Infrastructure Development Department (IDD) GOVERNMENT OF KARNATAKA Institutional strengthening & Sector Inventory for PPP Mainstreaming in Directorate of Municipal Administration (DMA) Preliminary Feasibility Report Chitradurga District – 6 Towns Water distribution network for six towns in Chitradurga district on PPP Mode July 2012 ICRA Management Consulting Services Limited Contents CONTENTS ........................................................................................................................................................ I EXHIBITS .........................................................................................................................................................III ABBREVIATIONS AND ACRONYMS ................................................................................................................. IV EXECUTIVE SUMMARY ..................................................................................................................................... 1 1. INTRODUCTION ....................................................................................................................................... 2 1.1 PROJECT IDEA ............................................................................................................................................ 2 1.2 SCOPE OF WORK ........................................................................................................................................ 2 1.3 APPROACH ................................................................................................................................................ 3 1.4 METHODOLOGY ......................................................................................................................................... 4 1.4.1 Project Conceptualisation ................................................................................................................. 4 1.4.2 Operational Framework .................................................................................................................... 4 1.4.3 Financial Viability .............................................................................................................................. 4 1.5 STUDY OF EARLIER REPORTS IN THIS SECTOR IN THE RELEVANT AREA ...................................................................... 4 1.6 REPORT STRUCTURE AND CONTENTS .............................................................................................................. 5 2. SECTOR PROFILE ...................................................................................................................................... 6 2.1 SECTOR OVERVIEW ..................................................................................................................................... 6 2.2 REGIONAL PROFILE ..................................................................................................................................... 7 2.3 DEVELOPMENT NEEDS, PUBLIC NEEDS & PLANNING CONSIDERATIONS ................................................................. 8 2.4 KEY ISSUES ................................................................................................................................................ 8 3. EXISTING WATER SUPPLY INFRASTRUCTURE ........................................................................................... 9 3.1 WATER SOURCES IN CHITRADURGA DISTRICT ................................................................................................... 9 3.2 EXISTING WATER SUPPLY INFRASTRUCTURE .................................................................................................... 9 3.2.1 Chitradurga City .............................................................................................................................. 11 3.2.2 Hiriyur Town .................................................................................................................................... 11 3.2.3 Challakere Town ............................................................................................................................. 11 3.2.4 Holalkere Town ............................................................................................................................... 11 3.2.5 Hosadurga Town ............................................................................................................................. 12 3.2.6 Molalkarmuru Town ....................................................................................................................... 12 3.3 SERVICE LEVEL INDICATORS ........................................................................................................................ 12 3.4 WATER TARIFF AND REVENUE COLLECTION .................................................................................................... 12 4. CASE STUDIES AND BEST PRACTICE ....................................................................................................... 13 4.1 OVERVIEW OF CITY WATER SUPPLY AND ITS MANAGEMENT ON PPP MODELS ....................................................... 13 4.2 CASE STUDY - HUBLI DHARWAD, GULBARGA & BELGAUM - 24*7 .................................................................... 14 5. PROJECT BRIEF....................................................................................................................................... 15 5.1 PROJECT OBJECTIVE .................................................................................................................................. 15 5.2 DESCRIPTION OF THE PROJECT .................................................................................................................... 15 5.2.1 Project Scope & Components .......................................................................................................... 15 5.3 DESCRIPTION OF THE SITE .......................................................................................................................... 15 5.4 INTERACTION WITH STAKEHOLDERS ............................................................................................................. 16 5.5 STUDIES AND SURVEYS ALREADY AVAILABLE ................................................................................................... 16 6. RISK ANALYSIS, PROJECT STRUCTURING AND BID VARIABLE ................................................................. 17 i 6.1 INTRODUCTION ........................................................................................................................................ 17 6.2 CONTEXT IN CHITRADURGA DISTRICT ULBS ................................................................................................... 18 6.3 RECOMMENDED PPP MODEL AND DISCUSSION ON KEY STRUCTURING ISSUES ....................................................... 19 6.3.1 Recommended PPP model - Afferimage Contract .......................................................................... 19 6.4 INSTITUTIONAL ARRANGEMENT- ROLES AND RESPONSIBILITIES .......................................................................... 22 6.5 RISK ASSESSMENT/ MITIGATION ................................................................................................................. 22 7. PROJECT FINANCIALS ............................................................................................................................. 24 7.1 CONCEPT AND METHODOLOGY ................................................................................................................... 24 7.2 ASSUMPTIONS FOR FINANCIAL ANALYSIS ...................................................................................................... 24 7.2.1 Construction Period ......................................................................................................................... 24 7.2.2 Concession Period ........................................................................................................................... 24 7.2.3 Cost Assumptions ............................................................................................................................ 24 7.2.4 Water Demand/ Supply Assumption ............................................................................................... 24 7.3 SUMMARY OF FINANCIAL ANALYSIS RESULTS ................................................................................................. 24 7.3.1 Cost Estimation ............................................................................................................................... 24 7.3.2 Tariff Revenue Stream .................................................................................................................... 25 7.3.3 Viability Assessment ....................................................................................................................... 25 7.3.4 Scenario Analysis ............................................................................................................................ 25 7.4 CONCLUSION ........................................................................................................................................... 25 8. STATUTORY AND LEGAL FRAMEWORK .................................................................................................. 26 8.1 APPLICABLE LAWS .................................................................................................................................... 26 8.1.1 Central Legislations/ Acts: