PROJECT APPRAISAL AND FINANCE

BATCH 2018-2020 SECTION-CF2

CASE STUDY ANALYSIS

CASE -1:
ALANDUR SEWERAGE PROJECT

PRESENTED BY,
ALICIA.A
NEHA.V
SRUTHIE SREENIVAS
GOWTHAMARAJA
PRIYANAKA GHATANI
ALANDUR PROJECT DETAILS:

• ALANDUR Located 14 km south of Chennai, Alandur is part of the Kanchipuram district of Tamil Nadu and forms
a part of the Chennai Metropolitan Development Area (CMDA).

• The town has developed as a residential suburb of Chennai with a population of 160,000 (Census 2004) of which
approximately one-fourth lives in slums.

• Rapid urbanization during 1980s and 90s at the peripheral vicinity of Chennai resulted in the creation of this
satellite town. It is given the status of Selection Grade Municipality.

• Prior to the project, Alandur had no sewerage system and wastewater from the majority of its residents was
collected either in septic tanks or holding tanks.

• The sewerage was collected periodically in tankers and disposed of in low-lying areas outside the municipal limits.

• The clearance of septic tanks was irregular due to lack of sufficient vehicles and staff in the public health
department. In 1997, the Government of Tamil Nadu decided to provide a sewerage system in 12 selected major
urban centers, including Alandur, in the context of a World Bank funded project.

• The Chairperson of the Municipality, Mr. R. S. Bharati took up the task of implementing the project in Alandur.
OBJECTIVES OF ALANDUR SEWERAGE PROJECT

 To improve the standard of living of the residents of Alandur on par with that of Chennai.

 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.

 The proposed sewerage system was to be designed for the estimated population of about 300,000 by 2027
was planned to be completed within a five-year period from its inception date.
 CANVAS FRAMEWORK
FOR
ALANDUR SEWERAGE PROJECT
 Customer relationships: Value propositions:
Key Partners: Key Activities: Customer
segments:
 Design and execution of All holiday and weekend  Health and hygiene
 Tamil Nadu
project with technical were used for discussion
urban with resident welfare End customer-
assistance and management  Environment
infrastructure oversights supported through associations . buyers of
protection.
financial an agreement – TNUIFSL. Alandur
services Ltd Communication with local sewage plant
 TNUIFSL – Project structuring
(TNUIFSL). and contract activities.
community was maintained ( Government
through a feedback and a and private)
 State Asset  Oversight of construction grieved redressal system and Channels:
activity responsibility of reviewed daily by project
management chairman of municipality of management team. • Public awareness of
company. Alandur and city’s chief project
engineer. Financial management • Media coverage
 USAID’s responsibility shared by
 CMWSSB • Local cable tv network
Financial municipality, resident, • Pamphlets in English and
Reform and  TN pollution contril board private sector and state Tamil
Expansion monitoring and oversight government.
• Door to door canvasing.
framework
Project.

Cost structure: Revenue streams:

Initial Estimation = 45.31 crore. • Grants and loan from key partners. Deposits from public.
Revised cost = 40.86 crore. • Interest on deposits.
 WORK BASED STRUCTURE
WORK CONTRACT for construction of sewage network

 Operation and management contract for maintaining sewage system for 5 years or more

 A lease contract to finance the project and also to keep a check on the project.
 RISK ASSESSMENT MATRIX
 2005 - 23,000 households who paid for the services, 8,350 households were connected in the first phase.
 2010 - 30,600 households who paid for the services, 29,300 households were connected.
 14 community toilets were constructed to serve poor clusters.
 Initial estimation – 45.31 crore, but Actual Investment 40.86 crore.

RISK ALLOCATION: Type of Risk Sensitivity

Land acquisition High

Delay in obtaining High

permits
Design Risk High
Construction Risk High
Construction cost High
over runs
Operations Risk High
Financial Risk High
 PESTLE FRAMEWORK
POLITICAL FACTORS
ECONOMIC
FACTORS SOCIAL FACTORS
The political risk was
mainly convincing the
Minimum guarantee Intense stakeholder
government officials and
agreement signed by consultations with
citizens to pay significant
Alandur municipality
share of the cost and citizen and resident
with respect to flow to
accept the entry of the welfare groups
the STP ( sewerage
private sector.
treatment plan)

TECHNOLOGICAL
ENVIRONMENTAL LEGAL FACTORS
FACTORS
FACTORS
• Tax restrictions
Selection of qualified private
Regulator for the quality of • Export and import
contractors with equipped
effluent discharged and its effects restriction of materials from
technology to support the
on the environment. different states.
complete project.
SUMMARY

A sewerage network consisting of the main sewer line, branch sewer line and manholes Construction of a sewage pumping station A sewage
treatment plant Low cost sanitation. The project was structured such that an EPC contractor, selected through competitive bidding process,
would design and implement the sewerage system, on turnkey works contract, and would also finance, design, build, and operate the STP on
BOT (Annuity) basis. The procurement of private contractor for the execution of the project was carried out as per the standards prescribed
by the World Bank. A two stage bid process was adopted - a technical proposal followed by a financial proposal. The technical capabilities
of the contractors and their experience in similar works were given importance. Of the 13 entities who submitted the bids, three were short-
listed, and the financial proposals were received from such technically qualified firms. As per the financial evaluation criteria, the bidder
quoting the lowest cost for the sewerage system and lowest lease period for the STP was selected as the final, successful contractor..
Beneficiary participatory approach Stakeholder involvement and interdepartmental coordination Political will and strong decision making,
especially at the grass-root level Acceptance of fiscal discipline Commitment towards project prior to implementation Implementing an
effective fee system Technical and financial assistance Transparency in bidding and contracting procedures. The initiative was awarded the
National Urban Water Award in 2008.
Learnings:

Nearly 500 slum dwellers of the 7,000 had a sewerage connection and 43 percent of slum dwellers have
opted and paid for individual sewerage connections. In 2005, 14 community toilets were constructed to serve
poor clusters. By end of March 2008 – all households have received sewerage connections Alandur sewerage
project is an innovative attempt for sustainable delivery of urban services in the country and many
municipalities (Trichy, Tanjavur, Tirunelveli, Ambattur, etc.) had started adopting similar efforts for
underground drainage The initiative was awarded the National Urban Water Award in 2008.