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Contents. Need for PPP - taking urban space as an exampleForms of PPP that are relevantLearnings from experience. Indian water sector. Water services are provided by local Governments or agencies reporting to regional GovernmentsCapital investments have been largely funded byRevenue surplus (in very few cities)Regional Government budget support andDonor projects.

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    3. Indian water sector Water services are provided by local Governments or agencies reporting to regional Governments Capital investments have been largely funded by Revenue surplus (in very few cities) Regional Government budget support and Donor projects

    4. Water Supply – Status of devolution

    5. Service levels are inadequate

    6. Sample of Class I Cities in a State

    7. Need for PPP Taking urban space as an example

    8. 1. The financing gap

    9. 2. Skill and strength gap

    10. Many technologies are new to local bodies

    11. 3. Accountability gap

    12. PPP timelines in water

    13. Mid 1990s, Failed projects

    14. Quick Profile - Bangalore

    15. Quick Profile - Hyderabad

    16. Quick Profile - Pune

    17. Quick Profile - Goa

    18. Around 2000, Momentum subsides

    19. Quick Profile - Sonia Vihar WTP

    20. Quick Profile - Sangli

    21. Quick Profile - Bangalore Delegated Management Contract

    22. Mid decade, High profile projects run aground

    23. Around the same time early successes emerge

    24. Quick Profile - Salt Lake

    25. Quick Profile - Haldia

    26. Quick Profile - Latur

    27. Quick Profile - Chandrapur

    28. Quick Profile - KUWASIP 4 towns in Karnataka

    29. Quick Profile - Mysore

    30. Quick Profile - Nagpur Pilot

    31. Key Characteristics

    32. Current successes – Scope of the PPPs

    33. PPP timelines in water – Change is visible

    34. What has possibly changed Projects are increasingly focussing on distribution improvements Unlike in the earlier years when capacity addition and bulk water was the focus Hardly any pure bulk water project (with the exception of desal) The expectation is more on service delivery improvement, not capital infusion from private sector Ready made PPP concepts failed to work when applied in water sector Bottom up efforts by water sector through PPPs are showing better results Is it finally a case of the dog wagging the tail?

    35. What has possibly changed….2 Domestic operator interest and success is high Atleast five Indian operators are common bidders in many projects International operators are aligning with domestic operators More comfortable with collection risks, generally have a higher commercial risk appetite Gain higher political acceptability NGO activism less vocal as compared to international operators

    36. What have been the key enablers Macro level - Strong public funding JnNURM support has been critical (Salt Lake, Mysore, potentially Madurai) Public funding in other cases (KUWASIP, Latur) Ground level – Attention to detail Government of Maharashtra has a volumetric tariff policy, had financed water audits and energy audits Karnataka had spent adequate time on preparation Balanced approach in contract design (Salt Lake, KUWASIP, Latur)

    37. Still a question mark Which operator model will work? Wide range being tested in the early projects. Mysore – “ Build at near fixed budget” and “Operate” KUWASIP – “Construction Manager” and “Operator” Bhiwandi and Haldia – “Invest” and “Operate” Each model has varying characters of Investor, Construction Manager and Operator

    38. Many initiatives are in the pipeline

    39. What are key issues to be considered? Policy level changes Public funding is necessary Operator model to be flexible, still no conclusion on what will work Government should invest in surveys and preparatory work (or) partner with operator in a discovery phase Metering and volumetric tariff policy should be in place Tariff revision is preferable, but not necessary But tariff clarity is a must Project level support Invest in survey – water audit, energy audit, household survey Decide level of support (and) choice of contract model based on sound financial analysis Consistent pre-qualification criteria Provide for a wide range of consortia structure – International operators may not always want to come in as Lead (or) in Joint Venture

    40. PPP momentum is at tipping point in water sector

    41. In Summary PPP momentum is at tipping point Early successes, many initiatives in pipeline Palpable interest from domestic operators, aligned with international operators Projects are deciding PPP scope, not the other way around Public funding, focus on distribution and volumetric tariff are key requirements for success Operator model still evolving

    42. Thank You sramanujam@crisil.com +91 99202 28448

    44. Crisil Infrastructure Advisory PPP experience in water sector

    45. CRISIL Businesses and CRISIL Infrastructure Advisory

    46. PPP Projects -- For Developers

    47. PPP Projects -- For Government

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