Alandur Sewerage Project

Public Private Partnership

Group 1, Section A

Amitesh | Narahari | S Giridharan | Pradeep | Subodh

ALANDUR- BACKGROUND

PPP

Brief:
Located 14Kms from Chennai (Kanchi District)
Comes under Chennai Metropolitan development Area
(CMDA) with a population of 1,65,000
25% of population living in Slums
Situation Prior to PPP
No sewerage system for 1.65 lakh people
Unregulated disposal of sewerage from septic tanks
Storm water + Sewage stagnation in open areas
Contamination of ground water
Mosquito Menace

Objectives:

To improve the standard of living of the residents of Alandur

To provide the most essential basic facility to all the residents of the town
To eradicate the mosquito menace
To avoid the recurring expenditure on septic tank cleaning
To avoid ground water contamination
Public Private Partnership

Alandur Sewerage Project

Group 1 | Section A

MAJOR WORK COMPONENTS

PPP

Sewage Network

Pumping station + STP

Designed for 3,00,000 population (for 2027) in 2-Phases

Phase-1 : Plant to treat 12 Million Liters per Day (MLD)
By Phase-2 : Ultimate capacity of 24MLD
Public Private Partnership

Alandur Sewerage Project

Group 1 | Section A

PPP STRUCTURE

PPP
TNUDF
Loan

EPC Works Contract

5 Year
Maintenance

O&M Contract

Sewerage
Lines

Alandur Municipality

GoTN
Loan/Grant

TUFIDCO

Sewage Tariff Sewerage

Connection
Installation fee

BOT Concession
Agreement

SPV

Sewerage
Treatment
Plants

14 Years (till 2019)

Citizens/Community

TUFIDCO - Tamil Nadu Urban Infrastructure Development Corporation

TNUDF - Tamil Nadu Urban Development Fund

SPV- First Sewerage Treatment Plant Pvt Ltd (FSTPPL) was created, Land was provided by Municipality to the SPV
2-stage bid process, key criteria being lowest cost for the sewerage system (90%) and lowest lease period for the STP
(10%)
Out of 13 bidders, The Project was awarded to IVRCL Infrastructures Ltd. (Had experience in similar projects)
IVRCL- Civil Works
Va Tech Wabag Technologies- Electro Mechanical Works (14 yrs)
Public Private Partnership

Alandur Sewerage Project

Group 1 | Section A

TIME LINE

PPP

Public Private Partnership

Alandur Sewerage Project

Group 1 | Section A

FINANCING INFORMATION

PPP

Tamil Nadu Urban Infrastructure Development Corporation (TUFIDCO): The agency to coordinate, supervise and structure the finances for
the project, was also responsible for detailed studies on the feasibility of the project
Tamil Nadu Urban Infrastructure Financial Services Limited (TNUIFSL): The State Asset Management Company

Finances:

Crores Percentage

Remarks

Grant from TNUIFSL

7%

Loan from TNUIFSL

15%

16% per Annum

Loan from TUFIDCO

16

39%

5% per Annum Interest rate

Grant from TUFIDCO

2%

Deposits from public

12.4

30%

Interest from deposits

2.46

6%

Total

40.86

100%

Public Private Partnership

Domestic (5000 per connection) + Commercial (10000 PC) + Industrial (10000 PC)

Alandur Sewerage Project

Group 1 | Section A

PUBLIC CONTRIBUTION

PPP
Tariff

Residential:
One time Deposit 5k/Unit
Monthly: 150Rs/Unit
159, 169, 178, 180, 180.
(Rates increasing @6%/Year
and stabilizing)
Commercial:
One time Deposit 10k/HH
Monthly: 450Rs/Unit
477, 506, 536, 540, 540..
(Rates increasing @6%/Year
and stabilizing)
Industrial:
One time Deposit 10k/HH
Monthly: 750Rs/Unit
795, 842, 893, 900, 900.
(Rates increasing @6%/Year
and stabilizing)

Public Private Partnership

Willingness to Pay

Survey on 10% sample

Strong support to the
project from public
But, Very low willingness to
pay
Condition by TNUIFSL to
collect OTD from at least
10,000 HHs (to access the
commitment)

Campaigning

Active Canvassing
Educating the citizens,
welfare organizations
Support from media
We for ourselves
campaign
2-Installment Payments
Transparency and opinion
seeking in every step

Alandur Sewerage Project

Results

13000 HHs paid OTD by the

time contract was signed
By 2010, 30,600 HHs paid
for a connection
Municipality has taken the
O&M function in 2005 from
the private party
500 slum HHs has
connection

Group 1 | Section A

KEY RISKS ADDRESSED

PPP
Risk

Primary Risk Bearer

Delay in obtaining permits

Alandur Municipality
(AM), Private developer

Land acquisition

Government

Payment Risk (Capital Cost for Sewerage

System)

Payment Risk (STP Annuity Payment)

Technology Risk

Financial Risk

Design Risk

Public Private Partnership

Remark
The AM took responsibility under the Contract for key approvals, including road cutting, shifting of services and
environmental clearances
The developer was responsible only of the works related approvals
AM took the responsibility for directly acquiring the land for the construction of the STP

The key risk in respect of payment of capital cost for the sewerage system was the component of the cost that had
to be met through public contribution
Government
The risk was addressed effectively through extensive public consultation and interactions
The collection exceeded initial plans and the AM did not have to draw upon the debt as planned from TNUIFSL
Annuity Payment for the STP was contractually bound over the period of lease by AM
Based on willingness to pay survey, the Government had agreed to extend subsidy support to meet operational
Government
cost
There are no clear references to this in the agreement.
The design was prepared at the bidding stage and thereafter accepted by the Bidder during submission of proposal.
Government
Since the project was implemented without significant delays, the technology risk (upgradation) due to passage of
time did not arise
The AM bore the financial risk in respect of the Sewerage System while the Private developer bore the risk for the
STP
Government & Private The AMs capital investment plan was planned even before the bidding process, the key risk arose from the portion
Developer
of the capital cost that was to come from public contribution towards connection charges
For STP, the Private Developer was able to raise the capital funds effectively as re-payment was protected by the
annuity payments as assured by the AM
Design for the Sewerage System as well as the STP was developed by the AM as part of the feasibility study
The same was provided to the developer as part of the RFP document
Private developer
The Bidder had the option to comment on the design provided and suggest changes, if any
However, after the submission of bids, the Contractor was required to adhere to the design provided by the AM

Alandur Sewerage Project

Group 1 | Section A

KEY RISKS ADDRESSED

PPP
Risk

Primary Risk Bearer

Remark

Construction Risk

Private developer

Construction cost over runs

Private developer

Operations Risk

Public Private Partnership

Private developer

The Construction Contract for the underground Sewerage System specified strict construction milestones linked
to the payment along with a one year defect liability period to address any construction related risk
Liquidated damages were prescribed in the contract for every day of delay limited to 10% of contact price
For STP, the construction risk was borne by the Developer as the investment was made by developer
The STP was constructed in two phases. The defect liability period for the STP extend one year beyond the lease
period of 14 years, during which the developer operated and managed the facility
The construction of the Sewerage System was based on detailed bill of quantities with rigorous clauses related to
cost over-runs
For STP, though the developer bore the construction cost, the design and cost was based on detailed costing predetermined at the bid stage.
As the construction cost was also the basis of the annuity payment determined in the bid, it was carefully
controlled.
Since the construction did not experience any time over-runs, cost over-runs were also controlled and the
project was implemented as per the original cost estimation
The performance parameter mainly referred to the treatment of sewage as fed into the STP during the lease
period
The Agreement prescribed a fine if the treated effluents failed to meet the required standards at the rate of Rs.
10,000 per day of default

Alandur Sewerage Project

Group 1 | Section A

IMPACT OF PPP

PPP
Parameter

Before PPP

After PPP

No sewerage system for a population of 165,000

Urban service

120 km of underground sewerage system, pumping stations and an

STP of 24 MLD

Water borne sanitation facilities, septic/holding tanks for disposal of Underground sewerage system with direct connection to each
night soil
household
Unregulated disposal of sewerage in storm water drainage and low
lying areas

Modern sewerage treatment plant designed to international

standards.

Open storm water drains stagnating in outer areas of town

environmental and health hazard

Underground sewerage system has eliminated risk of mosquitoes and

related diseases for the citizens of Alandur and surrounding areas

Contamination of underground water sources due to open drains

Almost 100% eradication of ground water contamination through

underground sewerage system and waste water treatment plant.

Environment and Health

Rs. 8 crores out of the capital cost of Rs. 34 crores was through public
contribution
Collection of sewerage fee from the public (on a graded structure
amounting to a weighted average of Rs. 75 per connection) amounts
to Rs. 2 crores per month and covers both debt repayment and O&M
costs of the AM

Public participation

Public Private Partnership

Alandur Sewerage Project

Group 1 | Section A

KEY LEARNINGS

PPP

Beneficiary participatory approach

29% of the project cost was garnered from public contributions, the most outstanding aspect and learning from the ASP
Stakeholder involvement and interdepartmental coordination
ASP established that close involvement of all stakeholders/departments at the key decision-making stages of the project, as also for review and monitoring, is
critical to ensuring that the project stays on-track
Political will and strong decision making, especially at the grass-root level
Political leadership and strong advocacy for the project provided by the chairman and council of the municipality proved to be critical element of the success
Acceptance of fiscal discipline
TNUIFSL required the municipality to establish a separate sewer account distinct from the general budget of the municipality. Also, contractual obligations
between the municipality and the BOT operator forced the municipal government to ensure timely payment for management and waste water treatment services
Implementing an effective fee system
Municipal council, through its rigorous public outreach measures, managed to impose reasonable levels of connection charges and sewer fee on the public
Assurances on payment to the Private Sector Participant
Municipality agreed to provide the BOT operator a minimum level of income by accepting the take or pay condition in the Agreement
Access to finance for the municipality
Projects success stemmed from concession financing and subsidies from the Government and public-private entities, established specifically to meet the credit
needs of the municipalities without access to private capital
Technical and financial assistance
Expertise needed to plan and manage the technical and financial aspects of the project far exceeded the capacity of the municipality and government bodies like
Chennai Corporation, TNUIFSL , Tamil Nadu Water supply and Sewerage Board, Chennai Metropolitan Water Supply and Sewerage Board played a substantial role
in structuring the project
Transparency in bidding and contracting procedures
Right from inception to selection of contractor/operator and implementation, transparency was critical to providing the necessary assurance to the private sector
bidders on the professional approach of the municipality

Public Private Partnership

Alandur Sewerage Project

Group 1 | Section A

Thank You

Amitesh | Narahari | S Giridharan | Pradeep | Subodh

Public Private Partnership

Alandur Sewerage Project

Group 1 | Section A