Transcript Urban reforms

Sustainable water management
strategy with spotlight on Indian
Water Conservation experience
Case Study of Mysore Water
Distribution
Oct 13, 2011
by
G S Basu, Jusco, India
Agenda
I.
India Urban Water Scenario
II.
JUSCO Mysore Experience
III. Future of Sustainable Water Management in India
3
Demand for water in India is expected to rise
dramatically in the next few decades
Drivers of water usage increase
Population
Urbanization
 Population increase from 1.2 Billion in
2010 to 1.6 Billion in 2030 will directly
increase demand for water
Water Demand in India; 2010 - 2050
Cubic KM or Trilion Liters
 Increased urbanization from 30% to 50%
will create demand aggregation at select
points in India, sometimes away from high
water availability areas
Per Capita
Income
Increase
 Indian GDP is expected to grow causing
per capita income to rise from $468 to $
17366 by 2050. Increased per capita will
result in lifestyle changes, requiring more
per capita water. For e.g. water
consumption in US is 582 litres/person /
day compared to India’s ~90
Industrializati
on
 India’s industrialization increase will
increase demand for water – especially
increase in power, steel and other heavy
industries
Per Capita
Availability1,2
1,730
1,401
1: As per international norms, if per capita water availability is less than 1700 m 3 per year, country is water stressed and if the per capita availability is less
than 1000 m3, the country is water scarce
2: Using theoretical available water as a base for calculations
Source: Ministry of Water Resources, National Hydrology Institute, Roorkee , 'The Himalayan Challenge: Water Security in Emerging Asia, Strategic Fore
1,200
4
Resulting in a potentially significant demand
supply gap in the near future
Water Supply and Demand in India; 2010 - 2050
Cubic KM or Trilion Liters
River Basins in India, with water shortage, 2030
Percentage
Demand
1,000
Current
Supply
950
900
850
12% gap by 2025
800
+12%
750
700
Current useful
water supply
0
2010 2012 2014 2016 2018 2020 2022 2024 2026
Expected issue by 2015
2: EFR – Eastern Flowing Rivers; WFR – Western Flowing Rivers (non major rivers)
Source: Ministry of Water Resources, National Hydrology Institute
5
While India faces water shortage in near future, it
already is facing significant issues in Urban areas
Urban Water Requirement / Availability , 2007
Million Litres per Day
Water Supply in a day on average, 2000
Hours
Indian Population in Urban Areas, 2006 - 2025
Millions
+
Sewage and Waste Water Generation in Treatment, 2005
Million Litres per Day
?
Domestic
Industrial
1: 50 Asian cities benchmarked by ADB
Source: Ministry of Urban Development, United Nations handbook of benchmarks, Central Pollution Control Board, Asian Development Bank
6
India has one of the lowest water tariff and tariff
hike is a very sensitive issue
Common public perspective
to water in India
 With abundant rainfall and
extensive river systems,
India has historically been a
water rich country
 Water has been considered
“God’s gift” leading to water
not seen as critical or finite
resource that needs to be
managed
 Need to have a national
regulatory authority to
regulate water
consumption, as for other
natural assets such as air
spectrum, is not easily
conceived
Price to customers, 2009
USD per 1000 Litres
1.52
Germany
United
Kingdom
1.11
1.06
Turkey
United
States
0.52
0.42
Mexico
South
Africa
0.34
Chile
0.34
China
Indonesia
India
0.20
0.13
0.08
 Common
psyche about
water as a
“free resource
 There is a lack
of political will
to consider
increase in
water tariff
 Indian
Municipalities
rarely recover
their costs of
operations given
low tariff rates
7
Several municipal water bodies have poor operational
and financial health
Municipal Leakage and Metered Connections, 2010
Percentage, Millions
City
 ~45% of Municipal
water supply is
leaked - does not
generate revenue
 Connections not
metered in ~40%
cases
City
Size in
India
(Rank)
Average Meter Connection per Employee, 2003
Count
Leakage
(%)
Connections
Metered (%)
Nashik
21
60
80
Delhi
2
53
56
Nagpur
13
52
40
Hyderabad
6
50
na
Bangalore
3
45
96
Kolkata
4
35
10
Rajkot
25
23
na
Chennai
5
17
na
Mumbai
1
13
75
Operating Ratio, 2007
Source: Urban Water India, report by McKenzie-Ray, Asian Development Bank
 Operating Ratio is defined as
O&M Costs / Revenue
 Operating Ratio more than 1.0
indicates utility is not able to
recover even O&M costs
 Ideally a utility should have a
operating ratio less than 1.0
to cover for capital
expenditures
 Most Indian utilities are
performing poorly
8
Private participation is expected to help in the following
areas
Access to funds for capital improvement
Access to latest technology and tools including MIS
More efficient operations and improved operating ratio
Better consumer complaint handling systems
Experience of urban water management in other geographies
Knowledge and skill transfer to municipal body staff
9
Agenda
I.
India Urban Water Scenario
II.
JUSCO Mysore Experience
III. Future of Sustainable Water Management in India
10
JUSCO – A Comprehensive Urban Infrastructure
Service Provider
A TATA Enterprise
India’s only private sector integrated civic service provider
Services:
Purpose
 Water & Waste Water
Management
 Power Distribution and
Infrastructure
 Solid Waste Management
 Construction Services
 Integrated Maintenance
 Environment Management
Jamshedpur
A town built on a
promise
11
JUSCO has been recognized for excellence in Urban
civic services
National Urban Water Award for Consumer
Satisfaction, 2009
JUSCO received Global Water Intelligence Award
in London, 2008
Total Productive Maintenance (TPM) Excellence
Award held at Kyoto, 2008
Asian Water Management Excellence Award
2008
12
Mysore – A Heritage city in South India
Mysore City Facts
• Area: 128.42 km2
• Population: 1,000,000
• Location: 12°18′N 76°39′E
•Elevation: 763 metres (203 ft.)
Mysore Palace
Mysore History
Karnataka
•Demon Mahishasura supposedly
killed in this town
•One of the princely states at time of
independence
•Strong Arts Heritage
•“Cultural Capital of Karnataka”
k
Mahishasura
Mysore
Mysore Economic Profile
• Tourism Hot spot within Karnataka
•Large Software exporter
• Significant handicrafts industry
• Sandalwood carving, Bronze work,
•
Jayalakshmi Vilas
13
Mysore Water Distribution Background
Mysore Water Distribution
Background
Cauvery River
 Source of water Cauvery
river fairly dependable
 Civic Services administered
by a Municipal Corporation
(MCC)
 City Council has a Mayor and
Deputy Mayor; 65 elected
Corporators each
representing a Revenue
Ward.
 Core municipal area about 84
sq km. City expanding and
MUDA responsible for
planning & development;
Master plan area: 150 sq km.
 Karnataka Urban Water
Supply and Drainage Board
(KUWSDB) is responsible
for water supply
Mysore City
Corporation (MCC)
Mysore Urban Development
Authority (MUDA Boundary)
14
Mysore Water Distribution facing significant
issues…
Background for Mysore Distribution
 Bulk water production assets have
outlived age
 KUWSDB is implementing a bulk
augmenting arrangement
 Distribution system in the city dates
back more than 100 years
 18 Boosting stations provided to
provide pressurized water
 Around 20,000 unauthorized
connections over a base of 126,000
 ~ 80% meters not functional
 Tap pressure ~ 3-5 m, as opposed to
7 m, as per norms in India
Issues for Consumers
 Water available for 3-5
hours per day in West
Zone and every alternate
day in East Zone
 Water availability at
erratic hours – middle of
night, very early morning
etc.
 Inadequate water
pressure, requiring
people to install booster
pump on water lines
 Water contamination due
to old / rusted pipes
+
Issues for KUWSDB/MCC
 Inspite of a good water
source (Cauvery river)
being close, there is
additional cost borne for
bore wells and tankers to
meet customer demand
 NRW in excess of 40%
 Poor collections from
consumers
 Low tariff levels – many
consumers billed on avg
consumption because of
non functional meters
15
Mysore Civic bodies envisaged a program to solve
water issues through private participation

Name of Project……………


Job Description……………


Client………………………

Mysore City Corporation (MCC) & Karnataka
Water Supply & Drainage Board (KUWSDB)

Project Aim…………………

To enable a profitable Urban Local Body
(ULB); Reduce losses and improve consumer
experience by providing 24x7 water

Contract Start Date………

28/01/2009

Completion Time…………

72 months

Value………………………

Rs. 1,620 Million (~USD 36 Million)

Funding arrangement

JNNURM:State Govt:MCC – 80:10:10
24X7 Water Supply performance based
management contract in Mysore city.
Conversion of intermittent to 24/7 continuous
water supply system for 130,000 connections
16
Responsibility for entire water cycle to be shared
between public and private parties
Urban Water Supply Cycle
Abstraction /
Treatment
Party
Notes
KUWSDB/MCC
 Around 240 MLD
water bulk supply
from Cauvery river
tapped at 3 different
areas
 4 Water Treatment
Plants (WTP) under
management by
KUWSDB
Transmission
KUWSDB/MCC
 Bulk water to WTP
and Treated water
to Master Balance
Reservoir (MBR)
under scope of
KUWSDB
 6 MBRs to balance
water supply having
capacity of 126 ML
Distribution
Contractor (Jusco)
 170,000
connections of
which 120,000
authorized
connections
 1700 KM of piping
network
 Consumer
complaint handling
 Metering and Billing
 Revenue collection
improvement
Waste Water
Collection and
Treatment
KUWSDB/MCC
 Responsible for
waste water
collection and
treatment before
release to Cauvery
waters
17
Mysore Project to be executed in three
phases
Phase 3:
Management
Phase 2:
Rehabilitation
Phase 1:
Preparatory
•
•
•
•
• Operation,
and
• Operation, maintain and
maintenance
improve facilities and provision phase
of water services
• Implementation of Final
Study existing water
Investment Plan involving
infrastructure & service
procurement, construction
Prepare O&M plan
(new network, valves, meters,
Topographical and customer
customer connections, creation
survey for for compilation of
of DMA etc), commissioning
customer database
• Implementing Integrated
Hydraulic network modeling & Management Information
design for rehabilitating the
System (IMIS)
intermittent Supply network to
Continuous Water Supply
1 year
3 Years
 India’s largest
PPP project
covering a
population of 1
Million
 Rehabilitation of ~
1700 KMs of
pipeline, pump
stations, electrical
and allied work
2 Years
18
Salient Features of the Contract…
Revenue and Risk Sharing
 Tarriff fixed by Municipal body,
Operator to bill consumers and pass
the revenue to the municipal body
 Risk sharing between Urban Local
Body (ULB) and Contractor
 Investment risk with ULB /
Government (source of funds)
 Tarriff risk with ULB
 Design and Construction risk
with Contractor
 Performance risk with
Contractor
 Operation risk with Contractor
 Collection risk with Contractor
 Performance based management
contract
+
Performance Gurantees
 Contractor revenue linked to
several performance parameters
Performance
Parameter
Target
Number of connections
with 24x7
Progressive
Revenue Improvement
% improvement
over baseline
revenue
Revenue Water in 24x7
area
85%
Complaint Resolution
98%
Leakage Levels
25%
Quality Compliance
100%
Pressure Compliance
95%
19
JUSCO Approach for Project Execution
2a
1
 Work break down packages for execution
 Prioritizing the works for execution
 Implementation of Rehab plan
 Service level targets delivered in stages
 Manage Issues Relating to Change in supply
pattern to 24X7
Development of Capital
Improvement Plan
 Asset Mapping
 Measuring bulk inputs and
outputs
 Base lining of losses,
existing service levels
 Establishment of DMAs,
Water Balance
 Hydraulic Modeling &
Investment Plan
Rehabilitation of
existing network
2b
Operations and
Maintenance of existing
network
 Customer centre with SLGs defined
 Standardization of O&M practices
 Active leakage management
 Meter Management
 Incentive based billing and revenue collection
 Integration of mapping, billing, customer care &
network management
 Safety Management
 Total Productive Maintenance (TPM) Practices
20
Project close to mid point in duration
Connections, 2009 – 2014
Units
Contract Agreement –
28 Nov 2008
Project Start
Jan 2009
Start of 6 monthly
Performance Milestones
First Performance Target –
10k 24x7 connections
We are here
Next 6 monthly milestone of 70k
24x7 connections
Jan
2009
Jan
2010
12 months
Preparatory Phase
Jan
2011
Jan
2012
36 months Operation & Rehabilitation
Phase
Jan
2013
Jan
2014
24 months Maintenance
Phase
Jan
2015
Already improvement in consumer
Top factors in consumer satisfaction score*
satisfaction noticed
Water Quality
Percent
91
+40%
65
Consumer satisfaction score, 2009 – 2010
Percent
95
90
2009
2010
+14%
79
Water Availability
Percent
94
77
+22%
76
2009
Metering
Percent
2009
x
80
2010
95
+19%
60
2010
Importance to customers
*Out of 8 factors including others such as Collection, Billing, Safety Measures
and Behavior of staff
2009
2010
22
Agenda
I.
India Urban Water Scenario
II.
JUSCO Mysore Experience
III. Future of Sustainable Water Management in India
23
Indian Utilities face several challenges (1/2)
Challenges
1 Weak focus on customer
2 Low water tariff resulting in
poor recovery on investments
Possible way forward thru PPP approach
 Improve service delivery thru introducing robust operation
Management processes
 Consumer focus through 24x7 complaint handling and prompt
response
 Capture consumer data for decision making and providing
analytical support for solving issues thru IT enablement
 KPI for customer service level guarantee
 All connections to be metered backed up by efficient meter
management process
 Move from flat tariff to consumption based telescopic tariff
structure to reflect economic status of the consumer and the
usage, including subsidy tariff for “Lifeline supply” and facilitating
demand management
 Cross subsidy between domestic and industrial/commercial
connections in tariff structure
* Jawaharlal Nehru Urban Renewal Mission
24
Indian Utilities face several challenges (2/2)
Challenges
3 High operational costs and not
satisfactory staff productivity
4 High level of Transmission &
Distribution losses
5 Crumbling Infrastructure and
limited funds for capital
maintenance or service
improvement
Possible way forward thru PPP approach
 Adoption of technologies and good management practices
 Meticulous benchmarking of good practices and processes
 Ring fencing of accounting system
 Structured skill enhancement programme for ULB staffs
 Track and report NRW for every urban ward
 Active Leakage Management
 Physical audits to address illegal connection
 Improved revenue collections to improve funds availability
backed up by efficient IT enabled consumer billing process
 Possible corporatization for revenue and cost management thru
proper ERP module
 Support from State and Centre such as JNNURM*
 Support thru soft loan from multilateral agencies
 Last mile connection cost to be borne by consumers to reduce
investment
 Additional revenue thru NRW reduction and tariff restructuring to
repay loan and recover O&M cost
 Efficient use of assets with periodic good maintenance practices
 Efficient and innovative hydraulic modeling of network to reduce
capital investment
* Jawaharlal Nehru Urban Renewal Mission
25
How Private participation can help ULBs (1/2) –
example JUSCO’s experience in Jamshedpur
JUSCO was
formed as a
corporate
urban utilities
service
provider for
Jamshedpur
town in 2004.
Results (2005)
Baseline
Parameter
Unit
Population
Covered
% of Total
67%
85%
Metered
Connections
% of Total
~0
30%
NRW
%
36%
9.5%
Service
Guarantee
Compliance
% of Total
77%
99%
Failures in
Water Systems
No per Month
44
1.1
Operating Ratio
O&M Cost /
Revenue
1.07
0.82
Staff/1000
connections
Nos
> 8.0
4.03
Results (2010)
26
How Private participation can help ULBs (2/2) –
example JUSCO’s experience in Haldia
Parameter
JUSCO took
over Haldia
city water
supply as
BOT cum
Concession
agreement
with Haldia
Development
Authority
(HDA) from
Nov 2008.
Water
Production
Unit
Results (2008)
Baseline
Results (2010)
MGD
19.7
27
MGD
15.2
23.6
NRW
%
25%
9.7%
Service
Guarantee
Compliance
% of Total
NA
99%
Critical
equipment
availability
%
85
94
Water Sale
27
Private sector participation in urban water
management is becoming popular after initial
reservations
Graph Indicative
Overall momentum
for PPP in Water
Sector
Mid 90s
Interest
Activity
Key Projects
Source: CRISIL
* JUSCO Projects
Early 2000
Mid Decade
 High Interest by
Foreign Players
 New Concept for
Indian Companies
 Very little interest
 Ineffective push
from the
Government
 First initiatives
 Poor results and
lack of momentum
 Many projects
grounded
 Few projects
 Onset of
pessimism on
Water PPP
 Pune
 Hyderabad
 Goa
 Bangalore
 Sonia Vihar WTP
2010
2015
 Renewed interest
 High Government
by International
focus
Cos.
 Domestic Interest
 Increased
involvement by
Domestic Cos.
 High level of
Public and NGO
opposition
 High profile
projects grounded
 Many ongoing
projects
 Commercial
Success being
closely monitored
 Mumbai Kurla
East
 DJB Pilot
 Bangalore DMA
 Sangli
 Latur
 Madurai
 Chennai
 Nagpur
 Salt Lake*
 Mysore*
 Haldia*
28
Private Sector Expectations from Government
for Water Utilities Market Development
Develop regulations that assure certainty of future cash flows to the
extent possible
Provide political commitment for PPP as water is not perceived as a
simple commodity by either the consumers or the Government
Align economic interest of all parties
Accept that profit from water business is OK
Define PPP projects on a holistic basis
Encourage plurality of approach and establish a framework that accepts
failures
Offer a project with detailed project due diligence including adequate
stake holder engagement
Source: ILFS
29
Thank You
30