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Karnataka Integrated and Sustainable Water Resources Management Investment Program: Feasibility Study

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Karnataka Integrated and Sustainable Water Resources Management Investment Program: Feasibility Study Technical Assistance Consultant’s Report Project Number: TA 7954 September 2012 India: Karnataka Integrated and Sustainable Water Resources Management Investment Program This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design. Karnataka Integrated and Sustainable Water Resource Investment Programme Urban Water Supply and Sanitation Component Draft Final Report Volume 2 Strategic Investment Plan September 2012 TA 7954–IND: KISWRIP Draft Final Report: Vol. 2 – Strategic Investment Plan September 2012 Foreword This Draft Final Report has been prepared as a deliverable of the PPTA-7954 IND: “Karnataka Integrated and Sustainable Water Resources Management Investment Programme – Urban Water and Sanitation Component”. This, the Second Volume, sets out a Strategic Investment Plan for improved water and wastewater service in the State of Karnataka as well as in the KISWRIP pilot Tundra-Bhadra sub basin. The Plan is based upon the detailed assessment made of four ULBs in the Tundra-Bhadra River sub-basin. During the course of the preparation of the Report, considerable advice, guidance and assistance has been provided by the Steering Committee and the staff of the KUIDFC, the local ULBs, KUWS&DB and by the engineering staff responsible for the existing on-going UWSS projects within the subject towns. This kind assistance, without which this Report could not have been produced, is herewith duly acknowledged and credited. In particular, the assistance and advice offered by the Managing Director of the KUIDFC and our Core Nodal Officer has been essential. Many of the recommendations made in the Institutional Road Map, and upon which the Strategic investment Plan is based, are theirs. I have merely taken their suggestions, polished them and fitted them into the overall context of the Programme. Tony Farrar PPTA Team: Team Leader & Water Sector Specialist Amit Basu Deputy Team Leader and Sewerage Specialist Jagan Kommareddy Replacement for Amit, following Amit‟s retirement due to ill health Sougata Datta Water Supply Expert Krishnan Padmanabhan Economic and Financial Expert Achyutha Rao Aleti Environmental Safeguard Specialist Saswati Belliappa Social Safeguard Specialist Arati Nandi Poverty & Social Development Specialist Alan Nightingale Water Engineer Fred Gould Wastewater Treatment Specialist Prepared under the guidance of Tatiana Gallego-Lizon, Principal Urban Development Specialist SARD/ADB ii TA 7954–IND: KISWRIP Draft Final Report: Vol. 2 – Strategic Investment Plan September 2012 1 KNOWLEDGE SUMMARY ....................................................................................................... 1 2 INTRODUCTION TO THE PROJECT .......................................................................................... 7 2.1 BACKGROUND TO THE PROJECT ...................................................................................................... 7 2.2 PROJECT DELIVERABLES ................................................................................................................ 7 2.2.1 MFF Sector Road Map ......................................................................................................... 7 2.2.2 Feasibility Studies ................................................................................................................ 8 2.2.3 Program Implementation Plan and Materials ................................................................ 8 2.3 SCOPE OF THE DRAFT FINAL REPORT ............................................................................................... 8 2.4 ADB POLICY AND EXPERIENCE IN INDIA ........................................................................................... 8 3 PROJECT RATIONALE ........................................................................................................... 10 3.1 PILOT SUB-BASIN ...................................................................................................................... 10 3.2 DEFINITION OF SUB-SECTOR ........................................................................................................ 10 3.3 STAKEHOLDERS AND THEIR ROLE IN PROJECT .................................................................................. 11 3.3.1 Regulation ......................................................................................................................... 13 4 GOVERNMENT SECTOR POLICY & INITIATIVES ..................................................................... 14 4.1 LEGAL FRAMEWORK ................................................................................................................... 14 4.2 NATIONAL POLICY ...................................................................................................................... 14 4.3 STATE POLICIES FOR THE SECTOR .................................................................................................. 18 4.3.1 Draft Cabinet Paper .......................................................................................................... 19 4.4 PUBLIC/PRIVATE PARTNERSHIPS .................................................................................................. 19 5 ISSUES FACING THE SECTOR & KISWRMIP PROPOSALS ......................................................... 20 5.1 OVERVIEW OF ISSUES ................................................................................................................. 20 5.2 COMPARISON OF KARNATAKA URBAN SERVICE STATUS WITH NATIONAL STANDARD AND AVERAGE ........ 20 5.3 COMPARISON OF KARNATAKA URBAN SERVICE STATUS WITH NATIONAL STANDARD AND AVERAGE ........ 28 5.4 ROAD MAP PROPOSALS .............................................................................................................. 36 5.5 OUTLINE OF PROPOSALS MADE IN ROAD MAP ............................................................................... 36 5.6 SUMMARY OF ISSUES AND PROPOSALS .......................................................................................... 38 6 OPPORTUNITES FOR PPP AND RE-USE OF WASTEWATER FINAL EFFLUENT ............................ 41 6.1 PUBLIC PRIVATE SECTOR PARTICIPATION ....................................................................................... 41 6.2 RE-USE OF WASTEWATER FINAL EFFLUENT .................................................................................... 42 6.2.1 State Unit for Wastewater Re-Use .................................................................................... 43 7 FINANCIAL ASSESSMENT OF ULBS ....................................................................................... 44 7.1 INTRODUCTION ......................................................................................................................... 44 7.2 FINANCIAL STATUS OF FOUR TOWNS ............................................................................................ 44 7.2.1 Summary of Financial Data of Subject ULBs ..................................................................... 44 7.2.2 Sector Operation and Maintenance .................................................................................. 46 7.2.3 Collection Efficiency .......................................................................................................... 47 7.2.4 Accounting Standards and Status of Auditing .................................................................. 47 7.3 RING FENCING WSS SERVICE UNITS IN ULBS ................................................................................. 47 7.4 FINANCIAL MANAGEMENT ASSESSMENT ....................................................................................... 48 iii TA 7954–IND: KISWRIP Draft Final Report: Vol. 2 – Strategic Investment Plan September 2012 8 ECONOMIC DEVELOPMENT ................................................................................................. 50 8.1 INTRODUCTION ......................................................................................................................... 50 8.2 URBAN SECTOR ......................................................................................................................... 50 8.3 EXISTING SITUATION ASSESSMENT ................................................................................................ 50 8.4 SECTOR COMPOSITION OF GSDP ................................................................................................. 51 8.5 MAJOR ECONOMIC ACTIVITIES OF KARNATAKA ............................................................................... 52 8.6 FUTURE GROWTH ...................................................................................................................... 53 9 STATE ECONOMIC ANALYSIS ............................................................................................... 55 9.1 ECONOMIC ANALYSIS ................................................................................................................. 55 9.1.1 Assignment of Resources to Local Bodies ......................................................................... 55 9.2 ECONOMIC ANALYSIS OF A SECTOR LOAN ...................................................................................... 56 9.2.1 Rationale for Government Involvement ............................................................................ 56 9.2.2 Goals of the Programme
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