24x7 Water supply project for nagpur city NAGPUR MUNICIPAL CORPORATION

1. DINESH RATHI & ASSOCIATES, NAGPUR [M.S.] INDIA PH. : 0712-2225566DINESH RATHI & ASSOCIATES, NAGPUR [M.S.] INDIA PH. : 0712-2225566

2. 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.

3. HISTORY OF NAGPUR WATER SUPPLY

4. RAW WATER SOURCES : (AS PER IRRIGATION DEMAND AGAINST NMC)

9. MASTER BALANCING RESERVOIRS

13. WATER SOURCES FOR NAGPUR WATER SUPPLY

14. COMAND AREA FOR Kanhan SOURCEPOPULATION : APPX. 0.8 MILLION

15. WATER DEMAND & SUPPLY

16. WATER SUPPLY MASTER PLAN

17. NEED FOR REFORMS IN WATER SECTOR

18. NMC Water Supply: Income Expenditure (in Rs.Lakhs)

19. NAGPUR WATER SUPPLY: Status before JNNURM

20. 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.

21. BWSSB-NOV '96

22. 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

27. 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.

28. Tariff Revision

30. NAGPUR WATER SUPPLY: Status After Implementation of JNNURM Projects

31. Review of NMC Maintenance Record

32. Review of NMC Maintenance Record

33. Review of NMC Billing Record

34. Analysis of DMA results for leak Detection

35. Analysis of DMA results for leak Detection

36. Analysis of DMA results for leak Detection

37. Analysis of DMA results for leak Detection

38. 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

39. WATER AUDIT FACTS WATER AUDIT IDENTIFIES HOW MUCH WATER IS LOST AND WHAT IS THE COST OF THAT LOSS. FACT-1 : NOT ALL WATER SUPPLIED BY NMC REACHES THE CUSTOMER FACT-2 : NOT ALL OF THE WATER THAT REACHES THE END USER IS PROPERLY MEASURED OR PAID FOR.

40. Strategy For Water Loss Control

41. 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

42. Pilot 24x7 Project :Baseline for Private Operator

43. 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

45. Continuous water supply at desired pressure. No Contamination of water Reduction in water losses Better Accountability Better Service to Consumer Sustainability of system 24x7 WATER SUPPLY : OBJECTIVES

46. Investment for RehabilitationJNNURM 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

47. 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

48. 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.

49. 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

50. 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

51. 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. Private Participation in Water Sector :Exist in NMC

52. 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

53. 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

55. Regulatory Framework: Accountability and Mission of the Regulator

56. 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.

59. PPP Lease/Concession Arrangements

60. Proposed Transaction Structure (1/5)

65. 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

66. 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