Public Private Partnership: 24x7 Water Supply Project in ... Public Private Partnership: 24x7 Water

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Transcript of Public Private Partnership: 24x7 Water Supply Project in ... Public Private Partnership: 24x7 Water

  • Public Private Partnership: 24x7 Water Supply Project in Mysore City

    (Lessons from project operation)

  • Trigger Points of Public Private Participation

    Accountability/Responsiveness

    Performance Indicators

    Service Levels

    Practices

    Sustainability

  • Key Questions for PPP Identification Benefits: Will the PPP unambiguously result in improved access to

    services, better quality, and greater efficiency? Cost-Recovery: Is there a clearly identifiable revenue stream? In

    what currency is it denominated? Demand: Is there a proven demand for the service, and is it

    measurable from past records? Stakeholders: Which stakeholders will be affected by the PPP

    project (consumers and labor are critical)? Dialog vs. Dictation Public Capacity: Is the public sector clearly committed to steering

    instead of rowing, and does it have the institutional capacity to monitor, regulate, and commit to the partnership long-term?

    Labor: Will new investments create new employment or would the PPP likely require reduction of overstaffing?

    Technology: Is it tried, tested, and proven?

  • Options for PSP

    Servicecontracts

    Mgmt.contracts

    Leases ConcessionBOT /DBOT

    BOODivestiture

    There is a range of options with increasing private sector responsibility

    Increasing private sector risk, responsibility, and financing

  • FORMS OF PUBLIC PRIVATE PARTNERSHIPS: Allocation Of Key

    ResponsibilitiesTypes of Contract

    Asset ownership

    Capital Investment

    O & M Commercial Risk

    Duration (yrs)

    Service Contract

    Public Public Private &Public

    Public 1-2

    Management Contract

    Public Public Private Public 3-5

    LeasePublic Public (with

    limited private)

    Private Shared 8-15

    Concession/BOT

    Public Private Private Private 25-30

    DivestiturePrivate or Private &

    Public

    Private Private Private Indefinite (license may

    set term)

  • Selecting the Most Appropriate Option for PSP

  • Key Factors

    Current state and performance of enterprise

    Is there enough reliable data to craft a good arrangement?

    What is the nature of demand?

    What is the condition of assets?

    How much investment is required?

    What are the (current and desired) performance standards and to what degree are they being achieved?

    What is the status of the enterprises human resources?

    To what degree is the enterprise recovering its costs (operations, maintenance, and depreciation)?

    Is the service affordable now and will it be under PSP?

  • Key Factors

    Nature and status of the regulatory framework

    Is the current regulatory framework conducive to PSP?

    If not, what elements require revision?

    Is there a regulatory agency, and if so, is it savvy enough to

    effectively regulate a private operator?

    Will the PSP arrangement be regulated by a regulator or

    through the contract?

    To what degree does regulation need to be coordinated with

    other sectors?

  • Private Sector Participation In Water in India

    MoUDPA encouragement for PPP: Issue of Guidelines in 2004

    JNNURM accords priority for projects with PSP over those

    executed by ULBs to leverage private capital & bring in

    efficiencies

    First successful PPP to be implemented in water for 24x7 supply

    in pilot areas in Karnataka

    Many more cities looking at PPP options following Mysore &

    Nagpur

  • Private Sector Participation In Water in India

    Early initiatives:

    Water Supply & Sewerage Project (Kolkata- Salt Lake, West Bengal)Water Supply Project (Chandrapur, Maharashtra)Seawater Desalination Project (Chennai, Tamil Nadu) Water Management Contract -Source to Tap (Latur, Maharasthra) Water Supply and Sewerage Project (Tirupur, Tamil Nadu) Water Supply Project (Nagpur, Maharasthra) Water Treatment & Supply Project (Haldia, West Bengal)

  • Private Sector Participation In Water in India by Jusco

    Experience of Water management in Jamshedpur City (effective 2004)24x7 Water supply in Mysore City (effective 2008)Haldia Water supply Project (effective 2008)Sector - V, Salt Lake Water supply Project (effective 2007)

  • Existing Situation & Issues in MysoreIn spite of adequate water availability from a dependable source, citizens do not receive regular supply: water is supplied for a few hours on alternate days in many areasSignificant extraction of ground water from bore wells and mixing up supply with Cauvery water through the same networkAssociated services like Customer Complaint Management, Billing & Revenue Collection, Active Leakage, Asset & Inventory Management very poorNo bulk meters and very few working customer metersSignificant proportion of network comprises PVC pipes laid at shallow depths and solvent cement jointedLack of accountability of staff due to politicized systemSizeable expenditure from municipal budget with no tangible gains

  • MYSORE CITY WARDS / DMAS

  • Mysore 24x7 Water Supply ProjectName of Project 24X7 Water Supply performance based management contract in Mysore city

    Job Description Conversion of intermittent to 24x7 continuous water supply system throughsystematic improvements and network rehabilitation

    Client Mysore City Corporation & Karnataka Water Supply & Drainage Board (KUWSDB)

    Salient Features Hydraulic modeling, Network design, preparation and implementation of Capital Investment Plan (CIP)

    Rehabilitation of citywide water distribution network About 1766 km. of pipeline (dia. 65- 350mm), 14 Booster Pump houses, 14 substations & related electrical works

    Providing house service connections 1,74,936 Operation & maintenance of citywide water distribution system for 6 years (2

    years post rehabilitation & implementation of 24x7, with fixed & performance linked remuneration

    Billing & Collection leading to increased revenue collections Establishment and Management of 24x7 Customer Complaint centers

    Value [Existing Contract]

    Rs. 1620 million

    Completion Time 72 Months

    Indias largest water management P-P-P Project till date covering one million plus population and 150,000 service connections

  • The Three Phases

    Phase 112 Months

    Phase 236 Months

    Phase 324 Months

    O&M Plan Take-over Operations Study & Survey Design & Engineering IMIS Capital Investment Plan

    O&M Sustainability of operations

    Implementation of CIP Rehabilitation works Metering program

    O &

    MBilling &

    CollectionCustom

    er Support Systems

  • Project Structuring Summary Performance based Management

    Contract

    Phase 1: Study Phase (Baseline study)

    Phase 2: Rehabilitation Phase

    Phase 3: O&M Phase

    Remodeling & Rehabilitation of distribution network, establishing DMAs to convert intermittent to 24/7 continuous water supply

    Fixed & Performance based fees

    Sharing of Risks between Operator and ULB

    Investment (JNNURM)

    Revenue collection Risk with Operator (limited)

    Performance Risk with Operator

    Design & Construction Risk with Operator

    Operation Risk with operator

    1. Tariff to be fixed by MCC

    2. Operator to bill, collect and pass on the revenues to MCC

  • 24X7 WATER SUPPLY Our MethodologySystem Understand and baselining

    - Asset Mapping

    - Measuring bulk inputs and outputs

    - Establishment of DMAs

    - Water Balance

    - Base lining of losses, existing service levels

    - Demand assessment

    System Improvement- Work break down packages for execution

    - Priority works execution

    - Implementation of Rehab plan

    - Service level targets are delivered in stages

    - Cost to benefit analysis

    - Change supply pattern to 24X7 supply

    System Maintenance - Standardization of O&M practices

    - Active leakage management

    - Metering

    - Incentive based billing and revenue collection

    - Customer centre with SLGs

    - Integration of mapping, billing, customer care system

    Systematic Study

    Systematic Implementation

    Operation &Maintenance

  • Payment Structure1. Management fees: Lump sum in two parts.

    o Fixed fees (50%), paid in 24 equal quarterly installments.

    o Performance fees (50%), paid six monthly on achievement of targets over project period of 6 years as per performance chart

    2. Operating Cost: Lump sum in two parts.

    o Fixed fees (30 %), paid in 23 equal quarterly installments

    o Performance fees (70%), paid six monthly on achievement of targets over project period of 6 years as per performance chart

    3. Rehabilitation Cost:

    o BOQ driven

    o Based on Capital Investment Plan (CIP)

    o Payable against invoice for completed works not less than Rs 10 lakhs

    4. Provisional Items:

    o Paid in same manner as rehabilitation costs.

  • Performance Measures

    Performance Parameter Weightage

    Number of connections with 24x7 30%

    Revenue Improvement 30%

    Revenue Water in 24x7 area 10%

    Resolution of Complaints on service in 24x7 area 10%

    Resolution of Complaints in entire zone 5%

    Leakage levels in 24x7 5%

    Quality compliance in 24x7 area 5%

    Pressure compliance in 24x7 area 5%

  • Problems in putting through a 24X7 contract Overall acceptance to PSP in water

    Lack of ownership of initiative across different levels and hence resistance f