2015年-世界发展银行全球_Evaluation_of_Water_Services_Public_Private_Partnership_Options_for_Mid-sized_Cities_in_India_84页_3mb

Summary of "Evaluation of Water Services Public Private Partnership Options for Mid-sized Cities in India"

Core Content

This report evaluates the feasibility of Public Private Partnership (PPP) models for improving water services in mid-sized Indian cities. It highlights the unique challenges these cities face and proposes two innovative PPP models: the Phased Performance Based Contract (PPBC) and the Joint Venture (JV) Partnership. These models aim to address the structural, operational, and financial issues that hinder the delivery of reliable and sustainable water services in the sector.

Main Challenges in Mid-sized Indian Cities

Current Operations

• Utilities are poorly structured and often lack independence.
• Operating cost recovery is low in most cities.
  • Bhubaneswar: 36.5%
  • Belgaum: 75% (includes a large government subsidy for electricity)
• Service levels are poor, with water supply being intermittent.
  • Belgaum: 2 hours every 3 days
  • Coimbatore: 2.5 hours every alternate day
• Staffing and operational inefficiencies are common.
  • Bhubaneswar: 39 staff per 1000 connections (well above world average)
  • Coimbatore: Understaffed and over-reliant on outsourcing
• Metering and illegal connections are widespread.
  • Less than 1% of connections are metered in Bhubaneswar and Belgaum
  • High but unknown number of illegal connections

Investment to Serve Current Population

• Poor asset condition and outdated infrastructure.
  • 70-80% of pipes in Belgaum and Bhubaneswar were laid before 1960
  • Distribution systems are not fully mapped
• Non-revenue water (NRW) is high and often underestimated.
  • Bhubaneswar and Belgaum: Over 50%
  • Coimbatore: 57% NRW despite low supply hours
• Detailed Project Reports (DPRs) fail to account for NRW, reducing their reliability.
• Rehabilitation costs are inconsistent and vary significantly based on assumptions.
  • Coimbatore: $8/capita for conservative pipe replacement
  • Belgaum: $150/capita for full network replacement

Investment to Meet Future Demand

• High and uncertain population growth.
• Uncertainty about where new populations will be located.
• Uncertainty about financing sources.
• Coimbatore's city boundaries expanded in 2011, almost doubling its population.
• Bhubaneswar and Belgaum rely heavily on government grants for capital expenditure.
• Coimbatore funds 52% of its growth from its own budget.
• Financial demands for improvement are substantial.
  • Coimbatore: $104 million to meet demand until 2044
  • Bhubaneswar: $623 million for the next two decades
• Poor capital planning and disregard for efficiency in DPRs.

Why Traditional PPP Models Fall Short

Traditional PPP models (Concessions, Leases, Management Contracts) are not suitable for mid-sized Indian cities due to:

• High risk for operators due to poor asset quality and information uncertainty.
• Limited scope and duration of management contracts, which restrict long-term improvements.
• Inability to create sustainable changes that benefit local governments.

Proposed Innovative PPP Models

1. Phased Performance Based Contract (PPBC)

• A 10-year, two-phase contract between the city government and a private operator.
• Phase I: Focus on establishing a city water utility, owned by the city government and managed by the private operator.
• Phase II: Begins after 6 years if performance targets are met; includes adjustments to service standards and fees.
• The private operator is incentivized to improve service levels and reduce costs.
• A fixed capital fund is allocated upfront, with government and development agencies providing grants and concessional loans.
• The fund is subject to strict procurement guidelines and independent audit.
• The model promotes long-term sustainability and flexibility.

2. Joint Venture (JV) Partnership

• A new city-level water company, structured as a Special Purpose Vehicle (SPV), jointly owned by the city government and a private investor.
• Private partner must be experienced and willing to invest equity.
• The SPV is responsible for all water service functions: bulk production, distribution, billing, collections, and capital planning.
• Tariffs are set to cover reasonable costs, including a return on investment.
• Government may provide subsidies to keep tariffs affordable.
• The model allows for concessional finance and promotes trust and transparency between public and private sectors.

Key Advantages of the Proposed Models

Advantages over Traditional Models

• PPBC: Encourages long-term improvements, focuses on building a utility, and provides a fixed capital fund.
• JV Partnership: Offers a potentially indefinite contract, promotes capital investment, and includes partial public ownership to ensure accountability and alignment with public interests.

Advantages over Business as Usual

• PPBC in Bhubaneswar: Better cost recovery and service levels, with performance-based incentives.
• JV Partnership in Coimbatore: Stronger financial position, regulated tariffs, and better access to concessional financing.

Conclusion

The report concludes that the two innovative PPP models—PPBC and JV Partnership—are more suitable for mid-sized Indian cities due to their ability to address the unique challenges of the water sector. These models provide stronger incentives for performance, clearer funding sources, and better alignment with the needs of both the public and private sectors. They are well-suited for cities with low cost recovery and large viability gaps, provided the government is willing to establish a ring-fenced utility and support the capital fund.