Exclusive Right of Supply and Services Agreement by wrh22281

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									24x7 Water supply project for
         nagpur city




NAGPUR MUNICIPAL CORPORATION
Nagpur

  • History : 300 Years old.
  • Location : Geographical Centre of
    India.
  • Population: 2.50 million
  • Area : 217 Sq. Km
  • Political : Winter Capital of
    Maharashtra.
  • Known for : Oranges
  • Facilities : Education, Health Services.
  • Tourist Place : 4 Major Tiger Projects.
  • Weather : Temp 80c to 480c(Summer).
    Rainfall- 1200 mm.
  • Growth in Population: Reach 5.0
    million in next 25 years.
          HISTORY OF NAGPUR WATER
                   SUPPLY

       Populati   Water
                            lpcd
Year     on       Supply                    Sources
                            Rate
                   in mld

1921    145000    16.50     114    Ambazari + Gorewada
1941    302000    45.00     149    Ambazari + Gorewada +
                                   Kanhan
1961    644000    80.00     124    Ambasari + Gorewada +
                                   1st Aug. Kanhan
1981   1217000    125.00    103    Ambazari (discarded ),
                                   Gorewada + 3 Times Aug.
                                   to Kanhan
2001   2150000    370.00    172    Gorewada + Kanhan +
                                   Pench -I + Pench -II
2004   2350000    470.00    200    Gorewada + Kanhan +
                                   Pench -I + Pench -II +
                                   Pench -III
 RAW WATER SOURCES                  :
(AS PER IRRIGATION DEMAND AGAINST NMC)




                                         Kanhan           120    mld


                                         Pench – RBC       370   mld
                                         at Mahadula      -440
                     PENCH
                     DAMP
                                         Gorewada          16    mld


                                                  TOTAL   536    mld

                    KanhanP


   Gorewada
                                                  RAW WATER UFW
                                                      >20%
                                          + MAJOR LOSSES THROUGH CANAL
                                                 (Irrigation Account)
    WATER SUPPLY SOURCE LOCATION




                                      Rahari




New water sources are far away will need high capital and energy cost.
        Salient Features of Nagpur Water Supply Infrastructure


RAW WATER PUMPING STATIONS
At Mahadula (370 - 440 Mld)
At Kanhan (125 Mld) and

Old Gorewada (17 Mld) by gravity
WATER TREATMENT PLANT/ PURE WATER PUMPING
Description    Rated Capacity of    Actual Operating
                Treated Water          Capacity
                     (mld)              In mld
1) Kanhan      108                 120

2) Gorewada    16                  16
   (Old)
3) Pench-I     113                 136
                                   Upgraded
4) Pench-II    133                 140

5) Pench-III   100                 120
                                   Design
Total          470                 532
              MASTER BALANCING
                 RESERVOIRS
At Seminary Hills
     Capacity – 24.97 Ml
     G.L. – 349.700 M

At Governor House
     Capacity – 22.74 Ml
     G.L. – 344.000 M

AT Sitabuldi Fort
       Capacity – 22.7 Ml
      G. L. - 334.300 M
PURE WATER DISTRIBUTION TRUNK MAINS
1200 MM TO 300 MM appx. 100 km
STORAGE RESERVOIRS
43 RESERVOIRS AT 31 LOCATIONS
TOTAL CAPACITY – 151.79 ml
DISTRIBUTION
NETWORK
 Appx.2100 K.M. of length
in 10 Water Distribution
Zones of Nagpur City
          WATER SOURCES FOR NAGPUR WATER
                        SUPPLY



                           Gorewada            Kanhan
                              3%                20%




                       Pench
                        77%




77% OF RAW WATER IS FROM PENCH RIGHT BANK CANAL AT 48.5 KM CHAINAGE AT MAHADULA .
IT IS ALSO A MAJOR SOURCE OF WATER LOSS.
COMAND AREA FOR Kanhan SOURCE
    POPULATION : APPX. 0.8 MILLION
                 WATER DEMAND & SUPPLY
   Demand Within        supply             Exhibit- I
   NMC limits                       Water Demand & Supply
                                 (Constant Rate of supply from WTP)


                 1000

                 800
Water Quantity




                 600
    (mld)




                 400

                 200

                   0
                         2004            2011               2021      2031

   Demand Within        488.5           531.62             709.18     933.74
   NMC limits
   supply               470.00          470.00             470.00     470.00

                                                 Year
          WATER SUPPLY MASTER PLAN
Year   Demand   Supply     Future Planning    Surplus /       Net Surplus /
                (As on                       Deficit Over      Deficit Over
                 2004)                        Existing      Existing + Future
                                             Supply (+/-)    Planned Supply
                                                 Mld



2011    532     470      113 (Pench-IV         (-) 62            +51
                         additional thru
                         Water saving)
2021    709     470      113 (Pench-IV)       (-) 239            +49
                         + 175(Rahari-I)


2031    934     470       113(Pench-IV)       (-) 464             +1
                         + 175(Rahari-I)
                         + 175(Rahari-II)
     NEED FOR REFORMS IN WATER SECTOR
 Annual expenditure of Municipal Corporation on water supply : Rs 106 crores

 Total demand from consumers against water bills: Rs 70.7 crores (deficit of Rs 36.5 crores)

 Total recovery against water bill              : Rs 50 crores (arrears of Rs 20.70 crores)

STATEMENT OF WATER BILLING DEMAND TO CONSUMER AND IT’S RECOVERY
YEAR       DEMAND          RECEIPT          % RECOVERY
           (IN Rs. CRORES)  (IN Rs. CRORES)                    WATER SUPPLY
2001-2002    70              44                  63            370 MLD
2002-2003    73.50           45                  63            370 MLD
2003-2004    71.50           50                  69            490 MLD

Municipal Corporation Makes Payment to Irrigation Department for : 540 ml/Day (annual avg.)
Municipal Corporation Supplies Treated Water to City              : 530 ml/Day
Municipal Corporation Billing to all consumers against water supply: 245 ml/Day (annual avg.)

Total Water Losses /UFW/ NRW are 291 ml/Day i.e. 54 % of supply.

                OPEX is Rs 3.30/ 1000 ltrs. @ WTP
                ANNUAL ENERGY BILL OF Rs. 28 CRORE /YEAR
             NMC Water Supply: Income
              Expenditure (in Rs.Lakhs)
                         2003-04 2004-05 2005-06 2006-07          2007-08
                         Actual  Actual  Actual  Actual           (BUDGET)
Establishment Expenses   501.96      574.85   623.86    640.00    705.00

Energy                   2186.32 2110.02 2040.02 2770.00          3265.00
Raw water                1173.25 939.35       1356.12 852.29      1200.00
Other expenses           195.90      274.85   191.74    346.00    439.00
M&R                      480.20      397.46   679.53    582.71    794.00
Total Operating          4537.63 4296.51 4891.27 5181.50          6397.00
Expenses
Water Charges recovery   4891.20 5146.01 4840.70 5011.00          5500.00
Old Loan Repayment       3208.47 2111.31      3711.40   4451.48   1879.51
Capital Expenses         1852.88 527.91       720.87    937.24    1561.00
                         (Pench-3)                      JNNURM    JNNURM
        NAGPUR WATER SUPPLY:
          Status before JNNURM
       Measurement      Losses       235 mld
       Losses 125 mld   20 mld   Commercial losses/
                                 theft/metering error
         Raw water
Losses               TREATMENTDistribution
         Purchase
In canal             500 mld  480 mld                   Recovery
         625 mld
                                                        200 mld

                                   Physical Collection
140 mld                            losses    Losses
       SYSTEM EFFICIENCY : 32%               45mld
       Annual Loss (W/O Dep): Rs 56 crore
       With Depreciation    : Rs 75 crore (appx)
    Water sector Challenges: NMC
• Water Losses and UFW
• Equitable distribution (Alternate day / 20 hrs/day)
• Accountability
• Water to Slums (inefficient system)
• Water network coverage and inadequacy of network
• Water supply management during summer peak demand
• Old and inefficient assets
• Delay in capacity augmentation for future demand from
  Limited water sources.
• Capital availability
• Low water tariff and Poor billing mechanism.
• Lack of professional approach.
    NMC Strategy

 Inadequate                 Unsatisfied demand    AUGMENTATION
  maintenance of                                    •
                             Poor cost recovery        Strain on water
  existing assets                                       resources
 Lack of operational                               •   Additional capital
  expertise                                             expenditure
                                  STRATEGY
 High UFW
 Strain on Water             • REFORMS IN WATER
  Resources                          SECTOR
 Tariffs not rational
                             • INVESTMENT SUPPORT
                                  FROM JNNURM
                              • IMPLEMENTATION
                              THROUGH PPP MODE
                                                          FUNDING
                                                        CONSTRAINTS
 MISMATCH BETWEEN                                        THROUGH
 INCREASING NEEDS &           FUNDING BURDEN ON
                                                        COMMERCIAL
DECREASING RESOURCES              NMC/STATE
                                                          SOURCES


BWSSB-NOV '96
    NMC Strategy for Reforms in Water
                 Sector
•   Fixing of Benchmarking and Performance indicators through Water audit,
    Energy audit & Financial reforms.
•   UFW/NRW reduction program with investment plan
•   Assets Up gradation plan for better serviceability and efficiency
•   Cost reduction program (Energy, Water & O & M Cost)
•   Improvement in services to consumer special emphasis to urban poor
•   Implementation of augmentation plans with inbuilt efficiencies.
•   Low cost Funds / Grant from Jn-NURM/ Tax free bonds/ PPP
•   Performance based contract with 5 to 25 years of O & M with private
    participation
•   Quality & Cost based selection criteria for contractors, consultants and
    Operators.
•   Rationalization of Water Tariff and Billing with Meterisation.
•   Capacity building of NMC employees by exposure and training.
•   Review of water supply master plan with inclusion of water reuse option

……………….. Moving towards Continuous Water Supply in Nagpur
                STEPS TAKEN BY NMC
        FOR BETTER EFFICIENYIN WATER SUPPLY
1. Water & Energy efficiency Project worth Rs. 96 crore
    has been approved and funds received from JNNURM
  i. Reduction in Raw water UFW by 100 mld (Annual
       savings of Rs. 2.0 Crore on investment of Rs. 35
       lakhs)
  ii. Water Audit & Leak Detection Phase-I of Rs. 28.0
       Crore. (Step towards bringing down the UFW to less
       than 25%)
  iii. Energy Efficiency Program of Rs 25.00 Crore is
       under implementation. (Reduction in energy
       consumption by 20%)
  iv. Up gradation & Expansion of Distribution Network of
       Rs 43 Crore (To increase the coverage of piped
       water network to 100% and equitable distribution of
       water)
                 STEPS TAKEN BY NMC
       FOR BETTER EFFICIENYIN WATER SUPPLY
2.   Pench-4 : Aug. water to supply project through reduced
     water losses in canal. : Rs 422 crore has been
     sanctioned under JNNURM (project cost increase to
     550 crore)
3.   New Water Supply Policy for Slums. To reduce UFW
     and service to urban poor.
4.   Rationalisation of Water Tariff. (To recover O & M Cost
     + Telescopic tariff for water conservation)
5.   Up gradation of Kanhan water supply systems (Project
     cost Rs. 83 crore sanctioned under JNNURM )
     (Optimum Utilisation of water resources)
6.   Water Reuse Projects under WENEXA-II: To make the
     region water surplus : Project cost Rs.131 crore
     sanctioned under JNNURM
7.   Resolution by General Body for PPP mode to
     implement 24x7 project
JNNURM      Cost    Completion Outcome
PHASE-1     In Rs
Projects    crore
Leak        3.30    Dec’2008    •Flow Meters from source to ESR
Detection                       •Reduction in BW –UFW to 2% from 23%
Water       25.00   June’2010   •24x7 for 15000 connection by Sep’09
Audit                           • Replacement of 20000 consumer meter
                                •Reduction in UFW < 25%
Energy      28.00   Dec’2008    •Replacement of All Pumps installed prior to
Audit                           Year 2000 with minimum efficiency of 70%
                                •Reduction in system head by 12m for Pench-1
                                •Centralized monitoring system
                                •Infrastructure for equitable dist.
Expansion 43.21     July’2009   •Connectivity to 572 layouts
of Network                      •Population over 2.0 lakhs will be covered in
                                piped water network
JNNURM      Cost    Completion Outcome
Phase-1     In Rs
            crore
Kanhan Up   87.65   Dec’2010   •New Plant of 240 mld and discarding the
gradation                      old plant of 120 mld with Pumps
Pench-4     210.00 Feb’2011    •Replacement of Canal by 2300 mm pipe
Part-1                         •Additional Raw water of 115 mld from
                               reduction in water losses in canal
Pench-4     70.80   Feb’2011   • New WTP of 115 mld at Godhani
Part-2                         •Trunk main up to MBR
Pench-4     87.68   Feb’2011   •Service Reservoirs 25 nos
Part-3                         •Feeder Mains 35 Km
Pench-4     174.00 Feb’2011    •Distribution system of 225 Km
Part-4
Total       729.64 Feb-2011    •Total Production Capacity 765 mld
JNNURM                         •Rehabilitation of old Pumps and WTP
Phase-1                        •10% of Area will be converted in to
                               24x7
      Water Tariff for Conservation and Sustainability

• Water Tariff for full cost recovery for sustainable water business.
• Subsidized Tariff to Urban poor and low domestic consumption 55 lpcd
• Tariff at cost for domestic consumption up to 135 lpcd
• Premium Tariff for domestic consumption beyond 135 lpcd and non
  domestic usage
• Indexation with raw water and energy charges. It enable to pass
  additional cost (70% of operating expenses) directly to consumer as
  surcharge.
• Tariffs are sufficient to meet Operating expenses and repay the loan for
  Jnnurm Projects
• Earning will be better with operational efficiency and reduction in Non
  Revenue Water.
Catagory        Old Tariff   New Tariff            Remark
                      Tariff Revision
                /1000 Ltrs
Residential     Rs 3 to 4    Rs. 8 to 15 for > 8   •Minimum charges
                             units per month as    Replaced by
                             per telescopic        Monthly access
                                                   charges (Rs 56 for
                             consumption
                                                   15mm)
Semi Residential NA          Rs 8 to 18 >8 units   Min access charges
                                                   are Rs 100
Institutional   Rs 12        Rs. 15 to 20
Commercial-1    Rs 20        Rs. 25 to 100
Commercial-2    NA           Rs 60 to 540          Mineral water +
                                                   Cold drink
Slum            Rs 25 PM     Rs. 30 to 80 PM       Kaccha, Concrete,
                                                   Multifloor
Indexation      NA           Energy + Raw water    Directly passing to
                                                   consumer as
                                                   surcharge
Annual Revision NA           5% to MC and 10%      No need to approval
                             to 25% to GB          from GOM
Action Plan Summary of Water Efficiency
       Projects & Tariff Revision
               Cash Flow
    Sr.   Description                  Rs. (Crore
    No.
    1     Total Investment including   730
          Augmentation
    2     Annual Savings /             71
          Additional Revenue
    3     NMC Share (30%+)in Loan 300
    4     Annual Burden                54.00
          (10 years repayment)

    5     Cash Surplus                 17.00
          NAGPUR WATER SUPPLY: Status After
            Implementation of JNNURM Projects

                         Losses        285 mld
                         5 mld     Commercial losses/
                                   theft/metering error
Raw water
                 TREATMENT Distribution
Transmission                                              Recovery
                 535 mld   530 mld
by Pipe                                                   200 mld

                                     Physical   Collection
                                     losses     Losses 45mld
Benefits after partial Implementation
•System Efficiency : 37% from 32%
•Reduced financial losses by tariff revision
•Increased water supply to distribution by 40 mld
Review of NMC Maintenance Record
                 Disconnected
                     HSC           Low Pressure
                     5%                3%
                            No             Polluted Water
              Valve        Water                 4%
              Repair        7%
               8%



     Pipe Repair &
        Fitting
          24%
                                              Leakage water
                                                  41%
            Borewell
              8%

                Customer Complaints
Review of NMC Maintenance Record
        300    350    400 450 500 600 700
    250
        1%     0%     1% 0% 0% 1% 2%
    1%

        200
        3%

                                              15
              150                            28%
              10%




                                                         20
                                                         3%
              100                                       25
              25%                                       2%
                                        50         40
                               80       7%         4%
                              11%
Pipe Size & Repairs
Review of NMC Billing Record
 No Bill, 6956,                PWR, 15220,
     3%                           7%

         Disconnect,
          3945, 2%


                                                Average,
                                               66380, 32%
                   No Meter,
                  30746, 15%


 Slum, 980, 1%
                      Reading,
                     36504, 18%
                                          Minimum,
                                         45594, 22%



             Consumer Billing Break up : 206356 nos
Analysis of DMA results for leak
            Detection

                          Consumers Test Zone
     Total No. of
        Conn.
      (Studied)
                    Legal       No Bill    ILLegal
                    Conn.       Conn.       Conn.


        4141        2866         536            708

        100%        69%          13%            17%
Analysis of DMA results for leak
            Detection

        Total Suply
                       Recorded NMC
       (m3/day) Bulk
                       Billing m3/Day
           Meter


           3794            1753



          100%              46%
Analysis of DMA results for
      leak Detection

          Losses in Network Upto
Commerci Consumer End (Physical
                                   Total Losses
al Losses  Losses +un identified
              Illegal Conn.)

Unit (m3)        Unit (m3)          Unit (m3)


  1373             674                2053


  36%              18%                 54%
             Analysis of DMA results for leak
                         Detection
                                  Summary of Metering Error For All Test Zones

                                                           Actual Study     Recorded
                                                                                                      Percenta
Sr. No.                 Zones              No. of Meters   Working Flow    NMC Billing   Difference
                                                                   3             3                     ge (%)
                                                           Meters m /Day     m /Day
  1       Dharampeth                           191            151.01          92.58        58.43      38.69%

  2       Laxminagar                           431            345.66         276.11        69.54      20.12%

  3       Dhantoli                             103             90.20          81.06         9.14      10.13%

  4       Hanuman Nagar                        184             84.59          93.58        -8.99      -10.63%

  5       Nehru Nagar                          238            110.86         119.50        -8.64       -7.79%

  6       Lakkadganj Zone                      179             89.53          69.08        20.44      22.83%

  7       Ashi Nagar                             7             4.38              1.99       2.39      54.61%

  8       Satranjipura (100% on avarage)         0             0.00              0.00       0.00       0.00%

                                   Total     1333.00          876.22         733.90        142.32     18.28%
    Source of Losses (Physical +
           Commercial)
• House service connection : 63% of reported
  leak complaint
• Old conservancy lane / G I Pipes
• Old Lead Joints / Valve leaks
• 70% of non working meters
• Illegal connections
• Poor quality of meters
• Absence of water accounting
          Strategy For Water Loss Control
                                                        Water Audit
                                                                   Leak Detection in Bulk water system (Supported by JNNURM)
Identification of the Water Losses (Technical & Commercial )       • Installation of Flow Meters (Supported by JNNURM)
                                                                   • Reduction in Raw water transmission losses (Supported by JNNURM)




                                      Pilot & DMA for Leak Detection
Pilot of 24x7 water supply project to reduce UFW in Distribution   DMA for leak detection plan to identify the causes (Supported by
               System (Supported by JNNURM)                                                  JNNURM)




                                         Full City Rehabilitation Plan
             Rehabilitation Plan Based on Water Audit and Pilot /DMA studies (Submission of this report to JNNURM)




                                    O & M Strategy for Sustainability
 Rationalization of Tariff for cost recovery (Revised by General    PPP for Technical & Commercial Efficiency through 25 years O
                               Body)                                & M lease contract ( EOI received from 10 prospective bidders)
      Pilot 24x7 Pilot Project
• Feature
  – 15000 Connection including slum
  – 10 slum areas
  – Population 1.5 – 1.75 lakhs
• Contract
  – Study, Rehabilitate, Operate contract with
    Private operator.
  – Penalty /bonus for targets in UFW, Quality,
    Customer services and Continuity of supply
  Pilot 24x7 Project :Baseline for Private
                 Operator
KPI                Baseline KPI                            Target KPI
UFW level          The NRW is assessed at 50%              UFW below 30%          for
                                                           proportionate bonus
Increase of volume Volume billed for FY 2006-07 = 21,7 Higher than baselines by
billed compared to MLD on average.                        10% for bonus
FY 2007-08         This value shall be used for the cost-
                   benefit analysis of the rehabilitation
                   plan.
                   The baseline KPI for the assessment of
                   bonus/penalties during O&M will be
                   based on FY 2007-08 data.
Continuity      of 2 to 24 hours depending on the area of 24/7 throughout the zone
supply             supply                                 with      minimum        2m
                                                          pressure at customer tap

Water Quality      63% of samples tested had a residual Residual chlorine higher
                   chlorine level higher than 0,2 ppm   than 0,2 ppm

Time for handling Not applicable                           Within 3 days
customer
complaints
Rehabilitation Plan for Pilot 24x7
• Replacement of 100% House service
  connection & Meters
• Replacement of old conservancy GI pipe
• Rehabilitation of Tertiary network
• Hydraulic modeling as per Master plan
• Installation of new billing system
• Customer Facility centre
 24x7 WATER SUPPLY : OBJECTIVES
      “Water for all and 24 x 7 supplies
      with focus on safety, equity, and reliability”.
• Continuous water supply at desired
  pressure.
• No Contamination of water
• Reduction in water losses
• Better Accountability
• Better Service to Consumer
• Sustainability of system
    Investment for Rehabilitation
         JNNURM Phase-2
• Replacement of House connection
• Replacement of consumer meters
• Replacement of deteriorated pipes and
  fittings
• Rehabilitation of ESR/GSR.
• Rehabilitation of Pench-II WTP
• Rehabilitation of Misc component
• Implementation of Slum Policy
 Public Private Partnership in JNNURM
                 Projects
• Project Finalized Under JnNurm
   – Pench-I WTP Improvement & Up gradation (Rs 6.42 Crore)
       • 70% grant in aid, 30% by private operator
       • 5 Years O & M by operator
   – Water reuse For Power Plant (Rs 130 Crore)
       • 70% grant in aid, 30% by Mahagenco
       • 30% O & M by Mahagenco & pay to NMC the raw sewage charges
         @ Rs3.0 – 3.50 per 1000 Ltr for 110 MLD. Annual revenue to NMC
         Rs 15 crore from sewage
   – 24/7 Water Supply (Rs 20 Crore)
       • 5 years O & M with performance based targets to reduce UFW and
         improvement in service level to customers in a pilot zone of 1.25
         lakhs population.
   – Improvement to Kanhan Water Supply (Rs 65 Crore)
       • 70% grant in aid, 30% by private operator
       • 15 Years O & M by operator
   – Water Distribution Monitoring System
        Implementation Options


• OPTION-1 : INVEST JNNURM MONEY KEEPING EXISTING
  MANAGEMENT PRACTICES AS IT IS WITH ASSUMPTION
  THAT ALL PROBLEMS ARE WITH PUMP AND PIPES.

• OPTION-2 : INVEST JNNURM FUND IN THE WATER SUPPLY
  SYSTEM AND IMPROVE THE MANAGEMENT &
  ACCOUNTABILITY.
          PPP Definition and Basic
                 Principal
• Public Private Partnership
• Partnership
    – Ownership : NMC
    – Operation: Private
    – Investment: Both
•   NMC to decide Tariff
•   NMC to decide Development Plan for City
•   Private Partner to Operate the system.
•   Private Operator to earn profit through
    efficiency in Implementation and operations
      Private Participation in Water Sector
                 :Exist in NMC

• All new assets created since 1999 is managed though service
  contract.
• Existing assets also managed thru service contract for
  Pumping station/ WTP O&M / Valve operations/ Billing
  distribution/ Annual maintenance contract for Zonal level
• Disadvantages
   – It is only a labor contract replacing retired employees.
   – No link with performance
   – No accountability towards consumer
   – Short term Contracts break up in small parts with no
      feasibility for private investment
   – Contractor motivated for providing short term solution
  Private Participation in Water Sector
             :Exist in NMC

• Advantage :
  – Reduced number of NMC employees as of now 80% of
    assets managed by private contractors
  – Short term annual contract can be replaced by better
    contract
  – Non performing contactor can be replaced by better one
  – Reduced O & M cost
  – Over the period of time capacity building of local
    contactors in O & M
  – Prepared the ground for larger involvement of Private
    participation without affecting the NMC employees.
    Hence, less resistance for PPP.
     Proposed NMC approach for Private Participation for
                       entire city

• Rationalization of Tariff for full cost recovery and subsidy
  to urban poor.
• Political willingness
• Performance based contract for 25 years.
• Participation in capital investment from Operator
• Better service to consumer and emphasis on urban poor
• Asset ownership with NMC
• JNNURM funding for better viability of project and reduced
  cost of capital.
• All operational risk with Operator
• Inbuilt incentive for performance
              Regulatory Framework:
              Accountability and Mission of the
              Regulator                 Regulator to
                                                                             Ensure consumers receive
Commitment to meet                                                           expected level of service at
Full City 24x7 WS since
  2012 without tariff                                      RFOM Contract
                                                                             reasonable cost
        increase              NMC                            including
                                                                             Protect short term and
                                                       Service Performance
                                                        + Works Contract     long term interests of the
                                                                             Consumers
                             Regulatory                                      Provide certainty for
                               Office
                                                                             public and private
               Consumers
                                                                             investment
                    &                           Operator
                  other
               stakehoders
                                                                             Enhance accountability
                                                                             and transparency
                             Consumer Service                                Control the financial
                                Agreement
                                                                             performance
     The Regulatory Office set-up
• Regulatory Office set as an SPV created by the NMC. The
  participation of other stakeholders in the constitution of the SPV may
  be envisaged.
• Initial set up and annual operating budgets approved by the
  Parties chargeable to the Operating Cash Flow.
• Regulator appointed for 5-year contract extensible.
• Regulator personally accountable for prejudice to the Parties.
• Key Staff selected on the basis of merit references.
• Public access to all resolutions and statements of the Regulator on
  the RO Web Site.
NMC Expected Revenue from Tariff




             Operator’s Rate




                     EXISTING
PPP Lease/Concession
   Arrangements
          Proposed Transaction Structure (1/5)
Type of Contract        RFOM Concession Contract
                        NMC grants for special purposes the exclusive right of use of all
                        NMC’s Water Supply Facilities and undertakes the expansion works.
                        The Operator is appointed as Contactor for the realization of certain
                        works of rehabilitation and replacement of NMC assets and as agent
                        of the NMC to operate and maintain the Facilities and to perform
                        Water Supply services to consumers.
Contracting Authority   NMC represented by the Commissioner. Under the provisions of the
                        CNC Act and per Decision of the General Body,
Scope of Contract       The Operator to implement and co-finance first 5-year 350 crores
                        Rs investment programme while JNNURM provides for 70%
                        funding with grants (Up to Rs #245 crores).
                        The Operator, at its own risks and peril, to operate, maintain, repair,
                        and to replace warned-out granted Facilities and to provide piped
                        drinking water to consumers according to service levels target, to bill
                        and collect water charges on behalf of the NMC according to
                        Municipal By-Laws and Tariff Codes.
Duration and possible   25 years.
extension               Extension subject to approval from General Body.
       Proposed Transaction Structure (2/5)

Service Area/        The NMC grants exclusive rights to deliver water supply
Service Perimeter   in the Jurisdiction of the NMC.
                    The operator shall ensure access of any applicant located
                    less than 200m from an existing pipe to water services
                    conform to required service level and subject to compliance
                    with the By-Laws.
                     The NMC can request bulk water services to be provided
                    to communities located outside NMC jurisdiction.
Exclusivity         The NMC to provide with the water ressources input to the
                    water systems operated by the Operator
                    The Operator is granted the exclusive right
                        1. to use the municipal Facilities as required in order
                            to provide the Granted Services and
                        2. to provide and to bill water supply Services, and to
                            collect water charges as per By-Laws in the
                            Service Area
    Proposed Transaction Structure (3/5)
Service           The Operator is required to improve the financial and
Performance       operational performance of the water utilities and to
                  achieve specific service performance targets related to
                  service levels and to operational efficiency.
Set up of a       NMC to create a Regulatory Office RO in the form of
Regulator         an SPV which shall be granted regulatory functions.

Role & power of   To  protect short term and long term interests of the
the Regulator     Consumers, ensuring that the Consumers receive the
                  expected levels of service at a reasonable Cost in
                  compliance with the Contract.
                  To control the Operational and financial performance
                  of the Parties, and to provide certainty for public and
                  private investment
                   To enhance accountability and transparency in the
                  sector.
    Proposed Transaction Structure (4/5)
Tariff              Tariff Codes determined by NMC based on proper By-Laws
Adjustments        include adjustment routines to be implemented by
                   Commissioner of Standing Committee as the case would be.
                    Tariff revision to be decided by General Body on request of
                   NMC based on required investment program and the
                   assessment by independent auditor of actual tariff efficiency.
Operator’s         Single  Operator’s Rate applicable to volume of water supply
Remuneration       billed to and paid by the Consumers according to category of
                   service (standard, bulk).
                    In-built incentive to improving technical and commercial
                   efficiency as well as collection efficiency.
                   Split of Operating Income through Escrow Account.

Rates Adjustment    Standard adjustment based on formula referring to WSPIs
                   (Industrial Equipment, Salaries +Quarterly for Electricity & Raw
                   water Surcharges).
                   Extraordinary Adjustments by the RO relating to agreed
                   Business Plan, to be approved by Commissioner or by Standing
                   Committee as the case would be.
   Proposed Transaction Structure (5/5)

Governing law   The operator must comply with all Indian laws, regulations,
                orders and directives that may affect the lease contract.
Mechanism of    Independent    Regulatory Office to adjust rates, and to monitor
enforcement     contract performance.
                Penalties to be applied to the operator in the event of breach of
                its obligations under the Contract.
                 Performance bond in favor of NMC

                Power of attorney to be given to the operator to act against
                illegal connections and disconnect bad payers.
Resolving       Procedures & time table shall be strictly regulated under
disputes        applicable Indian Law by the lease agreement.

                   Mechanisms of arbitration by an Arbitrations Panel.

                Court   of Law (Mumbai)
       PPP implementation process
•   EOI for RFQ                   August-08
•   Pre RFQ meeting               9thSept-08
•   RFQ                         20th Sept-08
•   Pre Qualification             10thOct-08
•   Issue of RFP                  15thOct-08
•   Pre bid Meeting             10th Nov-08
•   Technical Proposal           15thDec-08
•   Evaluation of TP and RFB      15thJan-08
•   Financial Bids                20thJan-09
•   Closing                      Jan/Mar-09
•   DPR to JNNURM              15th Oct-08
          INTERESTED OPERATORS
               (submitted EOI)
•   Veolia Water + VIL
•   Jusco + Ranhill
•   IRVCL + Aqualia of spain
•   Bywater + Nagarjuna
•   Punack + Lanco
•   Manila water + Mahindra
•   Salcon + Maytas
•   KBL
•   ILFS with Seventrent
•   East water with Hydrocom
THANK YOU

								
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