COMMERCE

PROJECT

2020

SUBMITTED BY:
MANAN MULLICK
XI-C
 INDEX

1) what are PPP

2) Mumbai Metro
3) Karnataka Urban Water Supply
Treatment programme
 ACKNOWLEDGEMENT

I would like to express my special thanks of gratitude to my teacher Mrs

Seema as well as our principal Dr Deepak Arora who gave me the

opportunity to do this wonderful project, which also helped me in doing a lot

Of research and I came to know about so many new things, I am really

Thankful to them. Secondly I would also like to thank my parents & friends

Who helped me a lot in finalising this project within limited time frame
 CERTIFICATE

This Is to certify that Ms Manan Mullick of XI-C of Ann

Mary School, Dehradun has completed this project under

My supervision , he has taken keen interest and shown

Utmost sincerity in completion of the project, she has

Successfully completed the project of commerce upto

My expectation and as per guidance issued by CISCE

————————- ————————
(Mrs Seema Saini). ( Ext. Examiner)
Subject Teacher
 INTRODUCTION
I will be doing two topics In my commerce project, one on

“ upcoming infrastructural projects” and “ public private

partnership

In this I will research about the different projects and

Companies to
 TOPIC-1

“ Identify Two Public Private

Partnership Projects”
 What Are PPP?
Public-private partnership (PPP), partnership between
an agency of the government and the private sector in
the delivery of goods or services to the public. Areas of
public policy in which public-private partnerships (PPPs)
have been implemented include a wide range of social
services, Public Transport , and environmental and
waste-disposal services.Although PPPs are an ancient
phenomenon, they were not studied seriously by
scholars until the late 1980s, when they began to be
adopted in public administration and management in
both developed and developing countries. PPPs have been
a topic of political controversy and scholarly debate,
especially regarding the advantages and disadvantages
of PPPs in comparison with traditional government-run
services and the nature of the partnerships they bring
about.In its most basic sense, a partnership is any
business or institutional association within which joint
activity takes place. A PPP exists from the
moment one or more public organisations agree to act
concert with one or more private organisations. PPPs
embrace public-sector partnerships with both businesses
and organisations in civil
society,including community organisations,
voluntaryorganisations, and (NGOs).
The partnership involved in a PPP is not equivalent to
any simple contractual relation. Although such relations
are sometimes labeled “partnerships” by the parties
concerned, they do not by themselves constitute a
genuine PPP, which implies a triadic relationship
between the public authority, the private-sector
partner, and members of the public concerned with the
service. A PPP is—or should be—a
mutually beneficial agreement directed toward serving
a social purpose But it is also true that a multiplicity of
agreements or contracts, more or less formal in nature
and sometimes very informal, may give rise to a genuine
partnership. The most-institutionalised forms of
partnership may evolve into formalised permanent
structures. In practice, PPPs tend to change over time,
because it is in the nature of a partnership to develop
and to adapt to the special circumstances of its
particular field of operation. In the latter regard,
political cultures and traditions have considerable
impact.It is possible to distinguish between substitutive
and collaborative forms of partnership. Under
substitutive partnership, the private partner replaces
the public agency more or less completely, as has
happened in the French system of outsourcing public
services. Under collaborative partnership, typical of
German organisations, each private partner has a
specific function, which is determined by the particular
profession with which the partner is associated.PPPs
have been widely adopted. Indeed, in many developed
countries (e.g., the United States, the United Kingdom,
France, Italy, and the Netherlands), their use has been
mandated through legislation. In France, for example,
the PPP concept is of quite long standing, and, since the
1980s, PPPs have been implemented in almost all areas of
public policy.Concerning the international level and
developing countries, partnerships between
international donors and nongovernmental development
organisations (NGDOs) have also increased in scope and
significance. The World Bank has sought to cooperate
with NGDOs as partners, and several reports and
evaluations have called for improvements in World Bank
procedures regarding partnerships with NGDOs.
PPP Projects That Will Be
Discussed:-

1) Mumbai Metro

2) Karnataka Urban Water Supply Improvement

Programme
1) Mumbai Metro:-
PPP structure of the Project
A concession agreement on BOOT basis for a period of 35
years, including a
construction period of 5 years, has been awarded by
the MMRDA. Under the
concession agreement, the operator has to design,
finance, construct, operate, own
and maintain the first corridor and transfer the
ownership and assets at the end of
the concession period.
A Special Purpose Vehicle (SPV) named Mumbai Metro One
Private Limited
(MMOPL) has been formed with Reliance Energy Limited,
Veolia Transport and
MMRDA holding equity stakes of 69%, 5%and 26% ,
respectively.
This project was one of the first projects in mass
transportation systems being
implemented on a PPP basis in Maharashtra. The
government thus felt the need to
closely monitor the project and took a 26 percent stake
in the SPV implementing the
project. This allowed the government to have 3 members
on the board of the SPV
and ensured that it would be able to effectively
monitor and influence decisions on
financing, design and construction for the
project. The MMRDA will contribute equity
to the tune of Rs. 134 crore for this 26 percent stake in
the SPV during the
construction phase of the contract.
The assets of the project include the viaduct, stations,
bridges, depot, rolling stock,
signalling system, traction and Supervisory Control and
Data Acquisition (SCADA)
system, communications systems, track work, fare
collection system, etc. All these
are owned by the SPV. The assets shall be constructed
or procured through
contractors and equipment suppliers. For example, the
signalling system shall be
installed by Siemens while the communications system by
Thales Inc. and the rolling
stock shall be procured from CSR Nanjing. The land for
the depot has been taken on

a long term lease which is renewable from the owners

of the land. The SPV holds
the exclusive rights to develop and use the land for
the MRTS Project.
 Project Description
To address both present and future public
transportation needs, the Government of
Maharashtra (GOM) through the Mumbai Metropolitan
Region Development
Authority (MMRDA) has planned a 146 kilometre long rail
based Mass Rapid Transit
System (MRTS) for Mumbai.
This project is the first corridor of the proposed
MRTS. The Versova Andheri
Ghatkopar line shall be an elevated line with a route
length of 11 kms, with 12
stations and a car depot situated at D.N. Nagar. The
line will have a minimum
curvature of 100 meters and minimum ground clearance
of 5.5 meters. The length
and width of the coaches that shall ply on the route
will be 22 metres and 3.2 metres,
respectively. Other technical features of the project
include 25 KV AC overhead
equipment, cab signalling with automatic train
protection, and a maximum speed of
80 kmph with an average speed of 33 kmph.
Mumbai Metro One is going to run on a dedicated
elevated corridor and shall have high levels of comfort
for the passengers viz. fully air-conditioned world
class
coaches, provision for lifts and escalators at stations,
modern automatic fare
collection system and high levels of passenger security
systems.
The existing sub-urban trains connect the northern
and southern parts of the city.
This project will provide East-West rail based
connectivity to Central and Western
suburbs. The total time taken for the journey from
Versova to Ghatkopar would be
approximately 21 minutes, as against a typical time taken
of 90 minutes by other
modes of transport.

Current Status
The construction has commenced from February, 2008
and the project achieved
financial closure in October 2008. The completion date
for the project construction is
expected by mid 2011.
At present, the construction of the viaduct is
underway with 773 piles being dug up.
The construction of the Depot, Substation and Stations
has also commenced along
the route of the project. Work has also commenced on
the construction of 2
overhead bridges at Andheri Station and the Western
Express Highway.

Financing Information
The total project cost is estimated at Rs. 2,356 crores.
The project shall be financed
on the basis of a Viability Grant of Rs. 650 crores
contributed by the Government of
India (Rs. 470 crores being 20%of the project cost) and
Government of Maharashtra
(Rs.180 crores being 7.5%of the project cost).
The remainder is to be financed by 70%debt, 30%
equity. The private operator and
MMRDA shall provide equity contribution of Rs. 466
crores in proportion of their
equity stake. The private operator has also arranged
debt of Rs. 1240 crores for the
project. This has been tied up from a consortium of
banks led by IDBI, Corporation
Bank, Karur Vysya bank, Canara Bank, Indian Bank and
Oriental Bank of
Commerce. IIFCL (U.K.) is providing the foreign currency
loan for the project.

The cost of borrowing for the rupee component, which

constitutes about 75 per cent
of the total debt, will be 12.25 per cent, while the
foreign currency loan will be at 3.5
per cent above LIBOR (London Inter-Bank Offered Rate).
The loan has been
secured for a moratorium period of 2 years and a total
loan repayment period of 15
years.
The project has also taken into consideration a service
debt facility of around Rs. 70-
80 crore in the project cost to ensure that cost
overruns are taken care of during the
tenure of the project. Senior Lenders have also been
notified of and have approved
of these provisions.

Conceptualisation and Feasibility

The Government had been exploring the viability of
various mass transit systems
that are efficient, economically viable and environment
friendly. In this context, a
detailed feasibility study was carried out under the
Indo-German Technical Co-
operation by entrusting the consultancy work to TEWET
in association with DE-
Consult &TCS, during 1997-2000.
The study recommended a mass transit corridor from
Andheri to Ghatkopar as
potentially bankable and economically viable, after
examining a number of
alternative corridors and alignments. It was then
decided to bid out the project on
PPP basis.
To manage the transaction process, a consortium
consisting of Louis Berger as
technical consultants, Price Waterhouse Coopers (PWC),
Masons and Economic
Law Practices was appointed in 2003-04 to assist MMRDA.

Procurement
The project was approved by the Government of
Maharashtra in August 2004 and
global bids were invited in the same month for the
project through an Expression of
 Interest (EoI). Almost 150 bidders responded to the EoI
and a pre-bid meeting was
held in November 2004.
The suggestions of prospective bidders were
incorporated in the agreements being
prepared for the project. The bid process conducted
was essentially a two stage bid-
process, i.e. technical and financial stage.
Only those consortia whose technical bids met the
technical criteria were allowed to
submit financial bids. Technical bids were invited for
the project in May 2005. The
consortia that submitted bids were:
 Hindustan Construction Company and RITES
 Reliance Energy Limited and Connex-France
 Shaktikumar Sacheti Limited and Lingkaran Metro
 Siemens, L&T, Gammon, BEML
 IL&FS and ITD Thailand and Unity Infraprojects

The consortia which qualified to submit financial

proposals were:
 Reliance Energy Limited and Connex-France
 Siemens, L&T, Gammon, BEML
 IL&FS and ITD Thailand and Unity Infraprojects
Financial proposals were submitted in January 2006
only by the Reliance Energy
and IL&FS consortia. The Siemens consortium withdrew
their bid.
After the bid process, negotiations commenced with the
lowest financial bidder, i.e.
Reliance Energy and Connex France. Veolia Transport
and Hong Kong MRT were
the other members of the consortium providing
technical know-how. From February

to May 2006 negotiations were carried out with the

lowest financial bidder.
The REL-led consortium expected an Equity IRR of 26%
but the government was
able to negotiate for a lower return in line with
international experience. The
consortium finally agreed on an Equity IRR of 15%on
their investment. This brought
down the VGF to Rs. 650 crores.
An application for VGF was submitted to the Government
of Maharashtra in June
2006 after the successful bidder was chosen. The
project faced delays in obtaining
approval for Viability Gap Funding (VGF) as the project
was conceptualized before
the model concession agreement was put in place. Its
concession agreement was
based on the model concession agreement of National
Highways Authority of India.
Moreover, the Public Private Partnership Appraisal
Committee (PPPAC) at the
central government level had not been constituted till
that time and only tentative
guidelines were in place for the PPP agreements.
Therefore, at that time various
options to obtain grant funding were explored including
obtaining grant funding
through the JnNURM scheme. However, the JnNURM funds
were capped at 10%of
the project cost. The issue was finally resolved by
grant of VGF in the form of a
special one time grant given to the state. The GoI
agreed to give a special grant of
20%of the project cost. In addition, the GoM approved a
grant of 7.5%of project
cost. The documentation and approval process took some
time and the formal
approval for VGF of Rs. 650 crores was obtained much
later by January 2009.
 Development
The development phase of the project was initiated in
parallel to the VGF approval
process. Major milestones achieved in the development
phase are presented below:
 The SPV was incorporated in December 2006.
 The Engineering and Project Management Consultants, a
consortium of Parsons Brinkerhoff (USA) and Systra SA
(France) joined the team on February 14, 2007
 Signing of the Concession Agreement and Shareholders
agreement took place on March 7, 2007
 MMOPL and Government of Maharashtra entered the
State Support Agreement on April 20, 2007
 Construction commenced on February 8, 2008
 Financial Closure for the project completed on October 3,
2008
All major contracts for the project have been awarded.
At present, 90% of the Right of
Way has been handed over to MMOPL. Utilities, mapping,
condition survey, and the
work for utility shifting has been completed. 70%of the
foundation work has been
completed. Girder launching has started at certain
stretches. The construction of the
Depot, Substation and Stations has also commenced along
the route of the project.
 Work has also commenced on the construction of 2
overhead bridges at Andheri
Station and the Western Express Highway.

Key Learning and Observations

1. Expediting the bid process is critical to ensuring a good
response to the proposal: The entire bid process for
choosing the successful bidder took more than 2 years.
This led to a lesser number of bidders to bid for the
project. Similar hurdles were experienced in the bid
process for the Metro Line 2 as the concession
agreement was based on the model concession agreement.
This agreement however had to be tailored for use for
implementation of a metro system. These delays
resulted in only one bidder finally submitting a bid for
the project.
2. Delay in Obtaining VGF approval: There was substantial
delay in obtaining approval for VGF from the
Government. While this was attributed to the model
concession agreement not being in place, the PPP
Appraisal Committee not be constituted and only
tentative guidelines with respect to VGF approval being
available at the time, this issue was a deterring factor
for developers and is also likely to have impacted the
level of interest in the Phase 2 bid.
3. Delay in approvals can potentially derail the
project: There was a delay in obtaining approvals for
the over bridge that passed over the railway line from
 the railway authorities. This had the potential of
delaying the project schedule. This was due to the
railways exploring the feasibility of another project
invading the path of the metro line. However a quick
resolution of this issue ensured that work was able to
continue. It is recommended that authorities be
cognizant of all other upcoming infrastructure projects
that have the potential to affect operations of the
planned project while bidding out such projects and
resolve the same prior to the appointment of a
developer.
4. Land Acquisition process can lead to issues in the
project: The government committed that the land for
the project which essentially consists of land allocated
for the depot would be procured as per the land
procurement schedule provided in the agreement.
However, this land was under private ownership and
under dispute. This exposed the government to the risk
of land not being available for the depot thereby
bringing in a possibility of derailing the project. The
issue was finally resolved by the private owner of the
land agreeing to allocate 75%of the land for the
development of the project on the condition of the
government granting him the right to the Floor Space
Index (FSI) available over the entire plot of land for
25%of the land. This land has been provided on a
nominal lease rent to the concessionaire for the
concession period. It is recommended in the future
concerns such as these are addressed before the
project procurement stage itself to ensure smooth
functioning of the project.
5. Clear Specifications on Asset Transfer on
termination: On the termination of the project through
the efflux of time, 5 years before the expiry of the
concession period a survey of the assets would be
carried out to determine whether they are in working
condition as given in the agreement. The survey is to be
carried out by an independent engineer based on a
schedule of specifications on the condition of assets.
However, the schedule in the concession agreement does
not have clear and robust specifications. There is thus
a risk of a difference of opinion between the
concessionaire and the government and this can
potentially lead to a dispute. The government could
manage this better by incorporating clear and robust
specifications on the condition it would want the assets
to be handed over to the government.
6. Public Support for the project: For a project of this
magnitude, it is important for the government agency to
garner adequate public support to ensure smooth
implementation. MMRDA ensured adequate public support
for land acquisition and road expansion activities by a
dialogue with the affected individuals. Despite these
efforts, the project was susceptible to delays and
similar difficulties are also being experienced in phase
2 of the project.
7. Role of Good Project Preparation: The viability gap
funding used in the project (Rs. 650 crore) makes up a
significant component (27.5 percent) of the project
cost. This project cost has been shared between the
central and state governments. The initial quote
submitted by the successful bidder quoted an amount
(Rs. 1250 crore) which was subsequently revised to the
current figure through negotiations. Thus, there is an
increased need for good project preparation prior to
the procurement process to ensure that the fair bids
are received for the projects. This would eliminate
private operators colluding with each other and/or
speculative bids.
2) Karnataka Urban Water Supply
Improvement Programme:-
ProjectDescription:-
In 2005, Government of Karnataka (GoK) initiated a
water
supply service delivery improvement programme with
private sector participation at the local level. This
initiative was part of a larger project developed by GoK
to
improve the performance of the urban water sector by
providing high quality and sustainable services in all
the
Urban Local Bodies (ULBs) of the state. The project
termed as Karnataka Urban Water Sector Improvement
Project (KUWASIP) was designed and implemented with
funding assistance from the World Bank through the
Karnataka Urban Infrastructure Development and
Finance Corporation (KUIDFC), the nodal agency for
externally funding projects in Karnataka. These
projects
included both reform-based programmes aimed at
strengthening of the water supply and sanitation
sector of
Karnataka and also specific projects for increasing the
water availability and service delivery levels at the
ULB
level.
At the local government level, projects were identified
and three ULBs, namely, Belgaum (now known as
Belagavi), Gulbarga (now known as Kalaburagi) and Hubli
(now known as Hubballi)- Dharwad were selected for
implementation. These projects were aimed at
augmentation of the bulk water supply and improvements
to the distribution system. These objectives were to be
met by provision of a 24*7 water supply on a Public
Private Partnership (PPP) basis for a defined project
area.
A pilot project in five demonstration zones of the
select
three Municipal Corporations of Karnataka was taken up.
The project involved refurbishment/rehabilitation of
the
existing distribution network of the select five
demonstration zones in the three Urban Local Bodies,
followed by the operation and management of water
distribution systems in these zones on a PPP basis.
The project was structured such that a private
developer
was identified for undertaking the required
rehabilitation
works, and for undertaking the operation and
maintenance (O&M) of the distribution network for the
period of the contract. The funding for capital
investment
required that the rehabilitation works be compensated
by
the World Bank through KUIDFC, and the private
developer be provided a fee for undertaking the O&M
activity. The project was planned for a total time
period of
3 years and 6 months inclusive of both rehabilitation
works for the distribution networks and the operation
and
maintenance of the distribution system.

PPP Structure:-
The PPP contract for the project was essentially a
management contract
involving the following institutions:
(a) Beneficiary: the three ULBs viz. Belgaum, Gulbarga
and Hubli-Dharwad
Sponsor: the GoK through its two entities the Karnataka
Urban Infrastructure
Development and Finance Corporation (KUIDFC), and the
Karnataka Urban
Water Supply and Drainage Board (KUWSDB)
(c) Developer: the private developer responsible for
rehabilitation and
operations

Under the PPP structure, the private developer’s

responsibility included
replacement of the distribution pipelines, installation
of bulk water meters
and consumer meters, and setting up of a computerised
billing system. The
rehabilitation activity by the private developer was
funded by KUIDFC as a
capital grant amounting to INR 42 crores

Current Status:-
The contract was awarded in 2005 to Compagnie
Generale des Eaux, Paris,
France (now known as Veolia Water). The chosen
bidder was required to
undertake both the rehabilitation, and the operation
and maintenance activity
of the distribution network for the identified zones
in the three ULBs. The
distribution network rehabilitation activity was
completed by April, 2008, and
the operation and maintenance contract which became
effective soon after
the rehabilitation was continued until March, 2010.
The O&M contract with Veolia Water was renewed for a
period of 2 years until
March, 20122. Subsequent, contract for O&M of 24x7 water
supplies in the
Demonstration Zones, for the period 2012-2014, was also
renewed with
Veolia Water3.
The number of house service connections has increased
from 25,383 in 2010
to 28,951 as of April, 2015. The ULBs levied volumetric
user charges and the
basis of tariff fixing and revision was according to GoK
tariff order
All the performance metrics such as reduction in loss
levels, ensuring 100%
coverage to the existing and regularised connections,
etc. were achieved
during the O&M phase. All five zones met the objective
of continuity of supply
and connections increased by 50 per cent. Overall,
there was a five-fold
increase in revenue billed and approximately a seven-
fold increase in
revenue collected4.
Tenders have now been invited for O&M for a period of
1 year (April 1, 2015 to
March 31, 2016) 5.
Financing Information:-
The total cost for the construction/rehabilitation
activity was capped at INR
42 crores. The actual cost incurred against this ceiling
has been,
approximately, INR 32 crores. The ULBs did not bear the
debt burden for the
capital costs. Upon incurring the expenditure on capital
works for distribution
infrastructure and the costs of financing during
construction, the private
developer was reimbursed the costs from KUWASIP
funds via KUIDFC. The
operator fee of INR 22 crores was paid from the
revenues accruing to the
ULBs from the user charges collected. However, delays
during the course of
the implementation of the project, led to escalation in
the compensation to be
paid to the operator by KUIDFC and the operator fee was
increased to INR 28 crores.
Process Analysis:-
Inception:
The GoK with the assistance of the World Bank
launched an urban water
supply and sanitation sector reform process through
KUWASIP. One of the
objectives under KUWASIP was to bring initial
improvements in water supply
systems of the three ULBs of Belgaum, Gulbarga and Hubli-
Dharwad. For
furthering the same, five demonstration zones were
identified where specific
interventions were to be brought about under a 24x7
water supply system.
These three ULBs experienced poor water supply levels,
inclusive of non-
reliable water supply hours, and high level of leakages.

PPPProjectPreparation:
As a first level of preparatory activity, an assessment
of the project area was
undertaken by Tata Consultancy Engineering (TCE) to
ascertain the status of
the water supply service levels in the project area. As
per the assessment it
was identified that the water supply service delivery
standards were
extremely poor in the three ULBs. For instance, the
frequency of water supply
ranged between once in 7 days for Hubli-Dharwad to
once in 2 days for
Gulbarga, and on alternate days in Belgaum. Non-Revenue-
Water levels in
these cities were, on an average, higher than 50 per
cent.
This assessment was followed by estimation of capital
investment, and a
review of the financial position and capacity of the
three Municipal
Corporations. Given the low sustenance capacity of the
three Corporations, it
was decided to fund the capital investment required
for the rehabilitation
work from the KUWASIP fund

A project for rehabilitation, operation and maintenance

of a 24x7 water
supply system in the demonstration zones on a public
private partnership
basis was prepared with the following objectives:

works, a 24x7 water supply system can be implemented in

an identified area
activity
other areas
-economic benefits of the project

Development:
The project was planned in three phases as explained
below:

envisaged as 6
months during which the private developer was
required to first undertake an
assessment of the existing water supply system of the
zones in the three
ULBs. On the basis of the assessment, the private
developer was required to
prepare the draft investment requirement, and
prepare detailed designs.
During this period, the private developer was also
required to get the
approval from KUIDFC and KUWSDB on the designs
submitted.

spread over 9
months. During this phase, the private developer was
required to first
arrange for finances for the investment amount as
identified in the Draft
Investment Report approved by KUIDFC. As stated
earlier, this investment
amount was capped at INR 42 crores. Following the
receipt of approvals, the
developer was required to commence the construction
works for the
rehabilitation/ refurbishment activity. The activity of
issuing tenders,
selection of contractors and supervision of the
rehabilitation works was
expected to be managed by the private developer. During
the construction
activity, it was incumbent for the private developer to
maintain the existing
levels of water supply services to the consumers. The
private developer did
not disconnect the existing consumers during the
rehabilitation phase and
instead water was made available through the existing
lines and / or parallel
lines to all the zones. During this period, the private
developer was also
required to
 manage all installation works, provide service
connections to the customers
approved by the ULBs and demonstrate the efficient
working of the system
where the performance targets were being met. The
efficient working of the
system was subject to an audit by an independent
engineer appointed by
KUIDFC, and post approval, the private developer was
allowed to take over
the system for the operation and maintenance phase of
the project. It is to be
noted here that the private developer, during this
phase, also undertook a
consumer survey in the project zone to ascertain the
number and type of
connections which were to be provided. The private
developer identified the
authorised consumers and those which required
regularisation by the ULBs.
developer was
required to undertake O&M of the entire distribution
system for a period of 2
years. The tasks of the private developer entailed
provision of 25,000 direct
house service connections, a 24*7 supply of treated
water at a set pressure
level, reduction in leakages and redressal of consumer
complaints etc.

The total time allocated for these three activities as

per the RFP was 42
months. However, during the course of the
implementation of the project’s
rehabilitation works, there were delays in the course
of the construction
phase, and the demonstration phase for several
reasons such as delays in

obtaining permits from other utilities’ departments, for

digging and
construction activities, limited or poor co-operation from
the three ULBs in
information sharing, delays brought about due to the
unfavourable climatic
conditions during the construction phase, etc.
Additional delays occurred at
the time of commencement of the demonstration works
which was largely
caused due to the non-availability of the bulk water
supply by KUWSDB as per
schedule.

Further, during the O&M phase, assistance from the

ULBs was required by
the private developer for undertaking all the
improvement works and for
provision of all connections. However, the same was not
fully made available,
resulting in delays.

On account of all these factors, the total time period

was extended by 17
months as against what was envisaged in the RFP and
the total time
increased to 59 months against the initial plan of 42
months. As per the
contract, the private developer had to adhere to the
performance targets set
and any non-compliance would result in immediate
termination. There were
no separate set of penalties which were stated in the
contract. KUIDFC,
however, noted that the delays were largely caused due
to delays from the

client’s side i.e. from the ULBs and the KUWSDB, and
therefore no penalties
in this regard were imposed on the private developer.
Also, for the period of
extension, KUDIFC fully compensated the private
developer for additional
costs incurred due to time over runs. Therefore, the
operator fee increased
from INR 22 crores to INR 28 crores corresponding to
overruns for the
extended time
KeyChallenges
:
The project faced several challenges, some of which are
listed below9:

were essential for the

demonstration of service level improvements. Delay in
completion of such
prioritised
work has had serious implications.

replacement of entire
distribution network
of water supply, as the existing pipes could not
withstand the pressure, but
there was
resistance by KUWS&DB in accepting the new material
the State government
because of
public concerns raised in the demonstration zone.
iling amongst the
political class and the
public-related to
volumetric billing and usage of water meter- ULBs
adopted flat tariff for six
months so that in the meantime consumers could
moderate their
consumption and adapt to the billing system.
xtensive efforts were made to ensure local political
support for
regularisation of unauthorised connections, providing
new connections to

slum dwellers as per state’s pro- poor policy.

strategically placed
to put forth the right messages at the right time.
The private developer, however, still faced few issues
during the O&M phase
of the project. For instance, the private developer was
required to provide
direct connections to those consumers for whom
regularisation and
authorisation had been provided by the ULBs. These
had to be provided
within seven days of receipt of such a request by the
private developer.
However, the ULBs did not provide information on the
authorised consumer
list in a timely manner. Instead, at random intervals,
information was shared
on the connections to be provided by the developer. Due
to this developer
was expected to address too many requests in a short
time of seven days.
Another issue faced by the private developer was
related to demands for
provision of the services beyond the project area. Such
demands would have
had adverse financial implications for the private
developer.

To ensure effective operations and provide the

necessary assistance to the
private developer, KUIDFC played a very active role.
Project Improvement
Units (PIU) were established to coordinate the O&M
activity. Further a
technical auditor was appointed to oversee the O&M
works being undertaken
on the site. A few modifications were made to the
performance targets set for
the private developer based on practical conditions. For
instance, the private
developer was permitted to continue generation of flat
rate bills beyond the
stipulated period of six months since the ULBs did not
adopt a volumetric
tariff structure. The project witnessed initial
resistance from the general
public on account of apprehensions of private sector
involvement in provision
of water supply services; however, effective provision of
water supply
services in the demonstration zone of Belgaum resulted
in greater
acceptance of the project in the remaining zones.
Additionally, Non-
Governmental Organisations (NGOs) were involved in
awareness creation
among the general public regarding the project and its
ben
Key Learning and Observations

the project, it is i
mportant that the government undertakes a first level
service assessment of
the project area. This assessment should be able to
indicate the status of the
physical infrastructure and the service delivery gaps,
and later on the basis
of the assessment, ascertain the nature of
rehabilitation works required and
the investment needed. Such an assessment would give
a realistic picture of
the on ground situation to the government and also
post award of bids, to the
private developer. It is, therefore, important on the
part of the ULB to have
undertaken the following basic studies to assess the
ground situation before
performance parameters are developed and a private
developer is brought
in. These studies include: o Water audit studies
o Energy audit studies o Consumer survey
o Pre-feasibility studies

government: There
were project awareness activities, which were initiated
by KUIDFC, to
familiarise the consumers with the proposed project.
Additionally, several
NGOs and PIUs were brought together to facilitate
effective implementation
of the project. The project incorporated a strategic
communication during the
preparation and implementation phases of the project.
These strategies
involved door-to-door distribution of regularly updated
and frequently asked
questions, establishment of public information centres
so that transparent
access to information was made available to all
citizens, ward level meetings,
media tours, information sharing with media on a
regular basis, and paid-
advertisements to place factual information in the
public domain. During
these communications, NGOs played an important role in
the door to door
communications, so that local communities had a clear
understanding of the
project approach, project progress, billing and tariff
arrangements,
grievance redress arrangements, and user
responsibilities in a 24X7 water
supply system. These measures ensured consumer
ownership and
willingness to pay for the improved water supply13.

private developer at
various phases: The private developer needs to be
provided with maximum
cooperation in implementation of the project. It has
been observed that there
were delays during the demonstration phase of the
project due to the non-
availability of bulk water for supply by KUWSDB. Further,
the ULBs did not
provide sufficient and prompt information, and also did
not release the
payments due to the developer on time. It is important
that such payments
are made on time to the private developer. There were
also delays in getting
permits.

participating ULBs
is important: For the success of water supply projects it
is important that
there is project ownership by both the implementing
agency and the
participating ULBs. To identify what
13 Implementation Completion and Results Report, World
Bank, 2011

potential users want and what resources they are

willing to apply to finance
and manage installed systems, it is also required that
correct and relevant
information be collected during preparation.
Consultation and participation
of the consumers and other stakeholders are crucial
for successful
implementation of the project.

the project: It is critical

that the private developer be provided reasonable time
for achievement of
the various tasks enlisted under each phase of the
project. For instance, the
preparatory period-A of the project was 6 months long,
during which the
private developer was required to carry out a detailed
assessment of the
project area and develop designs on the basis of the
same. In the context of a
situation where the ULBs have a poor information base
of the existing
infrastructure level and service delivery status, it is
important that sufficient
time be provided to undertake a detailed assessment in
order to arrive at an
accurate situation analysis.

KUIDFC: The private

developer has provided training to the existing staff of
the three ULBs for
managing the system post hand over by the private
developer. It is important
that these skills are well absorbed by the officials and
the management of the
system understand well for effective implementation
and continuance of
smooth operations of the system by the ULBs.

of this pilot project was

that capital financing was provided by a development
agency (the World
Bank), and not by commercial sources.
carry out comprehensive
benefit monitoring and evaluation. The evaluation shall
focus on aspects like:
o Impacts on soil quality.
o Reduction in instances of water logging,
o Avoidance of cross contamination,
o Reduction in wastage of water at house hold level,
o Change in storage of water and other coping strategies
by the consumer, o
Improvements in the water quality,
o Specific health improvements,
o Changes in habits of personal hygiene,
o Changes in wastewater generation, before and after
the project.

used as a baseline for

project and reveal the impact of the project, and
highlight areas for improving
project performance.
proposal of up-scaling
24x7 water supply to the entire corporation areas of
Belgaum, Gulbarga and
Hubli-Dharwad at an estimated cost of INR 1,809 crores
has been approved,
vide Government Order No. UDD 244 PRJ 2013, dated
November 7, 2013;

under which, the World Bank’s share is 66 per cent

(INR 1,209 crores).
THE

END