ASCI

1

• ASCI World Bank Institute Program on
• Strengthening Urban Management in India
  Unlocking Potential of Indian Cities
• Urban Service Delivery through PPP
• Issues and Perspectives
• Dr. Anand Chiplunkar
• Vice President
• ILFS Infrastructure Development Corporation
• January 19, 2004

2
SECTION AMUNICIPAL INFRASTRUCTURE ISSUES
3
Municipal Challenges

• Demand for good/better municipal services is
  growing
• water and sanitation
• traffic management - flyovers, roads, bus-stands,
  parking areas
• solid waste management
• commercial properties
• health and education

4
Initiatives

• GoI Budget 2002 - to develop municipal sector
• Urban Reform Incentive Fund - Rs. 500 crores
  linked to reforms (rent control, stamp duty,
  revision of municipal laws, levy of realistic
  user charges, initiation of PPP)
• City Challenge Fund -Rs. 500 crores (fund
  transitional costs to develop viable projects)
• Pooled Finance Development Scheme
• Use of such funds to develop viable charges and
  leverage investments from the market
• Reality these are yet to take off

5
Issues

• Lack of finances - municipal level and State
  government
• Weak institutional delivery mechanism
• technical
• managerial
• systems and processes
• record-keeping
• Increasing awareness about need for
• Investment
• Efficiency
• Better management practices

6
Financing Projects
Project Development Funds
PROJECTS
Project Identification
Project Development
FUNDING
LIC, HUDCO
Capital Market
Municipal Funds
State Funds
Multi-lateral agencies
CAPEX
Govt. guarantees
OPEX
Budgetary Allocation
Project Revenues
Cost Reduction
Efficiency Gains
User Charges
RECOVERY Capex and Opex
Taxes
Community Participation
Administrative
Political Will
REFORMS
Policies, Accounting Practices, Asset Inventory,
Capacity Building,
7
Focus Areas for Municipal Services Improvement

• Cost Reduction Measures
• Improve efficiency in operations
• Financial Strengthening
• revenue enhancement - increase efficiency in
  billing and collection
• improving accounting practices
• taking an assets inventory
• rationalization of taxation
• rating municipalities
• raising municipal bonds

8
Focus Areas for Municipal Services Improvement

• Institutional Strengthening
• Capacity building and on-job training
• Investment in viable projects
• project development and structuring
• leveraging municipal/govt. funds for induction of
  private capital

9
SECTION BVisakhapatnam Municipal Corporation
Projects
10
VMC-ILFS IDC Partnership
11
Partnership between VMC and IIDC

• Vizag Municipal Corporation and IIDC entered into
  an agreement in July 2003
• Plan for integrated municipal services
• Projects in urban infrastructure
• Financial Strengthening including Municipal Bonds
• Water Supply and Sewerage
• Road maintenance
• Central Business District
• School Upgradation
• Tourism and Recreation municipal park,
  convention center, resort and golf course etc.

12
Managing and Strengthening of Water Supply
System through PSP

• Scope
• Benchmarking the performance of the existing
  system and identifying interventions and
  investments required for improving the efficiency
  of the system
• Upgrading the distribution system with
  investments through PSP using an appropriate long
  term contract such as Concession or lease

13
Augmentation and Strengthening of Sewerage
Through PSP

• Scope
• Component 1 Management of sewage collection
  pumping STRF on BOO/BOT basis through PSP for
  identified zone
• Component 2 Management of collection and
  treatment for existing system through PSP
• Component 3 DBOT for new system covering 70
  area
• Total investment Rs. 100 cr.

14
Management and Strengthening of Roads through PSP

• Corporation creates maintains assets from
  annual budget normally through separate
  Contractors for
• Road Laying road, Overlaying road
• Amenities/ Services
• Civil works (manholes, central median)
  Electrical poles and lighting (could be in-house)
• Assessment of Intervention
• Road pavements - Quality and Pedestrian area
• Amenities - Street Furniture, Signage, Parking,
  Foot-bridges, Info-kiosks / E-Seva Counters
• Facilities - Police Stations, Bus Shelters,
  Toilets and Green area
• Road Lighting Energy Audit Savings Strategy

15
Proposed Road Management Model

• Cost Centers
• Road Pavements Pedestrian areas
• Police Stations
• Foot-bridges
• Energy efficient lighting

• Revenue Centers
• Billboards
• Installations
• Parking Tickets
• Info-kiosks / E-Seva Counters
• Bus Shelters
• Toilets
• Savings from
• New Technology for road relaying
• Energy efficiency savings

Business Plan for PPP Optimized Funding from VMC


16
School Upgradation

• Objectives
• To create a sustainable and replicable model for
  upgrading and maintaining municipal schools

17
Present Condition of Schools

• Municipal schools lack
• Proper sanitation facilities
• Provisions for drinking water
• Basic facilities inside classrooms fans,
  lights, benches etc.
• Quality physical infrastructure
• Security to protect physical assets
• And above all provisions for its maintenance

18
Proposed Model
Description

• Select 10 of 100 schools in city as a pilot
• Schools would be selected in a cluster in a
  locality where opportunities exist

Selection Criterion

• Up-grade maintain through PPPP or annuity
  format
• CAPEX by VMC NGOCorporates
• OM contracted to private sector on predefined
  performance-related parameters
• Put assets to increased utilization by allowing
  their use beyond school hours and thereby earn
  revenues
• Monitoring through Citizens Committee

Model
19
Central Business District
Retail Space Jewellery

• Concept driven by discussion with Pvt. Players in
  target segments
• Detailed studies being initiated

IMAX/ Multiplex Science Park Art Gallery
Retail Lifestyle Fashion
Town Center Gardens
Food Court Business Centre Apartels
Jewellery Mfg ITES
Office Space Logistics, Aquaculture, Energy City
20
Central Business District
Total 27 acre Super Built up 10 lakh
sft Estimated Project Cost Rs 120 cr
21
SECTION CWAY FORWARD
22
Opportunities for Change

• Large captive market - create good investment
  climate
• sufficiency in revenues for works through
  taxation
• demonstration of service delivery followed by and
  reasonable charges for services
• Develop viable projects and leverage investments
  from the market

23
Approach

• Plan for integrated municipal infrastructure
  development
• identify areas for change
• procure expertise for specialist services /
  detailed studies
• strengthen finances (rating municipalities,
  raising municipal bonds etc.)
• induct private sector as appropriate to the
  activity to bring in efficiency, best practices
  and investments

24
Project Development Process

• Manage the intensive processes involving
• sector focus
• project scoping
• site identification
• demand assessment
• master planning
• policy and operational framework
• environment and social management plan
• financial and legal assessment

25
Enabling Environment for PPP

• In order to attract private sector, the ULBs must
  demonstrate / show commitment to professional
  management of services
• In order to reduce initial tariff rise, ULB can
  provide cross-subsidy from surplus revenues
  generated from other activities
• In the long run, the investments must be serviced
  through revenues generated by the project itself
• Involvement of all stakeholders and addressing
  the risk perception of each is essential to
  sustain the PPP process

26
THANK YOU