JnNURM

Impact on the urban landscape

Ramanujam S.RDirector – Urban Practice

December 1, 2008

2.

• The urban landscape before JnNURM

• Impact of JnNURM

– Quantitative

– Qualitative

• Constraints and …. opportunities

Prior to JnNURM

4.

Service levels were poor

Large gap in basic services

0%10%20%30%40%50%60%70%80%90%

100%

Access to Water Sanitation Solid WasteCollection

5.

Revenue surplus didn’t exist to fund investments

Faridabad

Hyderabad

Madurai

Nagpur

Nashik

Agartala

Ahmedabad

Pune

RajkotAsansol

Indore

Mumbai

Bhopal

Bodhgaya

Chandigarh

Kochi

Guwahati

J aipur

Mathura

Meerut BhubaneswarAgra

BangaloreAmritsar

Ajmer

0.00

0.20

0.40

0.60

0.80

1.00

Operating ratio Desirable Limit

Faridabad

Hyderabad

Madurai

Nagpur

Nashik

Agartala

Ahmedabad

Pune

RajkotAsansol

Indore

Mumbai

Bhopal

Bodhgaya

Chandigarh

Kochi

Guwahati

J aipur

Mathura

Meerut BhubaneswarAgra

BangaloreAmritsar

Ajmer

0.00

0.20

0.40

0.60

0.80

1.00

Operating ratio Desirable Limit

Source: CRISIL Infrastructure Advisory analysis of CDPs

6.

Large unfunded investment needs

- 50,000 100,000 150,000 200,000 250,000

Revenue Surplus

Revenue Income

InvestmentProposals

Investment Proposals Rs Crores

Source: Investment needs of 45 cities compiled from city documents

The investment landscape now

8.

Good portion of the need has been funded, needs have also expanded

- 50,000 100,000 150,000 200,000 250,000

Revenue Surplus

Revenue Income

InvestmentProposals

Investment Proposals Rs Crores

Source: MoUD Analysis of CDPs

UIG+BSUP

3,35,000 crores

9.

Basic services are well prioritized

Basic Services include Water Supply, Drainage, Sewerage and Solid Waste

Share of various services in the approved investments under UIG and BSUP

Basic Services

Urban Poor

Others

Basic services and BSUP account for 85% of approved projects

10.

Cities have been able to scale up investments

-

200

400

600

800

1,000

1,200

1,400

1,600

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Cap

ital

In

vest

men

t in

Rs

Cro

res

Source: AMC presentation on Commercial borrowing – USAID, Indonesia

Ahmedabad – Trend of capital investments

11.

Many cities have been able to develop multi-year investment plans

Vishakapatnam

Capital expenditure

0200400600800

10001200140016001800

00-01 01-02 02-03 03-04 04-05 Multi Year

JNNURM

Rs

Cro

res

12.

0%

20%

40%

60%

80%

100%

1998 2002 2004 2005 2007

Water & San Bridges Roads Transport Urban poor

It took a long time for cities to develop a multi sector investment plan

Source: AMC presentation on Commercial borrowing – USAID, Indonesia

The first investments of Ahmedabad were in basic servicesIt took AMC ten years to reach a multi sector investment plan

Sectoral share of capital investments for Ahmedabad

13.

Indore was able to jump start this process

Indore Sectoral investments Water SupplySewerage Solid WasteRoads TransportUrban Poor

Its investment plan approved under JnNURM is multi-sector

14.

The investment landscape now

• The ULBs are implementing projects worth twice their annual

revenue

• Their investments are multi-year and are on a different scale

• Their plans are also multi-sector

How else is the investment landscape changing

16.

PPP momentum in water sector is at tipping point

Karnataka Pilot areasChandrapur outsourcingChennai DesalLatur

Salt Lake HaldiaNagpur pilotBhiwandi

Mysore 24 X 7Madurai 24 X 7MorbiKhandwaRaipur

Nagpur scaling upKarnataka scaling up

At design stage Announced Bidding completedContract commenced

A year after contracting

Note: Non comprehensive list of cities with water PPPs

17.

Urban Transport PPPs

Bus stops, smallterminals

Fleet

Road infrastructure

MRTS/ LRTS

Small scale PPPs abundant.Should become mandatory across projects.Only a small solution in the larger context.

Live example in Indore. Many in bidding stage. Next steps are in a) Scaling up in frequency and b) unviable routes A viability gap based model is workable

Kolhapur an example of city level scale. Waiting for results.Pimpri - work in progress for a city level financing solution.

Hyderabad metro through a fee + real estate solutionA city level financing solution is a must

based on city level revenuesbased on land use revenues

18.

Water and Urban Transport have adopted new vocabulary

• Water Supply

– Cost recovery has much better

acceptance

– So does 24 X 7

– Increased focus on service

delivery

– SPVs for commercial

borrowing

• Urban Transport

– Shift from high cost metro

plans to bus based systems

– JnNURM has provided

implementation leverage to UT

policy

– Urban Transport Authority

– Urban Transport Fund

– SPVs for commercial

borrowing

Medium scale, private sector oriented opportunities emerge

20.

Focus will be on efficiency improvement

Source: Benchmarking of utilities by WSP and Utility Data Book by ADB

0.0% 20.0% 40.0% 60.0% 80.0% 100.0%

Coverage

Supply Quantity

Hours of Supply

NRW

Cost Recovery (No oftowns)

Service Levels

Water - Current service levels are poor in the distribution side

21.

New opportunities – Water Supply

Quality Metering

Instrumentation

Customer mapping

Quality Metering

Instrumentation

Customer mapping

Energy efficiency

Customer service contracts

Energy efficiency

Customer service contracts

Service contracts

Billing and collection contracts

NRW reduction

Service contracts

Billing and collection contracts

NRW reduction

22.

Urban Transport – City bus will be a high growth area

Source: WSA study for MoUD

23.

So will be parking

Source: WSA study for MoUD

24.

New opportunities – Urban Transport

Junction improvement

Traffic management

Traffic database

Junction improvement

Traffic management

Traffic database

Advertising

On road parking

Advertising

On road parking

Bus Terminals

Multi level parking

Fleet maintenance

Bus Terminals

Multi level parking

Fleet maintenance

Fleet operationsFleet operations

What can slow down the change

26.

Many cities do not have revenues to cover normative maintenance

Per capita revenue, Rs

3691

2551

2348

2075

2069

2067

1961

1733

1529

1354

1350

1132

1050

1034

947

947

942

889

817

772

646

622

585

568

472

237

0 500 1000 1500 2000 2500 3000 3500 4000

Pimpri

Nashik

Pune

A'bad

Surat

Bangalore

Vadodara

Ludhiana

REQUIRED

Nagpur

Chandigarh

Rajkot

Amritsar

Vizag

Chennai

Jaipur

Hyderabad

Indore

Madurai

Kanpur

Faridabad

Bhopal

Kochi

Lucknow

Varanasi

Allahabad

Most octroi-levying cities able to meet normative requirement

Other cities a have deficit of at least Rs.500 per capita

Note: Gujarat has since then repealed Octroi

27.

Urban Transport is the next big investment need with big gaps

# - Aggregate revenues estimated for 63 JNNURM Cities (41% of total urban population)

* Investment requirement as per Eleventh Five Year Plan

18860

132000

0

20000

40000

60000

80000

100000

120000

140000

Aggregate ULB Revenues Investment Requirement*

Rs

cro

res

28.

Revenue reforms can change this, but implementation is slow

0 10 20 30 40 50 60 70

Property Tax 85%Coverage

Property tax 90%collection

Water 100% costrecovery

Solid waste 100% costrecovery

Number of cities

Achievement till now Targetted for this year Remaining

29.

Summary

• JnNURM has changed the investment landscape

– Quantitatively as well as qualitatively

• Several innovations underway

• PPP and service focus will open up many opportunities

– Large scale PPPs

– Medium scale PPPs focussed on efficiency

• Revenue reforms are necessary to sustain this, but are moving slowly

Thank You

sramanujam@crisil.com+91 99202 28448

31.

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