata Surface Water Supply Scheme for Municipal Towns of Naithati Halisahar Kanchrapara Gayeshpur and uncovered ares of Kayyani Dehradun Haridwar Nainital Asansol Asansol Asansol Kolkata Kolkata Kolkata Kolkata Kolkata Kolkata Kolkata Kolkata Kolkata Kolkata Kolkata 7002.7 4784.43 547 1453 3627 8982.96 951.86 1066 1717 2521.87 4558 4492 9068.91 2606.62 9875 12950.88 14194.25

Annexure 4: List of approved Sewerage & Sanitation Projects under JnNURM Waste Water Management, Recycle and Reuse, Waste to Energy, Community Sanitation, PPPs
S.N Project Name City Approved Cost * (Rs. In Lakhs) 14881 20038 25125 743 949 3708 24444 1135 3681.26 10692.01 1193 18404.35 2128 11065.73 3437

1.

2.

Hyderabad Hyderabad Vijayawada Vijayawada Vishakhapatnam Vishakhapatnam Ahmedabad Ahmedabad Ahmedabad Surat Surat Surat Surat Surat

3.

4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

Providing sewerage treatment plan at Singhnagar (UASBR) (Sector-8) Providing sewerage system in Old city area of Vishakapatnam Providing sewerage system to Central part of Visakhapatnam city Renovation of Sewerage Treatment Plant at Vasna Terminal Sewerage Pumping Station, Pumping Main and Sewage Treatment Plant near Vinzol for East AUDA Area West AUDA Area Terminal Sewerage Pumping Station, Pumping Main and Sewage Treatment Plant near Vasana Augmentation of Adajan Sewerage Sewerage System for new Northern Drainage Zone of SMC Sewerage Disposal Network and STP for Pal-palanpor area Sewerage system and Storm Water Drainage system of New East Zone of Surat Municipal Corporation Sewerage Disposal Network and STP for Vesu area

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Rehabilitation and Strengthening of Sewerage system in Old City area on South of Musi (In Zone I in catchments S1 to S6, S12 and S14) Implementation of Sewerage Master Plan in Serilingampally Municipality forming part of Hyderabad Urban Agglomeration (Vol.I, Vol.II (A to G), Vol.III (A to G) Rehabilitation and Strengthening of Sewerage system in Old City Area on South of Musi (in Zone 2 in catchments S 7 to S11, S13 and S15) Providing sewerage system in Krishnalanka area of Vijayawada

Hyderabad

Module 3 - Project Development

16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. Sewerage System for Vadodara city Revamping of Sewerage System and Sewerage Treatment works in Faridabad Comprehensive sewerage scheme for Division A of Greater Jammu Comprehensive sewerage Scheme for Zone III(Sector I) of Greater Srinagar. Environmental Action Plan Replacement Rehabilitation of existing sewerage system Sewerage scheme for Central zone covering six Divisions and Wards (No.43, 49, 50, 51, 54 and 56) of Kochi Improvement of Sewerage schemes for Thiruvananthapuram Municipal Corporation Indore Sewerage Project Sewerage and Sewage Treatment Project Phase-II Sewerage and Sewage Treatment Project Phase-I Thane Sewerage Project Phase III Thane Sewerage Project (Phase II) Underground Sewerage Scheme Phase I for THANE Mira Bhyander Underground Sewerage project based on decentralised system (4 Vol) Undergrounda Sewerage and Sewage Treatment (Nanded-South) Sewerage System in Nanded North - Zone-III Sewerage System in North Nanded-Zone-I Sewerage System in Nanded North - Zone-II Underground Sewerage Project for Nashik City Phase I Renewal and Management of Sewerage and Drainage Disposal System in Pune (Augmentation of Weris, Restoration of Lakes Bio-remediation and Landscaping of Nalla and Rivers) Sewerage proposals for Pimpri Chinchwad Integrated Sewerage Project Comprehensive Sewerage Project Water Supply, Sewerage and Sewage treatment for Amritsar Sewerage system for Jaipur (Phase-I) Jaipur Sewerage Project Phase II Rehabilitation of Trunk Sewer along NH starting from Hospital Dara to STP and sewer mains along Tibet Road New Market along MG Marg at Gangtok Providing sewerage facilities to Ullagaram Puzhithivakkam Construction of additional sewerage treatment plant 54 MLD at Perungudi Providing Water Supply and Sewerage System infrastructure along IT corridor in Chennai (7 packages) Providng Underground Sewerage Scheme(UGSS) to Ambattur Municipality Providing Comprehensive Sewerage Scheme to Avadi Municipality Comprehensive Underground Sewerage scheme Under Ground Sewerage Scheme for Phase III area and Renovation of existing Sewerage System Yamuna Action Plan Phase II for Branch and Lateral Sewer Lines in Northern Zone and Western Zone in Agra Sewerage work of Inner Old City Area of Kanpur Development and Management of Water Supply and Sewerage System at Sector V under Naba Diganta Industrial Township Authority Vadodara Faridabad Jammu Srinagar Bangalore Cochin Thiruvananthapuram Indore Jabalpur Jabalpur Greater Mumbai Greater Mumbai Greater Mumbai Greater Mumbai Nanded Nanded Nanded Nanded Nashik Pune Pune Bhubaneshwar Puducherry Amritsar Jaipur Jaipur Gangtok Chennai Chennai Chennai Chennai Chennai Coimbatore Madurai Agra Kanpur Kolkata 10514.93 10383 12923 13292 17675 7841 21541 30717 7081 7801 4181 14009 14956.79 33142.27 4093 3931 4025 4889 14846 9778 11938.88 49891.35 20340

36. 37. 38. 39. 40. 41. 42.

7495.97 11086 2392.01 2808.05 3147.98 4177 13091 15805.41 37712.88 22934 2162 19088.22 2606.62

43. 44. 45. 46. 47. 48. 49. 50. 51. 52.

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53. 54. Upgradation of Sewer System in Kolkata (Phase-I) Upgradatio of Man Entry Brick Sewer System (Part) for Kolkata Kolkata Kolkata 9712 40291

Annexure 5: List of approved Solid Waste Management Projects under JnNURM Integrated Solid Waste Management, Collection and Transportation of SWM, Treatment and Disposal of SWM, Waste to Energy, PPPs
S.N Project Name City Approved Cost * (Rs. In Lakhs) Itanagar Guwahati Patna Rajkot Surat Vadodara Faridabad Shimla Cochin Thiruvananthapuram Indore Greater Mumbai Nashik Pune Imphal Jaipur Chennai Chennai Coimbatore Madurai Agra Allahabad Kanpur Lucknow Mathura Meerut Varanasi Asansol Kolkata 1194.38 3516.71 3695.4 867 5249.72 3098.54 7650 1604 8812 0 4324.66 17879 5999.23 4240.8 2580.71 1319.74 4421.25 25532 9651 7429 3083.99 3041.49 5623.79 4292.37 991.6 2259.4 4867.73 4357.27 5658.53

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29.

Setting up of Municipal Solid Waste Management in a scientific way for capital complex Solid Waste Management for Guwahati Municipal Solid Waste Management for Patna town Strengthening of Solid Waste Management (Phase-I) Upgradation of Solid Waste Management in Surat Solid Waste Management for Vadodara Solid Waste Management Scheme for Faridabad Solid Waste Mangement for Shimla Solid Waste Management for Kochi Storm Water Solid Waste Management Solid Waste Management of Indore City Solid Waste Management Solid Waste Management for Nashik Solid Waste Management - Pimpri-Chinchwad Solid Waste Management for Imphal Solid Waste Management for Jaipur Solid Waste Management for Pallavaram Municipality in Chennai Solid Waste Management for Chennai Solid Waste Management for Coimbatore Solid Waste Management for Madurai Municipal Solid Waste Management in Agra Solid Waste Management for Allahabad Municipal Solid Waste Management in Kanpur Municipal Solid Waste Management in Lucknow Municipal Solid Waste Management in Mathura Municipal Solid Waste Management Solid Waste Management of Varanasi Municipal Solid Waste Management in Asansol Urban Area Municipal Solid Waste Management of Municipal Towns

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Annexure 6: List of approved Urban Transport Projects under JnNURM Construction of ROBs, BRTS, MRTS
Approved Cost * (Rs. In Lakhs) 3510 4912 15264 1212 2144 2955 5013 8760 2480.74 841.39 2077.12 1427.12 1396 2162.88 2543.79 2782.49 4153.8 4361.16 5044.9 21902.47 1966.34 3974.64 4083.35 15513.34 253 900.8 1828.65 8628

S.N

Project Name Road Widening on Outer Ring Road and Inner Ring Road under Charminar Pedestrianisation Project Storm Water Drainage System for uncovered areas in Circle I II III and MG road of VMC Bus Rapid Transport System for Vijayawada (i) MG Road (II) Nujiveedu Road (iii) Eluru Road (iv) Route No.5 (v) S.N.Puram Road (vi) Loop Road Construction of Railway over Bridge on Ahmedabad Botad M.G. Railway line at Shreyas Crossing on 122 ft. Ring Road Construction of Railway over Bridge No.132 ft. Ring Road near Dakshini Societyn over B.G. Railway lines between Maninagar and Vatva Rly. Station Construction of four lane Bridge across River Sabarmati connecting Vasna and Pirana 122 road Construction of Major and Minor Radial Roads Phase-I in AUDA Area Bus Rapid Transport System- Construction of 12 Km. long stretch (Stretch-1 of first phase) BRT Roadway and Carrying out detailed studies and engineering of remaining stretches ROB in lieu of Level Crossing on BG Railway line along Gondal Road and Mahudi Road, Rajkot Bridge across Kankara Khadi between Udhana Magdalla Road and Bamroli Construction of 4 lane ROB at Ralway K.M.254 17 20 on Surat Mumbai B.G. Railway line on 60 OMDP Road between stations Bhestan to Sachin on Sachin M agadalla state Highway at Surat D.P Road in Surat Construction of 4 Lane Railway Over Bridge at Gothan Surat D.P. Road in Surat Construction of 4 Lane RoB Across Ahmedabad Mumbai BG line at Railway Km 399(41) between Station Vishwamitri and Makarpura near D Cabin Navayard on 24.0 M road at Vadodara city Construction of underpass at Nagavara road junction Construction of Underpass at Ring Road Hennur Banaswadi Road Junction Construction of underpass at Magadi Road and Chord road junction Underground Drainage system and road restroation for R.R Nagar CMC Drainage Zone V Upgradation side walks and asphalting work of roads surrounding M.G. Road area Upgradation side walks and asphalting work of roads surrounding Koramangala area Development of Outer Ring Road in Mysore Development of Link Road from White Church to By Pass Road Development of Master Plan Link Road MR-9, Indore Construction of 8 important roads at Indore Elevated road on Sahar road - MUIP Construction of Road over Bridge at Maskasath Construction of Road Over Bridge at Itwari Construction of Road under Bridge near Anand Talkies Road Over Bridges (ROBs)

City

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Hyderabad Vijayawada Vijayawada Ahmedabad Ahmedabad Ahmedabad Ahmedabad Ahmedabad Rajkot Surat Surat Surat Vadodara Bangalore Bangalore Bangalore Bangalore Bangalore Bangalore Mysore Indore Indore Indore Greater Mumbai Nagpur Nagpur Nagpur Nagpur

11.

12.

13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28.

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29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. Improvement to City Roads in Nanded (Package I) Improvement to Movements Network in Nanded Package II III and IIIB Roads Construction of Subways (5 Nos.) on Nagar Road Subways on Baner Road Approach Road to Sangamwadi BRTS Corridor for Mumbai Pune Highway (8.5 Kms) and Audh Rawet Road (14.5 Kms) Total (23 Kms) Roads and Transportation Construction of two lane Elevated Road from G.T. Road to Golden Temple AND Construction of 4 lane Elevated Road on G.T Road from Maqbulpura Chowk to Bhandari-Pul BRTS project proposal (Package IB) from C zone Bypass corssing to Panipech via Sikar Road Rehabilitation of Trunk Sewer along NH starting from Hospital Dara to STP and sewer mains along Tibet Road New Market along MG Marg at Gangtok Constructiojn of High Level bridge, Adyar River at Alandur Road, Chennai Road Widening on Outer Ring Road and Inner Ring Road under Charminar Pedestrianisation Project Storm Water Drainage System for uncovered areas in Circle I II III and MG road of VMC Bus Rapid Transport System for Vijayawada (i) MG Road (II) Nujiveedu Road (iii) Eluru Road (iv) Route No.5 (v) S.N.Puram Road (vi) Loop Road Construction of Railway over Bridge on Ahmedabad Botad M.G. Railway line at Shreyas Crossing on 122 ft. Ring Road Construction of Railway over Bridge No.132 ft. Ring Road near Dakshini Societyn over B.G. Railway lines between Maninagar and Vatva Rly. Station Construction of four lane Bridge across River Sabarmati connecting Vasna and Pirana 122 road Construction of Major and Minor Radial Roads Phase-I in AUDA Area Bus Rapid Transport System- Construction of 12 Km. long stretch (Stretch-1 of first phase) BRT Roadway and Carrying out detailed studies and engineering of remaining stretches ROB in lieu of Level Crossing on BG Railway line along Gondal Road and Mahudi Road, Rajkot Bridge across Kankara Khadi between Udhana Magdalla Road and Bamroli Construction of 4 lane ROB at Ralway K.M.254 17 20 on Surat Mumbai B.G. Railway line on 60 OMDP Road between stations Bhestan to Sachin on Sachin M agadalla state Highway at Surat D.P Road in Surat Construction of 4 Lane Railway Over Bridge at Gothan Surat D.P. Road in Surat Construction of 4 Lane RoB Across Ahmedabad Mumbai BG line at Railway Km 399(41) between Station Vishwamitri and Makarpura near D Cabin Navayard on 24.0 M road at Vadodara city Construction of underpass at Nagavara road junction Construction of Underpass at Ring Road Hennur Banaswadi Road Junction Construction of underpass at Magadi Road and Chord road junction Underground Drainage system and road restroation for R.R Nagar CMC Drainage Zone V Upgradation side walks and asphalting work of roads surrounding M.G. Road area Upgradation side walks and asphalting work of roads surrounding Koramangala area Development of Outer Ring Road in Mysore Development of Link Road from White Church to By Pass Road Nanded Nanded Pune Pune Pune Pune Kohima Amritsar Jaipur Gangtok Chennai Hyderabad Vijayawada Vijayawada Ahmedabad Ahmedabad Ahmedabad Ahmedabad Ahmedabad Rajkot Surat Surat Surat Vadodara Bangalore Bangalore Bangalore Bangalore Bangalore Bangalore Mysore Indore 6108.55 21497.33 661 726 782 31214 2525.6 14949 7519 2392.01 548.3 3510 4912 15264 1212 2144 2955 5013 8760

841.39 2077.12 1427.12 1396 2162.88 2543.79 2782.49 4153.8 4361.16 5044.9 21902.47 1966.34

50.

51.

52. 53. 54. 55. 56. 57. 58. 59. 60.

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Module 3 - Project Development

61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80. 81. 82. 83. 84. 85. 86. 87. 88. Development of Master Plan Link Road MR-9, Indore Construction of 8 important roads at Indore Elevated road on Sahar road - MUIP Construction of Road over Bridge at Maskasath Construction of Road Over Bridge at Itwari Construction of Road under Bridge near Anand Talkies Road Over Bridges (ROBs) Improvement to City Roads in Nanded (Package I) Improvement to Movements Network in Nanded Package II III and IIIB Roads Construction of Subways (5 Nos.) on Nagar Road Subways on Baner Road Approach Road to Sangamwadi BRTS Corridor for Mumbai Pune Highway (8.5 Kms) and Audh Rawet Road (14.5 Kms) Total (23 Kms) Roads and Transportation Construction of two lane Elevated Road from G.T. Road to Golden Temple AND Construction of 4 lane Elevated Road on G.T Road from Maqbulpura Chowk to Bhandari-Pul BRTS project proposal (Package IB) from C zone Bypass corssing to Panipech via Sikar Road Rehabilitation of Trunk Sewer along NH starting from Hospital Dara to STP and sewer mains along Tibet Road New Market along MG Marg at Gangtok Constructiojn of High Level bridge, Adyar River at Alandur Road, Chennai Road Widening on Outer Ring Road and Inner Ring Road under Charminar Pedestrianisation Project Storm Water Drainage System for uncovered areas in Circle I II III and MG road of VMC Bus Rapid Transport System for Vijayawada (i) MG Road (II) Nujiveedu Road (iii) Eluru Road (iv) Route No.5 (v) S.N.Puram Road (vi) Loop Road Construction of Railway over Bridge on Ahmedabad Botad M.G. Railway line at Shreyas Crossing on 122 ft. Ring Road Construction of Railway over Bridge No.132 ft. Ring Road near Dakshini Societyn over B.G. Railway lines between Maninagar and Vatva Rly. Station Construction of four lane Bridge across River Sabarmati connecting Vasna and Pirana 122 road Construction of Major and Minor Radial Roads Phase-I in AUDA Area Bus Rapid Transport System- Construction of 12 Km. long stretch (Stretch-1 of first phase) BRT Roadway and Carrying out detailed studies and engineering of remaining stretches ROB in lieu of Level Crossing on BG Railway line along Gondal Road and Mahudi Road, Rajkot Bridge across Kankara Khadi between Udhana Magdalla Road and Bamroli Construction of 4 lane ROB at Ralway K.M.254 17 20 on Surat Mumbai B.G. Railway line on 60 OMDP Road between stations Bhestan to Sachin on Sachin M agadalla state Highway at Surat D.P Road in Surat Construction of 4 Lane Railway Over Bridge at Gothan Surat D.P. Road in Surat Construction of 4 Lane RoB Across Ahmedabad Mumbai BG line at Railway Km 399(41) between Station Vishwamitri and Makarpura near D Cabin Navayard on 24.0 M road at Vadodara city Construction of underpass at Nagavara road junction Construction of Underpass at Ring Road Hennur Banaswadi Road Indore Indore Greater Mumbai Nagpur Nagpur Nagpur Nagpur Nanded Nanded Pune Pune Pune Pune Kohima Amritsar Jaipur Gangtok Chennai Hyderabad Vijayawada Vijayawada Ahmedabad Ahmedabad Ahmedabad Ahmedabad Ahmedabad Rajkot Surat Surat Surat Vadodara Bangalore Bangalore 3974.64 4083.35 15513.34 253 900.8 1828.65 8628 6108.55 21497.33 661 726 782 31214 2525.6 14949 7519 2392.01 548.3 3510 4912 15264 1212 2144 2955 5013 8760 2480.74 841.39 2077.12 1427.12 1396 2162.88 2543.79

89.

90.

91. 92. 93.

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Junction 94. 95. 96. 97. 98. 99. 100. 101. 102. 103. 104. 105. 106. 107. 108. 109. 110. 111. 112. 113. 114. 115. 116. 117. Construction of underpass at Magadi Road and Chord road junction Underground Drainage system and road restroation for R.R Nagar CMC Drainage Zone V Upgradation side walks and asphalting work of roads surrounding M.G. Road area Upgradation side walks and asphalting work of roads surrounding Koramangala area Development of Outer Ring Road in Mysore Development of Link Road from White Church to By Pass Road Development of Master Plan Link Road MR-9, Indore Construction of 8 important roads at Indore Elevated road on Sahar road - MUIP Construction of Road over Bridge at Maskasath Construction of Road Over Bridge at Itwari Construction of Road under Bridge near Anand Talkies Road Over Bridges (ROBs) Improvement to City Roads in Nanded (Package I) Improvement to Movements Network in Nanded Package II III and IIIB Roads Construction of Subways (5 Nos.) on Nagar Road Subways on Baner Road Approach Road to Sangamwadi BRTS Corridor for Mumbai Pune Highway (8.5 Kms) and Audh Rawet Road (14.5 Kms) Total (23 Kms) Roads and Transportation Construction of two lane Elevated Road from G.T. Road to Golden Temple AND Construction of 4 lane Elevated Road on G.T Road from Maqbulpura Chowk to Bhandari-Pul BRTS project proposal (Package IB) from C zone Bypass corssing to Panipech via Sikar Road Rehabilitation of Trunk Sewer along NH starting from Hospital Dara to STP and sewer mains along Tibet Road New Market along MG Marg at Gangtok Constructiojn of High Level bridge, Adyar River at Alandur Road, Chennai Bangalore Bangalore Bangalore Bangalore Mysore Indore Indore Indore Greater Mumbai Nagpur Nagpur Nagpur Nagpur Nanded Nanded Pune Pune Pune Pune Kohima Amritsar Jaipur Gangtok Chennai 2782.49 4153.8 4361.16 5044.9 21902.47 1966.34 3974.64 4083.35 15513.34 253 900.8 1828.65 8628 6108.55 21497.33 661 726 782 31214 2525.6 14949 7519 2392.01 548.3

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Module 3 - Project Development Annexure 7: Preparation of Project Report on Water Supply Schemes
All projects have to follow distinct stages between the period they are conceived and completed. These various stages are (a) Pre-Investment Planning, (b) Identification of a project , (c) Preparation of project, (d) Appraisal and sanction, (e) Construction of facilities and carrying out support activities, (f) Operation and Maintenance, and (g) Monitoring and feed back Project Report A project report deals with all aspects of pre-investment planning and establishes the need as well as the feasibility of projects technically, financially, socially, culturally, environmentally, legally and institutionally. For big projects economical feasibility may also have to be examined. Project reports should be prepared in three stages viz. (i) identification report, (ii) pre-feasibility report and (iii) feasibility report. Projects for towns or those forming pans of a programme may not require preparation of feasibility reports. Detailed engineering and preparation of technical specification and tender documents are not necessary for taking investment decisions, since these activities can be carried out during the implementation phase of projects. For small projects, however, it may be convenient to include detailed engineering in the project report, if standard design and drawings can be adopted. Since project preparation is quite expensive and time consuming, all projects should normally proceed through three stages; and at the end of each stage a decision should be taken whether to proceed to the next planning stage, and commit the necessary manpower and financial resources for the next stage. Report at the end of each stage should include a time table and cost estimate for undertaking the next stage activity, and a realistic schedule for all future stages of project development, taking into consideration time required for review and approval of the report, providing funding for the next stage, mobilising personnel or fixing agency (for the next stage of project preparation) data gathering, physical surveys, site investigations etc. The basic design of a project is influenced by the authorities organisations' who ace involved in approving, implementing and operating and maintaining the project Therefore the institutional arrangements through which a project will be brought into operation, must be considered at the project preparation stage. Similarly responsibility for project preparation may change at various stages. Arrangements in this respect should be finalised for each stage of project preparation. Some times more than one organisation may have a role to play in the various stages of preparation of project. It is therefore necessary identify a single entity to be responsible for overall management and coordination of each stage of project preparation. It is desirable that the Implementing authority and those responsible for operation of a project are consulted at the project preparation stage.

Identification Report
Identification report is basically a "desk study", to be carried out relying primarily on the existing information. It can be prepared reasonably quickly by those who are familiar with the project area and needs of project components. This report is essentially meant for establishing the need for a project, indicating likely alternatives which would meet the requirements. It also provides an idea of the magnitude of cost estimates of a project to facilitate bringing the project in the planning and budgetary cycle, and makes out a case for obtaining sanction to incur expenditure for carrying out the next stages of project preparation. The report should be brief and include the following information. identify project area and its physical environment commercial, industrial, educational, cultural and religious importance and activates in and

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around the project area (also point out special activities or establishment like defence or others of national importance) existing population, physical and distribution and socio-economic analysis present water supply arrangements and quality of service in the project area, pointing out deficiencies, if any, in quality quantity and delivery system Population projection for the planning period, according to existing and future land use plans, or master plans, if any water requirements during planning period for domestic, industrial, commercial and any other uses establish the need for taking up project in the light of existing and future deficiencies in water supply services, pointing out adverse impacts of non-implementation of the project, on a time scale bring out how the project would fit total strategies and with the general overall development in the project area. identify a strategic plan for long term development of water supply services in the project area, in the context of existing regional development plans, water resources studies and such other reports, indicating phases of development. State the objectives of the short term project under consideration, in terms of population to be served, other consumers if nay, service standard to be provided, and the impact of the project after completion, clearly indicate the design period. Identify project components, with alternatives if any; both physical faculties and supporting activities Preliminary estimates of costs (component wise) of construction of physical facilities and supporting activities, cost of operation and maintenance, identify source for financing capital works, and operation and maintenance, work out annual burden (debt servicing + operational expenditure) Indicate institutions responsible for project approval; financing, implementation, operation and maintenance (e.g. National Government, State Government, Zilla Parishad, Local Body, Water Supply Boards) Indicate organisation responsible for preparing the project (pre-feasibility report, feasibility report), cost estimates for preparing project report, and sources of funds to finance preparation of project reports Indicate time table for carrying out all future stages of the project, and the earliest date by which the project might be operational Indicate personnel strength required for implementation of the project, indicate if any particular / peculiar difficulties of policy or other nature are likely to be encountered for implementing the project and hoe these could be resolved Recommend actions to be taken to proceed further

The following plans may be enclosed with the report: (a) an index plan to a scale of 1 cm = 2 km showing the project area, existing works, proposed works, location of community / township or institution to be served. (b) A schematic diagram showing the salient levels of project components.

Prefeasibility Report
After clearance is received, on the basis of identification report from the concerned authority and / or owner of the project, and commitments are made to finance further studies, the work of preparation of pre-feasibility report should be undertaken by an appropriate agency, which may be a central planning and designing cell of a Water Supply Department / Board, Local Body, or professional consultants working in the water supply sanitationenvironmental areas. In the later case terms of references for the study and its scope should be carefully set out.

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Pre-feasibility study may be a separate and discrete stage of project preparation or it may be the first stage of a comprehensive feasibility study. In either case it is necessary that it proceeds taking up of a feasibility study because the pre-feasibility study is essentially carried out for screening and ranking of all project alternatives, and to select an appropriate alternative for carrying out detailed feasibility study. The pre-feasibility study helps in selecting a short term project which will fit in the long term strategy for improving services in the context of overall perspective plan for development of the project area. Contents of Prefeasibility Report: A pre-feasibility report can be taken to be a preliminary Project Report, the structure and component of which are as follows: (a) executive summary, (b) introduction, (c) the project area and the need for a project, (d) long term plan for water supply, (e) proposed water supply project, (f) conclusions and recommendations, and (g) tables, figures/maps and annexes Executive Summary It is a good practice to provide an Executive Summary at the beginning of the report, giving its essential features, basic strategy, and approach adopted in developing the project, and the salient features of financial and administrative aspects. Introduction This section explains the Origin and Concept of the project, how it was prepared and the scope and status of the report. These sub-sections may be detailed as under: (a) Project Genesis describe how the idea of the project originated, agency responsible for promoting the project, fits and explain previous studies and reports on the project, including the project identification report, and agencies which prepared them, - Describe how the project fits in the regional development plan, long term sector plan, land use plan, public health care, and water resources development plan etc. (b) How was the Study Organised explain how the study was carried out agencies responsible for carrying out the various elements of work, and their role in preparing the study. - time table followed for the study (c) Scope and Status of the Report how the pre-feasibility report fits in the overall process of project preparation describe data limitation list interim reports prepared during the study explain if the pre-feasibility report intended to be used for obtaining approval for the proposed project.

The Project Area and the need for the project: This section establishes the need for the project. It should cover the following: (a) Project Area give geographical description of the project area with reference to map/maps, describe special features such as topography, climate, culture, religion, migration

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etc. which may affect project design, implementation and operation. - map showing administrative and political jurisdiction - describe if nay ethnic, culture or religious aspects of the communities which may have a bearing on the project proposal (b) Population Pattern estimate population in the project area, indicating the source of data of the basis for the estimate review previous population data, historic growth rates and causes estimate future population growth with different methods and indicate the most probable growth rates and compare with past population growth trends compare growth trends within the project area, with those for the region, state and the entire country. estimate probable densities of population in different parts of the project area future intervals of time e.g. five, ten, are twenty years ahead. discuss patterns of seasonal migration if any, within the area indicate implication of the estimate growth pattern on housing and other loc infrastructure

(c) Economic and social Conditions describe present living conditions the people of different socio-economic an ethnic groups identify locations according to income levels or other indicators of socio-economic studies show on the project area map location-wise density of population; poverty groups and ethnic concentrations, and the present and future land uses (as per development plan) information on housing conditions an relative proportions of owners and tenant provide data on education, literacy and un-employment by age and sex provide data and make projection or housing standards and average household occupancy in various parts of the project area. describe public health status within the project area, with particular attention to diseases related to water and sanitary conditions; provide data on crude, maternal and infant mortality rates, and life expectancy discuss the status of health care programmes in the area, as well as other projects which have bearing on improvements in environmental sanitation

(d) Sector Institutions identify the institutions (Government, semi-Government, Non-Government) which are involved in any of the stages of water supply and sanitation project development in the area, (planning preparing projects, financing, implementation, operation and maintenance, and evaluation. comment on roles, responsibilities and limitation (territorial or others) of all the identified institutions, in relation to water supply and sanitation (this may also be indicated on a diagram)

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(e) Available Water-Resources summarise the quantity and quality of surface and ground water resources, actual and potential, in the project area and vicinity (give sources of information) indicate studies carried out or being carried out concerning development of potential sources, and their findings mention the existing patterns of water use by all sectors (irrigation industrial energy, domestic etc), comment on supply or deficiency and possible conflicts over the use of water, at present and in future comment on pollution problems, if any, which might affect available surface and ground water resources mention the role of agencies/authorities responsible for managing water resources, their allocation and quality control

(f) Existing Water Supply Systems and Population Served describe each of the existing water supply system systems in the project area, indicating the details as under source of water, quantity and quality available in various seasons, components of the system such as head works, transmission mains, pumping stations, treatment works, balancing/service reservoirs, distribution system, reliability of supply in all seasons areas supplied, hours of supply, water pressures, operating problems, bulk meters, metered supplies, un-metered supplies, supply for commercial use, industrial use, domestic use private water supply services such as wells, bores, water vendors etc number of people served according to water supply systems of the following category unprotected sources like shallow wells, rivers, lakes, ponds, etc protected private sources like wells, bores rain water storage tanks etc piped water system number of house connections, number of stand pipes consumers option about stand-pipe supply, (e.g. distance, hours of supply, waiting time etc) how many people obtain water from more than one source note source, note these sources, and how their waters are used, e.g. drinking, bathing, washing etc and reasons for their preferences explain un-accounted for water social problems able causes and trends and efforts made to reduce losses comment on engineering and social problems of existing systems and possible measures to resolve these problems and the expected improvement

(g) Existing sanitation System and Population Served: Even if the proposed project may be for proving a single service i.e. water supply and not sanitation the existing sanitation arrangements should be described, giving details of the existing sanitation and waste disposal of the project area, and the number of people served by each system. Comment on

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the impact of existing system on drinking water quality and environment. (h) Drainage and Solid Waste: Briefly describe existing systems of storm water drainage and solid waste collection and disposal. This discussion should be focussed in terms of their impact on water supply and environment. (i) Need for a Project: Comment as to why the existing system cannot satisfy the existing and projected demands for services with reference to population to be served and the desired service standards, other demands that are commercial and industrial. Describe the consequences of not taking up a project, (which may include rehabilitation/ augmentation of the existing system and /or developing a new system) indicate priorities to improvement if existing system, expansion of system, construction of new system, supply for domestic use, industrial and commercial use; assessment of the need for consumer education in hygienic; and comments on urgency of project preparation and implementation. Long Term Plan for Water Supply a) Improvement in water supply services has to planned as a phased development programme, and any near-term project should be such as would fit in the long term strategy plan should be consistent with the future overall development plans for the areas. A long term plan may be prepared for a period of 25 to 30 years, and alternative development sequences may be identified to provide target service coverage and standards at affordable costs from these alternative development sequences, a priority project to be implemented in near-term can be becomes the subject of a comprehensive feasibility study. b) Alternative development sequences should be identified in the light of the service coverage to be achieved during the planning period, in phases. This calls for definition of the following: population to be covered with improved water supply facility Sub Module: 3.5 Design Criteria for Urban Infrastructure Services
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other consumers to be covered industrial commercial, government, institutions, etc.) service standards to be provided for various section of population (e.g. house connections, yard-taps, public stand post and point sources) target dates by which the above mentioned service coverage would be extended within the planning period, in suitable phases.

c) It must be noted that service standards can be upgraded over a period of time. Therefore various options can be considered for different areas. While selecting service standard community preferences and affordability should be ascertained through dialogue with intended beneficiaries. Only those projects which are affordable to the people they serve, must be selected. This calls for careful analysis of the existing tariff policies and practices, cost to the users for various service standards and income of various groups of people in the project area. d) Having determined the service coverage in stages over a planned period, requirements of water can be worked out for each year (or in suitable stages) adopting different standards; at different stages. To this may be added the demand for industrial commercial and institutional users. Thus, water for the projected needs through out the planned period can be quantified, (duly considering realistic allowances for unaccounted for water and daily and seasonal peaking factors) for alternative service standards, and service coverage. These demands

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from the basis for planning and providing system requirements. The annual water requirements should also take into consideration water demands for upgrading sanitation facilities, if, proposals to that effect are under consideration. Consistency and coordination has to be maintained between projections for both water, supply and sanitation services. e) It must be noted that availability of funds is one of the prime factors which will ultimately decide the scope and scale of a feasible project. f) Selection of a Strategic Plan: Each of the alternative development sequences, which can overcome the existing deficiencies and meet the present and future needs, consists of a series of improvements and expansions to be implemented over the planned period. Since all needs cannot be satisfied in immediate future, it is necessary to carefully determine priorities of target groups for improvement in services and stages of development and thus restrict the number of alternatives. Improvement in services and stages of development and thus restrict

the number of alternatives.

(g) Planning for system requirement includes consideration of the following: possibilities of rehabilitating and / or debottlenecking the existing systems reduction in water losses which can be justified economically, by deferring development of new sources alternative water resource, surface and groundwater with particular emphasis on maximizing the use of all existing water sources alternative transmission and treatment systems and pumping schemes distribution system including pumping station and balance reservoirs providing alternative service standards in future, including upgrading of existing facilities and system expansion Sub Module: 3.5 Design Criteria for Urban Infrastructure Services
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(h) it may also be necessary to ascertain if supporting activities like health education, staff training and institutional improvements etc, are necessary to be included as essential components of the project. All the physical and supporting input need to be carefully costed (capital and operating) after preparing preliminary designs of all facilities identified for each of the alternative development sequences. These alternatives may then be evaluated for least cost solution by net present value method, which involves expressing all costs (capital and operating) for each year in economic terms discounting future costs to present value; selecting the sequence with the lowest present value.

(i) As stated above, costs are to be expressed in economic terms and not in terms of their financial costs. This is because the various alternatives should reflect resource cost to the economy as a whole at different future dates. Costing of the selected project may however, be done in terms of financial costs, duly considering inflation during project implementation. Proposed Water Supply Project (a) Details of the Project: The projects to be selected are those components of the least cost alternative of development sequence, which can be implemented during the next 3-4 years. Components of the selected project may be as follows: rehabilitation and de-bottlenecking of the existing facilities construction of new facilities for improvement and expansion of existing systems

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support activities like training, consumer education, public motivation etc, equipment and other measures necessary for operating and maintenance of the existing and expanded systems consultancy services needed (if any) for conducting feasibility study, detailed engineering, construction supervision, socio-economic studies, studies for reducing water losses, tariff-studies, studies for improving accounts support activities.

(b) All project components should be thoroughly described, duly supported by documents such as: i. location maps ii. technical information for each physical component, and economic analysis where necessary iii. preliminary engineering designs and drawings in respect of each physical component, such as head works, transmission mains, pumping stations, treatment plants, balancing reservoirs, distribution lines (c) A realistic implementation schedule should be presented, taking into consideration time required for all further steps to be taken, such as conducting feasibility study, appraisal of the project, sanction to the project, fund mobilization, implementation, trial and commissioning. In preparing this schedule due consideration should be given to all authorities/groups whose inputs and decisions can affect the project and its timing. (d) Cost estimates of each component of the project should be prepared and annual requirement of funds for each year should be worked out, taking into consideration the likely annually progress of each component. Due allowance should be made for physical contingencies and annual inflation. This exercise will result in arriving at total funds required annually for implementation of the project (e) The pre-feasibility report should bring out any major environment and social impact the project is likely to cause and if these aspects will affect its feasibility. (f) Institutional Responsibilities: The pre-feasibility report should identify the various organizations / departments / agencies that would be responsible for further planning and project preparation, approval, sanction, funding, implementation and operating and maintenance of the project and indicate also the strength of personnel needed to implement and later operate and maintain the project. It should also discuss special problems likely to be encountered during operation and maintenance, in respect of availability of skilled and technical staff, funds, transport, chemicals, communication, power, spare parts etc. Quantitative estimates of all these resources should be made and included in the project report. (g) Financial Aspects: The capital cost of a project is a sum of all expenditure required to be incurred to complete design and detailed engineering of the project, construction of all its components including support activities and conducting special studies. After estimating component-wise costs, they may also be worked out on annual basis, throughout the implementation period, taking into consideration construction schedule and allowances for physical contingencies and inflation. Basic item costs to be adopted should be of the current year. Annual cost should be suitably increased to cover escalation costs, during the construction period. Total of such escalated annual costs determined the final cost estimate of the project. Financing plan for the project should then be prepared, identifying all the sources form which funds can be obtained, and likely annual contribution from each source, until the project is completed. The possible sources of funds include: cash reserves available with the project authority cash generated by the project authority from sale of water from the existing facilities grant in aid from government loans from government loans from financing institutions like Life Insurance Corporation, Banks, HUDCO etc

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open market borrowings loans / grants from bilateral / international agencies capital contribution from voluntary organisation or from consumers

In that case the pre-feasibility study with suitable concluding report should be processed for obtaining investment decision for the project. The feasibility study can then be taken up at the beginning of the implementation phase and results of the study if noticed to be at variance with the earlier ones, suitable modification may be introduced during implementation. In respect of major projects however, and particularly those for which as distance of bilateral or international funding agencies is sought for, comprehensive feasibility study may have to be taken up before an investment decision can be taken.

Feasibility Report
Feasibility study examines the project selected in the pre-feasibility study as a near-term project, in much greater details, to see if it is feasible technically, financially, economically and institutionally. Enough additional data/information may have to be collected to examine the above mentioned aspects, though the details components may be collected during execution of works.

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(h) if the lending authority agrees, interest payable during implementation period can be capitalized and load amount increased accordingly the next step is to prepare recurrent annual cost of the project for the next few years (say 10 years) covering operating and maintenance expenditure of the entire system (existing and proposed). This would include expenditure on staff, chemicals, energy, spare parts and other materials for system operation, transportation upkeep of the systems, and administration.The annual financial burden imposed by a project comprises the annual recurring cost and payment towards loan and interest (debtservicing). This has to be met from the operational revenue, which can be realized from sale of water. The present and future tariff for sale of water should be identified and a statement showing annual revenue for ten years period, beginning with the year when the project will be operational, should be prepared. If this statement indicates that the project authority can generate enough revenue to meet all the operational expenditure as well as repayment of loan and interest, the lending institutions can be persuaded to sanction loans for the project. (i) Every State Government and the Government of India have schemes for financing water supply scheme in the urban and rural areas, and define allocations are normally made for the national plan periods. It will be necessary at this stage to ascertain if an how much finance can be made available for the project under consideration, and to estimate annual availability of funds for the project till its completion. This exercise has to be done in consultation with the concerned department of the Government and the lending institutions, who would see whether the project fits in the sector policies and strategies, and can be brought in an annual up detailed investigations, data collection and operational studies, pending undertaking feasibility study, formally. (j) In respect of smaller and medium size project, the pre-feasibility report can be considered sufficient for obtaining investment decision for the project it: the result of the pre-feasibility study are based on adequate and reliable data / information analysis of the data and situation is carried out fairly intensively no major environmental and social problems are likely to crop up that might jeopardize project implementation no major technical and engineering problem are envisaged during construction and operation of the facilities

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It is a good practice to keep the authority responsible for taking investment decisions, informed of the stage and salient features of the project. If there are good prospect of the project being funded immediately after the feasibility study is completed, detailed engineering of priority components may be planned simultaneously. Contents of Feasibility Report The feasibility report may have the following sections(a) background, (b) the Proposed Project, (c) institutional and Financial Aspects, (d) conclusion and Recommendations Background: In this section describe the history of project preparation, how this report is related to other reports and studies carried out earlier, and in particular its setting in the context of a pre-feasibility report. It should also bring out if the data/information and assumption made in the pre-feasibility report are valid, and if not, changes in this respect should be highlighted References to all previous reports and studies should be made. In respect of the project area, need for a project and strategic plan for water supply, only a brief summary of the information covered in pre-feasibility report, should be presented, highlighting such additional data/information, if any, collected for this report. The summary information should include planning period, project objectives, service coverage, service standards considered and selected for long term planning and for the project, community preferences and affordability, quantification of future demands for services, alternatives strategic plans, their screening and ranking, recommended strategic plan and cost of its implementation. The Proposed Project This section describes details of the project recommended for implementation. Information presented here is based on extensive analysis and preliminary engineering designs of all components of the project. The detailing of this section may be done in the following sub-sections: (a) Objectives: Project objectives may be described in terms of general development objectives such as health improvements, ease in obtaining water by consumers, improved living standards, staff development and institutional improvements; and also terms of specific objectives such as service coverage and standards of service to be provided to various target groups. (b) Project Users: Define number of people by location and institutions who will benefit and/or not benefit from the project area and reasons for the same, and users involvement during preparation, implementation and operation of the project (c) Rehabilitation and De-bottlenecking the Existing Water Supply System: In fact rehabilitation, improvement and de-bottlenecking works, if necessary should be planned for execution prior to that of the proposed project. If so these activities should be mentioned in the feasibility report. If, however, these works are proposed as components of the proposed project, necessity of undertaking the rehabilitation/improvement/de- bottlenecking works should be explained. (d) Project Description: This may cover the following items in brief: definition of the project in the context of the recommended development alternative (strategic plan) and explanation for the priority of the project brief description of each component of the project, with maps and drawings. functions, location, design criteria and capacity of each component

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technical specification (dimension, material) and performance specifications stage of preparation of designs and drawings of each component method of financing and constructing in house facilities, like plumbing and service connection etc.

(e) Support Activities: Need for and description of components such as staff training, improving billing and accounting, consumer education, health education, community involvement etc. and timing of undertaking these components and the agencies involved. (f) Integration of the Proposed Project with the Existing and Future Systems: Describe how the various components of the proposed project would be integrated with the existing and future works. (g) Agencies involved in Project Implementation and Relevant Aspects : Identify other agencies including government agencies, who would be involved in project implementation, describing their role, such as granting administrative approval, technical sanction, approval to annual budget provision, sanction of loans, construction of facilities, procurement of materials and equipment etc. Outline of arrangements to coordinate the working of all agencies. Designate the operating agency and its role during implementation stage. Role of consultants, if necessary, scope of their work, and terms of reference. Regulations and procedures for procuring key materials and equipment, power, and transport problems, if any. Estimate number and type of workers and their availability Procedures for fixing agencies for works and supplies and the normal time it takes to award contracts. List of imported materials, if required, procedure to be followed for improving them and estimation of delivery period. Outline any legislative and administrative approvals required to implement the project, such as those pertaining to riparian rights, water quality criteria, acquisition of lands, permission to construct across or along roads and railways, high-tension power lines, in forest area and defence or other such restricted areas. Sub Module: 3.5 Design Criteria for Urban Infrastructure Services
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Comments on the capabilities of contractors and quality of material and equipment available indigenously.

(h) Cost Estimates: Outline basic assumption made for unit prices, physical contingencies, price contingencies and escalation. Summary of estimated cost of each component for each year till its completion and work out total annual costs to know annual cash flow requirements. Estimate foreign exchange cost if required to be incurred. work out per capita cost of the project on the basis of design population, cost per unit of water produced and distributed and compare these with norms, if any, laid down by government or with those for similar projects.

(j) Implementation Schedule: Prepare a detailed and realistic implementation schedule for all project components, taking into consideration stage of preparation of detailed design and drawings, additional field investigations required, if any, time required for preparing tender documents, notice period, processing of tenders, award of works/supply contract actual construction period, period required for procurement of material and equipment, testing, trials of individual component and commissioning of the facilities etc. If consultants services are required, the period required for completion of their work should also be estimated. A detailed PERT diagrams showing
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implementation schedule for the whole project, as well as those for each component should be prepared, showing linkages and inter-dependence of various activities. Implementation schedule should also be prepared for support-activities such as training, consumers education etc. and their linkages with completion of physical components and commissioning of the project should be established. (k) Operation and Maintenance of the Project: Estimate annual operating costs, considering staff, chemicals, energy, transport, routine maintenance of civil works, maintenance of clerical/mechanical equipment, including normal cost of replacement of parts and supervision charges. Annual cost estimates should be prepared for a period of 10 years from the probable year of commissioning the project, taking into consideration expected out-put levels and escalation. (l) Environmental Impact: Brief description of the adverse and beneficial impact of the project may be given covering the following aspects: Beneficial Impact ease and convenience in obtaining water by the consumers improvement in public reuse of water in household premises or by water authority effect of construction of storage reservoirs on flood moderation, navigation, ground water table, power generation etc. Adverse Impact risk of promoting mosquito breeding effect of with-drawing surface/ground water effect of disposal of backwash Water and sludge from water treatment plant effects of construction of storage reservoirs on ground water table, down stream flow of the stream, in the reservoir bed etc. effects on ecology

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Institutional Aspects: It is necessary to examine capabilities of the organisations who would be entrusted with the responsibility of implementing the project and of operating the same after it is commissioned. The designated organisation(s) must fulfil the requirements in respect of organisational structure, personnel, financial, health and management procedures, so that effective and efficient performance is expected. This can be done by describing the following aspects: history of the organisation, its functions, duties and powers, legal basis, organisational chart, (present and proposed), relationship between different functional groups of the organisation, and with its regional offices, its relation with government agencies and other organisations involved in sector development. Public relations in general and consumer relations in particular, extension services available to sell new services, facilities for conducting consumer education programme, and settling complaints. Systems for budgeting for capital and recurring expenditure and revenue, accounting of expenditure and revenue, accounting of expenditure and revenue, internal and external audit arrangements, inventory management. Present positions and actual staff, comments on number and quality of staff in each category, ratio of staff proposed for maintenance and operation of the project to the number of people served, salary ranges of the staff and their comparison with those of other public sector employees.

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Staff requirement (category wise) for operating the project immediately, after commissioning future requirements, policies regarding staff training, facilities available for training. Actual tariffs for the last 5 years present tariff, tariff proposed after the project is commissioned, its structures, internal and external subsidies, procedure required to be followed to adopt new tariff, expected tariff and revenues in future years, proposal to meet shortage in revenue accruals. Prepare annual financial statements (income statements, balance sheets and cash flows) for the project operating agency, for three years after the project is commissioned, explain all basic assumptions for the financial forecast and the terms and conditions of tapping financial sources, demonstrate ability to cover all operating, and maintenance expenditure and loan repayment, workout rate of return on net fixed assets and the internal financial rate of return of the project.

Financing Plan: Identify all sources of funds for implementation of the project, indicating year-by-year requirements from these sources, to meet expenditure as planned for completing the project as per schedule, state how interest during construction will be paid, or whether it will be capitalised and provided for in the loan, explain the procedures involved in obtaining funds from the various sources. Conclusions and Recommendations This section should discuss justification of the project, in terms of its objectives, cost-effectiveness, affordability, willingness of the beneficiaries to pay for services and the effect of not proceeding with the project. Issues which are likely to adversely affect project implementation and operation should be outlined and ways of tackling the same should be suggested. Effect of changes in the assumptions made for developing the project, on project implementation period, benefits, tariffs, costs and demand etc. should be mentioned. Definite recommendations should be made regarding time-bound actions to be taken by the various agencies, including advance action which may be taken by the lead agency pending approval and financing of the project. Sub Module: 3.5 Design Criteria for Urban Infrastructure Services
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