Surat (Gujarat)

Workshop on Wastewater reuse and recycle: The Need of the Hour

PPP project in waste-water re-use Surat Gujarat

Delhi April 18, 2012

ICRA Management Consulting Services Limited Background

 Project developed as part of an ADB-GoI-GoG initiative • ADB interaction with Ministry of Urban Development, Government of India and Government of Gujarat • Focus on developing PPPs in water supply/waste-water recycling

 Focus on sewage re-use for meeting industrial demand • Tested interest / conducted preliminary profiling • Identified ideal sewage treatment plant - industry cluster combinations • Looked at projects in Surat and Ahmedabad, but dropped Ahmedabad due to inadequate interest from industry stakeholders

 One of the fastest growing cities in India • Population ~ 4.5 million • 3% CAGR since 1980

 Good basic infrastructure provision • 100% water supply / sewerage in old city • Infrastructure provision in extended areas was underway.

 Among the progressive ULBs in country

PANDESARA • Ranked high on water, sanitation indictors INDL. AREA

BAMROLI • Investment Grade rating STP • Won 4 National level Urban awards under the JNNURM in 2009.

1. Water shortage as an impending threat • Dependence on River Tapi • Shortage as early as 2015

2. High Industrial water demand • Pandesara ~100 MLD (~ 13% of total) • High TDS in ground water • SMC supply only 55 MLD; remaining from PANDESARA INDL. AREA tanker/ other sources BAMROLI STP 3. Bamroli STP just 5 km from Pandesara • 100 MLD capacity / 65% capacity utilisation

Recycling the Secondary Treated Water and supplying to Pandesara Industrial Estate emerged as a logical win-win project to look at

Industrial Grade Water 40 MLD scalable 100 MLD Tertiary to 80 MLD Bamroli Pandesara Capacity Pandesara Treatment STP WDS Users Plant Potable Quality Water 15 MLD Capacity Water from SMC supply 75 MLD

Existing facility New Facility to be developed, Rehabilitate, Maintain, Use maintained and used

1. Operation and Maintenance of Bamroli STP. 2. Construction, O&M of Tertiary Treatment plant. 3. Construction, O&M of Transmission networks. 4. Rehabilitation, O&M of existing sumps at Pandesara 5. Rehabilitation, O&M of existing distribution network at Pandesara

6. Construction, O&M of potable water network © IMaCS 2012 Printed 19-Apr-12 Page 5 Project Structure

Private Operator SMC

Distribution network Equity Improvement Grant Land for setting TT Debt Plant

DBFOT concession Minimum Off Take – Take or Pay Project SPV SMC Compensation by SMC to SPV for bulk supply User level Contracts for water supply

Compensation based Build Operate Maintain on metered supply TT Plant and Transmission network Pandesara Build Operate Maintain Rehab Operate Maintain Supply Potable Industries New Potable Water Distribution Network quality water and Network for IG Water supply Industrial Grade Water

All Assets of the Project SPV transferred to SMC at the end of the Concession Period

 Perceived threat of revenue loss to SMC • Tertiary treated water complemented rather than replaced SMC supply • Contractual flexibility to expand tertiary treatment capacity in future

 Willingness to pay • Estimated price (@ Rs. 16 – 18 per kl) in vicinity of prevailing price of water

 Payment security by SMC • 100% off-take commitment and collection risk • Creation of a Payment Reserve Account

 End-to-End solution • Operator responsible for delivery of water and network performance • O&M of STP to be transferred to Operator

Preparation Approvals Bid Process

April 08 Nov 08 Aug 09 Nov 09 Jul 10

Feasibility Presentation to SMC Standing Bids received Placed for evaluation SMC Standing Committee and Preferred SMC initiated Committee GB approvals Bidder approval but Identified filed and process suspended

 Transparent, competitive and successful bid process;

 5 bids received; 4 qualified after shortlisting and technical evaluation

o Triveni Engineering - Rs. 18.2

o Vatech Wabag - Rs. 21.9

o JUSCO - Rs. 24.9

o ILFS Water - Rs. 39.6

 Two unsuccessful bidders sent in written appreciation to SMC on the process

The Times of India 1 July 2010

The Times of India Jan 18 2012

1. Wastewater reuse not just ‘desirable’; but a ‘strategic water security imperative’ • Mandatory targets for Re-use may be necessary; • MoUD’s SLB norm of 20% wastewater re-use is a good starting point • Larger cities (esp. with water scarcity issues) should aspire to do a lot more • Closed loop evaluation: Pumping water from 300 km away or tertiary treatment & re-use?

2. Rational pricing is a pre-requisite to incentivize wastewater reuse • Recover at least O&M costs from ‘residential’ users; • Freshwater tariffs for industry should be set high enough to make recycling worthwhile • Limit groundwater abstraction and use for industry

3. At a Project level, appropriate / balanced risk sharing is critical; In general, • ULBs / utilities should not bear Technology / Operating risk • Off-take/ Demand risk should be retained with the ULB or with User; should not be passed onto Private Operator to the extent possible.

Anand Madhavan Head Energy and Urban Infrastructure IMaCS [email protected]