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GOVERNMENT OF INDIA

MINISTRY OF RURAL DEVELOPMENT

Draft document on role of District Rural Development Agencies


(DRDAs)
under
Provision of Urban Amenities in Rural Areas (PURA) Scheme

Role of DRDA in PURA projects

Table of Contents
1.

2.

Introduction.........................................................................................................................4
1.1.

Background .................................................................................................................4

1.2.

Process for implementation of the PURA scheme ........................................................5

1.3.

Developer selection process and current status of the project .......................................7

Transaction structure and project agreements.....................................................................10


2.1.

Transaction structure..................................................................................................10

2.2.

Concession Agreement ..............................................................................................10

2.2.1.

Key obligations of Concessionaire .....................................................................12

2.2.2.

Key obligations of the Gram Panchayat..............................................................13

2.3.

3.

State Support Agreement ...........................................................................................13

2.3.1.

Key obligations of the MoRD ............................................................................13

2.3.2.

Key obligations of the concerned State Government ..........................................14

2.3.3.

Key obligation of the Concessionaire .................................................................14

Obligations of District Rural Development Agency (DRDA).............................................16


3.1.

Creation of a dedicated bank account for each PURA project.....................................16

3.2.

Procurement and release of Scheme Funds.................................................................16

3.2.1.

Procurement of Scheme Funds ...........................................................................17

3.2.2.

Release of the Scheme Funds .............................................................................17

3.3.

Procurement and release of PURA Grant ...................................................................18

3.3.1.

Procurement of PURA Grant..............................................................................18

3.3.2.

Release of the PURA Grant................................................................................18

3.4.

Maintaining custody of the Performance Security ......................................................19

3.4.1.

Build-up schedule of Performance Security........................................................19

3.4.2.

Release schedule of Performance Security .........................................................19

3.4.3.

Appropriation of the Performance Security ........................................................20

3.5.

Role in the Dispute Resolution Process ......................................................................20

Role of DRDA in PURA projects

List of Figures
Figure 1-1: Scoring methodology ................................................................................................8
Figure 1-2: Qualified PURA projects for which DPRs have been received ..................................9
Figure 2-1: Transaction structure...............................................................................................10
Figure 2-2: Overview of the Concession Agreement..................................................................11

Role of DRDA in PURA projects

1. Introduction
1.1. Background
Lack of livelihood opportunities, modern amenities and services for decent living in rural areas
results in a sense of deprivation and dissatisfaction amongst a large percentage of population and
leads to migration of people to urban areas. This is primarily due to the wide gaps in the
availability of physical and social infrastructure between rural and urban areas. In order to
address these issues, the Government, in the past has launched various schemes at different
points of time. However, due to several reasons the impact has not been very visible. The
deliveries of these schemes were not simultaneous and although huge sums were earmarked for
capital expenditure, very little resources were spent on the operation and maintenance of the
assets. Also, each of these schemes operated autonomously and the standards set for
infrastructure services delivery in the rural areas was far below those for the urban population.
Hence, inspite of several schemes, there continued to be a substantial flow of migration from the
rural to urban areas. In order to catalyze the convergence between different infrastructure
schemes and create a new model for management of urban services in the rural areas, the
Provision for Urban Amenities in Rural Areas ("PURA") scheme has been developed.
The mission of the PURA scheme is holistic and accelerated development of compact areas
around a potential growth centre in a Gram Panchayat (or cluster of contiguous Gram
Panchayats) through Public Private Partnership ("PPP") framework for providing urban
amenities and livelihood opportunities to improve the quality of life in rural areas. The scheme
aims to provide urban amenities and livelihood opportunities in rural areas to bridge the ruralurban divide.
This aim of the PURA scheme is proposed to be achieved under the framework of PPP between
Gram Panchayats and private sector partner. Core funding shall be sourced from the convergence
of Central Government schemes and complemented by additional support through the PURA
scheme. The private sector shall also bring on board its share of investment besides operational
expertise. The PURA scheme would be implemented and managed by the private sector on
considerations of economic viability but designed in a manner whereby it is fully aligned with
the overall objective of rural development. To attract the private sector, the scheme has a
project based design with well defined risks, identified measures for risk mitigation and risks
sharing among the sponsoring authority (Gram Panchayat), Government, State Government and
the Selected Bidder.

Role of DRDA in PURA projects

1.2. Process for implementation of the PURA scheme


The Concessionaire selected to undertake PURA projects shall identify a Gram Panchayat/a
cluster of geographically contiguous Gram Panchayats for a population of about 25,000 (twenty
five thousand)40,000 (forty thousand). Whereas, the cluster would be the project area, there
may be sub-projects to cover each of the Panchayats within the cluster. Alternatively, a large
single Panchayat could individually provide critical mass to make the project viable. The
coverage of the mandatory services should span across all the Gram Panchayats in a proposed
cluster. The Concessionaire is given the flexibility to identify and select the Gram Panchayat(s)
for undertaking PURA projects based on their familiarity with the area or past experience of
working at the grassroots level. In this identified PURA area, the Concessionaire shall plan for
the development/re-development of selected infrastructure services along with economic
activities, after undertaking baseline studies.
Identified Infrastructure and Urban Amenities: A list of infrastructure, urban amenities and
economic activities to be provided under PURA are as follows:
Mandatory - under MoRD
schemes or through self
financing

Water and sewerage

Village streets

Drainage

Solid waste management

Skill development#

Development
economic activities#

of

Under Non-MoRD schemes Add-on Economic


as local conditions permit
projects to generate
(Illustrative list)
economic and livelihood
opportunities*
(Illustrative list)

Solar village street


lighting

Telecom

Non conventional
electricity generation,
etc.

Village linked tourism

Integrated Rural Hub,


Rural Market

Agri common service


centre and warehousing

Any
other
rural
economy based project

* At least 1 (one) such activity would be included in the project


#

An activity from the list of Add-on Economic projects could be included in the activities
undertaken hereunder

Role of DRDA in PURA projects

Amenities under Ministry of Rural Development (MoRD) Schemes: The Concessionaire shall be
responsible for delivering amenities and services such as water and sewerage, construction and
maintenance of village streets, drainage, solid waste management and skill development under
the following ongoing schemes of the MoRD: Special Projects for Skill Development of Rural
Youths under Swarnjayanti Gram Swarozgar Yojana (SGSY), National Rural Drinking Water
Programme (NRDWP), Total Sanitation Campaign (TSC), etc. For development of economic
activities, support may also be drawn from the National Rural Livelihood Mission (Restructured
SGSY).
Amenities under Non-MoRD Schemes: The PURA may include schemes of other central
government ministries and state government ministries, that are available on tap as some areas
of critical infrastructure (urban amenities) necessary for the project are not within the purview of
the MoRD, such as Ministry of Panchayati Raj (Rural Business Hub scheme and others),
Ministry of New and Renewable Energy (for solar village street lighting and non conventional
electricity generation) and Ministry of Communications and Information Technology (for
telecom services) etc. The Concessionaire shall access the support under such schemes of
relevant Ministries other than MoRD and dovetail into PURA for delivering the identified urban
amenities.
Add-on Economic Projects: It is necessary that the Concessionaire creates a pipeline of
commercially viable and people centric projects in the nature of add-ons to the list of urban
amenities to be provided. It is mandatory that the Concessionaire undertakes at least 1 (one) such
Add-on Economic activity in the proposed project. The Concessionaire has to ensure that the
minimum size of such Add on Economic Facility or Funded Add on Economic Facility shall be
atleast 5% (five percent) of the capital component of project cost or Rs. 1 (one) crore, whichever
is greater (land cost is not included). However, the Concessionaire has the choice of undertaking
more than 1 (one) such activity. In the event a Concessionaire wishes to undertake more than 1
(one) Add on Economic activity or Funded Add on Economic activity, then the Concessionaire
has to ensure that the total cost of Add on Economic Facilities and Funded Add on Economic
Facilities shall not exceed 35% (thirty five percent) of the capital component of the project cost
(land cost is not included). To ensure delivery of all elements of the project, add-ons submitted
as part of the Detailed Project Report (DPR) shall become essential/mandatory. Such add-ons
will generate economic and livelihood opportunities and are preferably developed in partnership
with the Gram Panchayat and may inter-alia include:

Role of DRDA in PURA projects

Village tourism projects that provide direct employment to locals and opportunities for
incomes to local artisans, performing artists, etc

Setting up good skill development institution this would link up with the economic activity
initiated in the project

Integrated rural business centres that will help the local economy to upgrade to commercial
scale

Each Project should have at least one such activity included in the project. In the event any
funding from any Government Instrumentality has been sought by the Concessionaire for any
Add-on Economic activity, then such activity shall be regarded as Funded Add-on Economic
Facility.

1.3. Developer selection process and current status of the project


Ministry of Rural Development (MoRD) has adopted a two-stage process for selecting Bidders
for the award of the Project. The first stage (the Qualification Stage) of the process involved
qualification of interested parties in accordance with the provisions of the Expression of Interest
issued by MoRD. MoRD issued the EOI on 15th April 2010, for which it received 93 responses.
MoRD, based on the evaluation of the EOIs, short-listed 45 bidders (Short-listed Bidders) for the
RFP stage.
In RFP stage of the bidding process, the short-listed Bidders were evaluated on the basis of their
technical capability in terms of infrastructure experience and community oriented project
experience and assigned scores as per the evaluation methodology in the RFP. The short-listed
Bidders were required to submit a concept plan detailing the components as envisaged under the
PURA scheme and in line with the philosophy of the PURA scheme. The concept plan received
from various Bidders were evaluated by a project screening and monitoring committee
established by MoRD and scored and ranked as per the criteria set out in the RFP.
The Bidders would then be ranked on the basis of their total score i.e. experience score and
concept plan score and the highest rank Bidders would be issued the Letter of Intent. The
following figure depicts the scoring methodology adopted by MoRD.

Role of DRDA in PURA projects

Figure 1-1: Scoring methodology


Total
Total Score
Score
1000
1000
Experience
Experience

Concept
Concept Plan
Plan

600
600

400
400

400
400

Community
Community
Oriented
Oriented
200
200

Min
Min experience
experience
>=
>= Rs.
Rs. 50
50 crores
crores
84
(83.5)
84 (83.5)

Min
Min experience
experience
>=
>= 11 project
project
40
40

For
For experience
experience
>=
>= Rs.
Rs. 240
240 crores
crores
400
400

For
For experience
experience
>=
>= 55 projects
projects
200
200

Infrastructure
Infrastructure

 Bidder/
Bidder/ Lead
Lead Member
Member to
to meet
meet minimum
minimum financial
financial capacity
capacity (Net
(Net
worth)
worth) of
of Rs.
Rs. 25
25 crores.
crores.
 Bidder
Bidder needs
needs to
to achieve
achieve minimum
minimum 50%
50% (200
(200 points)
points) for
for his
his concept
concept

Uniqueness
Uniqueness &
&
Quality
Quality of
of Concept
Concept
100
100
Coverage
Coverage of
of
Mandatory
Mandatory Services
Services
50
50
Coverage
Coverage of
of Non
Non
MoRD
MoRD Schemes
Schemes
100
100
Impact
Impact on
on local
local
livelihood
livelihood
50
50
Sustainability
Sustainability
100
100

In response to the final RFP documents, nine bidders responded by submitting 14 bids. On the
evaluation of the bids, MoRD qualified 11 bids who met the eligibility requirements of the RFP
document. MoRD issued the Letter of Intent to the qualified bidders and asked them to prepare
the Detailed Project Reports for their respective PURA projects.
The Detailed Project Reports (DPRs) for eight PURA projects have been submitted by the
qualified bidders to the MoRD. MoRD is currently undertaking the evaluation of the DPRs
submitted by the qualified bidders. The results of the evaluation will be presented to the Inter
Ministerial Empowered Committee (EC) constituted for the project. MoRD shall issue a Letter of
Award to the only those projects, whose DPRs have been approved by the EC. Post the issue of
the Letter of Award, the Concession and State Support Agreements shall be executed. The
following figure depicts the qualified PURA projects for which the DPRs have been received by
MoRD.

Role of DRDA in PURA projects

Figure 1-2: Qualified PURA projects for which DPRs have been received
Map for representation only

Dehradun

Uttarakhand

Jaipur
Rajasthan

Rajasmand

Warangal

4
Andhra
Pradesh

Malappuram
Thrissur

7
8

Krishna

Puducherry

Kerala

Role of DRDA in PURA projects

2. Transaction structure and project agreements


2.1. Transaction structure
There exist two main relationships in the project, viz (1) Relationship between Gram Panchayat,
District Rural Development Agency (DRDA) and Project SPV for the development of the PURA
Project; and (2) Relationship between Ministry of Rural Development (MoRD), the State
Government and the Project SPV. The following figure depicts these relationships:
Figure 2-1: Transaction structure
Private
Developer

Concession
Agreement

DRDA

(selected by MoRD)
Equity

Set-up and operate


a dedicated bank for
each PURA project
Amenities
and Add-on
projects

PURA Grant

MoRD

Through

SPV

DRDA

Release of MoRD
share under MoRD
schemes
Facilitate release of
GOI share in funds
sanctioned under
non- MoRD schemes
State Support
Agreement

Release of State
govt. share in funds
under MoRD & nonMoRD schemes
through DRDA

Access, Land,
Core facilities,
Clearances
/approvals

Gram
Panchayat(s)

State
Govt.

These relationships are governed by the Concession Agreement and the State Support Agreement
respectively and shall be operational for a concession period of 13 years.

2.2. Concession Agreement


The Concession Agreement shall be executed between the Gram Panchayat(s), the
Concessionaire and the District Rural Development Agency (DRDA). The overview of the
Concession Agreement is presented in the figure below.

10

Role of DRDA in PURA projects

Figure 2-2: Overview of the Concession Agreement


Appointed
Date
Signing of
agreement

Commercial
Operations
Date

180 days Effective

Date
Fulfillment of
Conditions
Precedent

Scheduled
Project
Completion Date

Expiry
of the
Agreement

Project
Completion
Certificate

3 years

Construction Period

10 years

Operations Period

Concession Period

As highlighted in the above figure, out of the total concession period of 13 years, three years
have been allocated for development of the project facilities and 10 years for operating and
maintaining the same. The Concessionaire under this Agreement shall be granted to oblige or
entitle to:
1. Access and license to Site A (for executing its obligations relating to MoRD and non MoRD
schemes);
2. Develop, design, engineer, finance, procure, operate and maintain the Project facilities;
3. Right to collect user charges for facilities under MoRD schemes and non MoRD schemes at
such prevailing rates sanctioned by Gram Panchayat and/or state government;
4. Right to decide the rate, charge and collect user charges for add on facilities;
5. Right to lease/sub-lease the add on facilities;
6. Purchase or acquire on lease, on its own cost, land for Site B for add on facilities;
7. Not to use the land for any other purpose other than the purpose specified in the Agreement;
and
8. No right to mortgage Site A, facilities under MoRD and non-MoRD schemes.
The following paragraphs highlight the obligations of the parties to the Concession Agreement,
except the obligations of DRDA, which are detailed in the subsequent section.

11

Role of DRDA in PURA projects

2.2.1. Key obligations of Concessionaire


The key obligations of the Concessionaire are as follows:
1. Design, engineer, finance, procure, construct, develop, operate and maintain the
Project facilities;
2. Utilize the PURA grant and scheme funds received for the purpose of this Project
only;
3. Submission of Performance Security;
4. Completion of the Project facilities as per the project milestones in the approved
DPR;
a. Damages applicable if project is delayed beyond Scheduled Project
Completion Date (SPCD);
b. Delay beyond 180 days from SPCD, Gram Panchayat has the right to
terminate the agreement.
5. Ensure commitment of other members [not less than 11% of the equity stake] whose
technical capacity has been evaluated during RFP stage till 2 years from Effective
Date;
6. Operation and Maintenance obligations:
a. Provide services to users, as per the service standards and operations and
maintenance manual, on a non-discriminatory basis to all users irrespective of
caste, community and creed;
b. Operate and maintain the Project facilities as per the approved DPR and
standards and specifications;
c. Collect and appropriate user charges for add on facilities;
d. Collect and appropriate the user charges for facilities under MoRD and nonMoRD schemes as per prevailing norms and practices of the Gram Panchayat
and State Government;

12

Role of DRDA in PURA projects

e. Comply with complaint handling procedure approved by the Gram Panchayat;


and
f. Adhere to documentation requirements under each scheme and provide
necessary reports to respective authorities.

2.2.2. Key obligations of the Gram Panchayat


The key obligations of the Gram Panchayat are as follows:
1. Facilitate in the procurement of applicable permits;
2. Assist the Concessionaire in obtaining access to necessary infrastructure facilities and
utilities;
3. Permit the peaceful use of Site A for mandatory facilities; and
4. Grant approvals on the work completed by the Concessionaire, to enable release of
the scheme funds and the PURA grant.

2.3. State Support Agreement


The State Support Agreement shall be executed between the Ministry of Rural Development
(MoRD), the concerned State Government and the Concessionaire. The key obligations of each
are highlighted below.

2.3.1. Key obligations of the MoRD


The key obligations of MoRD under the State Support Agreement are as follows:
1. Release the sanctioned installment of the PURA grant to the dedicated bank account
operated by DRDA as per the schedule;
2. Release the sanctioned installment of the scheme funds [share of MoRD only] to the
dedicated bank account operated by DRDA as per the schedule;
3. To ensure that Scheme Funds are provided even in the event of expiry of the scheme
before the achievement of Commercial Operations Date;
4. Authorize DRDA to receive and release the share of the ministries in the non-MoRD
schemes applicable to the Project.

13

Role of DRDA in PURA projects

2.3.2. Key obligations of the concerned State Government


The key obligations of the State Government under the State Support Agreement are as
follows:
1. Enable access for the Concessionaire to Site A (For MoRD and Non MoRD
facilities);
2. Provide Applicable Permits to the extent the State Government is entitled to issue in
respect of facilities under MoRD and Non-MoRD schemes;
3. Facilitate the Concessionaire, on best effort basis, in procuring Applicable Permits
from any other Government Instrumentality;
4. Assist the Concessionaire in obtaining access to infrastructure facilities and utilities;
5. Release the share of the State Government funds related to schemes of MoRD and
non-MoRD facilities governed by the State Government to the dedicated bank
account on receipt of request from DRDA;
6. Ensure timely release of Scheme Funds and PURA Grant by DRDA after certification
from the Independent Engineer and concurrence of the Gram Panchayat;
7. Scheme Funds to be provided even in the event of expiry of the scheme before the
achievement of Commercial Operations Date;
8. Facilitate obtaining necessary approvals from concerned authorities for the Project;
9. Extend the necessary assistance to the Gram Panchayat for discharging its obligations
under the Concession Agreement;
10. Nominate a government official from any Government Instrumentality, under its
control, to act a single point of contact for the Concessionaire.

2.3.3. Key obligation of the Concessionaire


The key obligations of the Concessionaire under the State Support Agreement are as
follows:
1. Compliance to all applicable laws and permits;

14

Role of DRDA in PURA projects

2. Compliance to the provisions of the Concession Agreement and the Project


Agreements;
3. Compliance to the State Support Agreement;
4. Maintain a project account for all receipt and payments related to the Project and get
the same audited by a statutory auditor;
5. Undertake to provide the necessary documentation, utilization certificates, reports,
etc. as required by the schemes guidelines.

15

Role of DRDA in PURA projects

3. Obligations of District Rural Development Agency (DRDA)


As highlighted in the earlier section, the District Rural Development Agency (DRDA) is a party
to the Concession Agreement and shall have the following obligations.

3.1. Creation of a dedicated bank account for each PURA project


1. The DRDA shall, within 180 days from the Appointed Date, create a dedicated bank account
for each PURA project.
2. All the funds, constituting the Scheme Funds and PURA Grant, shall be credited to such
dedicated bank account in accordance with the terms of the Concession Agreement.
3. The DRDA shall operate and maintain such dedicated bank account in accordance with the
provision of the Concession Agreement and shall not use the account for its own or any other
purpose.
4. The interest that shall accrue on the funds lying on deposit in such dedicated bank account
shall be used in connection with the performance of obligations of Gram Panchayats under
this Concession Agreement in accordance with the instructions and directions of the Ministry
of Rural Development (MoRD). Such amount shall be termed as the Risk Fund.
5. Subject to the provisions of the Concession Agreement, upon termination of the Concession
Agreement, all amounts standing to the credit of the dedicated bank account shall be:
a. returned to MoRD in case of the MoRDs share of Scheme Fund under the MoRD
Schemes and the PURA Grant;
b. returned to the Government of the State in case of the States share of the Scheme
Fund under the MoRD Schemes and the non MoRD Schemes;
c. returned to the relevant Government Instrumentality (other than MoRD) in case of
Scheme Fund available under the non MoRD Schemes; and
d. returned to MoRD or in accordance with its direction in case of any other amounts.

3.2. Procurement and release of Scheme Funds


Scheme Fund means the cash support available for the Project under the relevant MoRD and/or
the non MoRD Schemes as per the funding mechanism mentioned in the respective Scheme
Guidelines. The Scheme Funds sought by the Concessionaire, for its PURA project, shall be

16

Role of DRDA in PURA projects

quantified and detailed out in the Approved Detailed Project Report, along with the respective
payment schedules.

3.2.1. Procurement of Scheme Funds


1. The Scheme Fund shall be requested by the DRDA from the relevant Government
Instrumentality and released by the relevant Government Instrumentality to the
DRDA, atleast six months before its indicative release as specified in the Concession
Agreement.
2. DRDA shall deposit the Scheme Fund in the dedicated bank account maintained for
the PURA project.
3. It is to be noted that as a conditions precedent of the Concession Agreement, the first
installment of the Scheme Fund shall be requested by DRDA from the relevant
Government Instrumentality and released by the Government Instrumentality to
DRDA and deposited by the DRDA in the dedicated bank account within 180 days
from the Appointed Date.

3.2.2. Release of the Scheme Funds


1. The process of release of relevant installment of Scheme Funds, as per the approved
DPR, shall be initiated by the Concessionaire, by making a request to each of the
Gram Panchayats;
2. Along with the request, the Concessionaire shall submit a Utilization Certificate, as
per the format and terms of the applicable Scheme Guidelines;
3. The Gram Panchayat(s) shall forward this request, along with the necessary
documentation, to the Independent Engineer;
4. The Independent Engineer shall verify the documents submitted by the
Concessionaire. If the Concessionaire is performing its obligations as per the
Concession Agreement and has achieved the relevant milestones, then the
Independent Engineer shall issue a certificate to the Gram Panchayat(s) in this regard;
5. The Gram Panchayat(s) shall within one week of issue of such certificate give its
concurrence to the same;
6. Such certification by the Independent Engineer along with the concurrence of the
Gram Panchayat(s) shall then be submitted by the Concessionaire to the DRDA;

17

Role of DRDA in PURA projects

7. DRDA, within one week from receipt of the above certification, shall release the
relevant installment of the Scheme Fund to the Concessionaire.

3.3. Procurement and release of PURA Grant


PURA Grant is the capital grant available under the PURA Scheme to the Concessionaire subject
to a maximum of 35% of the project cost. The PURA Grant sought by the Concessionaire, for its
PURA project, shall be quantified and detailed out in the Approved Detailed Project Report. The
payment of the PURA Grant shall be governed by the terms of the Concession Agreement.

3.3.1. Procurement of PURA Grant


1. The Scheme Fund shall be requested by the DRDA from the Ministry of Rural
Development (MoRD) and released by the MoRD to the DRDA, atleast six months
before its indicative release as specified in the Concession Agreement.
2. DRDA shall deposit the PURA Grant in the dedicated bank account maintained for
the PURA project.
3. It is to be noted that as a conditions precedent of the Concession Agreement, the first
installment of the PURA Grant shall be requested by DRDA from the MoRD and
released by the MoRD to DRDA and deposited by the DRDA in the dedicated bank
account within 180 days from the Appointed Date.

3.3.2. Release of the PURA Grant


1. The process of release of relevant installment of PURA Grant, as per the approved
DPR, shall be initiated by the Concessionaire, by making a request to each of the
Gram Panchayats;
2. Along with the request, the Concessionaire shall submit the Performance Security
corresponding the PURA Grant installment, as per the format and terms of the
Concession Agreement;
3. The Gram Panchayat(s) shall forward this request, along with the necessary
documentation, to the Independent Engineer;
4. The Independent Engineer shall verify the documents submitted by the
Concessionaire. If the Concessionaire is performing its obligations as per the
Concession Agreement and has achieved the relevant milestones, then the
Independent Engineer shall issue a certificate to the Gram Panchayat(s) in this regard;

18

Role of DRDA in PURA projects

5. The Gram Panchayat(s) shall within one week of issue of such certificate give its
concurrence to the same;
6. Such certification and other documentation issued by the Independent Engineer along
with the concurrence of the Gram Panchayat(s) shall then be submitted by the
Concessionaire to the DRDA;
7. DRDA, within one week from receipt of the certification and the necessary
documentation from the Independent Engineer, shall release the relevant installment
of the PURA Grant to the Concessionaire.

3.4. Maintaining custody of the Performance Security


Subject to the terms and conditions of the Concession Agreement, the Concessionaire shall
provide a Performance Security for an amount equal to the sum of PURA Grant and 3% of
Project Cost. The Performance Security shall be provided in the form of a bank guarantee as per
the format specified under Schedule H of the Part III of the Concession Agreement. The bank
guarantee shall be addressed to the DRDA.

3.4.1. Build-up schedule of Performance Security


Further to the provisions of the Concession Agreement, the following build-up schedule
shall be adhered by the Concessionaire.
1. 3% of the Project Cost on the Appointed Date;
2. 25% of the PURA Grant within 180 days from the Appointed Date;
3. 25% of the PURA Grant after submission of 25% project completion certificate;
4. 25% of the PURA grant after submission of 50% project completion certificate for
the second installment;
5. 25% of the PURA grant on the Scheduled Project Completion Date or Commercial
Operations Date.

3.4.2. Release schedule of Performance Security


Further to the provisions of the Concession Agreement, the following release schedule
shall be followed by the DRDA.

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Role of DRDA in PURA projects

1. Performance Security amounting to 3% of the Project Cost on the second anniversary


of the Commercial Operations Date (COD);
2. Performance Security amounting to 15% of the PURA Grant each on 3rd to 7th
anniversary of COD;
3. Performance Security amounting to 25% of the PURA Grant after 120 days from
expiry of Concession Agreement.

3.4.3. Appropriation of the Performance Security


In the event of Concessionaire Event of Default, the Gram Panchayat, under the
provisions of the Concession Agreement, shall inform the DRDA to initiate the procedure
to encash the relevant amount of Performance Security. The encashment of the
Performance Security shall be made by the DRDA if it has been: (a) recommended by the
Independent Engineer; (b) concurred by each of the Gram Panchayats; and (c)
consequently, ratified by the Coordination Committee (excluding the Concessionaires
member). The Concessionaire shall replenish the Performance Security to its full value
as per the provisions of the Concession Agreement, within 30 days of such encashment.

3.5. Role in the Dispute Resolution Process


Any dispute, difference or controversy of whatever nature howsoever arising under or out of or
in relation to the Concession Agreement between the Parties and DRDA and so notified in
writing by either Party and/or DRDA to the other Party and/or DRDA shall be resolved through a
four level dispute resolution process under the Concession Agreement.
1. 1st Level: In the first instance, the resolution should be attempted through mutual discussion
between all Parties and the DRDA;
2. 2nd Level: Any dispute, which is not resolved within 30 days of a reference by any Party or
DRDA to the other Parties or DRDA, shall be referred to the Independent Engineer for
resolution;
3. 3rd Level: Any dispute, which is not resolved within 30 days of a reference to the
Independent Engineer, shall be referred to the Coordination Committee. The Coordination
Committee shall comprise of the District Collector and one representative each of the State
Government, DRDA, Concessionaire and each of the Gram Panchayats;
4. 4th Level: Any dispute, if not settled through the Coordination Committee within 30 days of a
reference to it, shall be referred to a committee under the chairpersonship of Joint Secretary,
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Role of DRDA in PURA projects

MoRD. This committee shall comprise of the one representative each of State Government,
DRDA, Concessionaire and each of the Gram Panchayats;
5. 5th Level: Any dispute, if not settled through the committee under the chairpersonship of
Joint Secretary, MoRD, within 30 days of a reference to it, shall be finally settled by
arbitration in accordance with the prevailing International Centre for Alternate Dispute
Resolution Arbitration Rules, 1996 (ICADR Rules).

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