sustainable water management strategy with spotlight on indian water conservation experience
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Sustainable water management strategy with spotlight on Indian Water Conservation experience
Case Study of Mysore Water Distribution
Oct 13, 2011by
G S Basu, Jusco, India
Agenda
I. India Urban Water Scenario
II. JUSCO Mysore Experience
III. Future of Sustainable Water Management in India
3
Demand for water in India is expected to rise dramatically in the next few decades
Source: Ministry of Water Resources, National Hydrology Institute, Roorkee , 'The Himalayan Challenge: Water Security in Emerging Asia, Strategic Fore
1: As per international norms, if per capita water availability is less than 1700 m3 per year, country is water stressed and if the per capita availability is less than 1000 m3, the country is water scarce2: Using theoretical available water as a base for calculations
Drivers of water usage increase
PopulationPopulation increase from 1.2 Billion in
2010 to 1.6 Billion in 2030 will directly increase demand for water
Urbanization Increased urbanization from 30% to 50%
will create demand aggregation at select points in India, sometimes away from high water availability areas
Per Capita Income
Increase
Indian GDP is expected to grow causing per capita income to rise from $468 to $ 17366 by 2050. Increased per capita will result in lifestyle changes, requiring more per capita water. For e.g. water consumption in US is 582 litres/person / day compared to India’s ~90
Industrialization India’s industrialization increase will
increase demand for water – especially increase in power, steel and other heavy industries
4
Per Capita Availability1,2 1,730 1,401 1,200
Water Demand in India; 2010 - 2050Cubic KM or Trilion Liters
Resulting in a potentially significant demand supply gap in the near future
Source: Ministry of Water Resources, National Hydrology Institute
2010 2012 2014 2016 2018 2020 2022 2024 2026
750
850
0
1,000
950
900
800
700
+12%
Current useful water supply
Expected issue by 2015
Water Supply and Demand in India; 2010 - 2050Cubic KM or Trilion Liters
River Basins in India, with water shortage, 2030Percentage
DemandCurrent
Supply
12% gap by 2025
5
2: EFR – Eastern Flowing Rivers; WFR – Western Flowing Rivers (non major rivers)
Source: Ministry of Urban Development, United Nations handbook of benchmarks, Central Pollution Control Board, Asian Development Bank
1: 50 Asian cities benchmarked by ADB
6
While India faces water shortage in near future, it already is facing significant issues in Urban areas
Urban Water Requirement / Availability , 2007Million Litres per Day
Water Supply in a day on average, 2000Hours
Sewage and Waste Water Generation in Treatment, 2005Million Litres per Day
Domestic Industrial
+
Indian Population in Urban Areas, 2006 - 2025Millions
?
India has one of the lowest water tariff and tariff hike is a very sensitive issue
With abundant rainfall and extensive river systems, India has historically been a water rich country
Water has been considered “God’s gift” leading to water not seen as critical or finite resource that needs to be managed
Need to have a national regulatory authority to regulate water consumption, as for other natural assets such as air spectrum, is not easily conceived
0.08
0.13
0.20
0.34
0.34
0.42
0.52
1.06
1.11
1.52GermanyUnited
Kingdom
Turkey
Indonesia
United
States
China
India
Mexico
Chile
South
Africa
Common public perspective to water in India
Price to customers, 2009USD per 1000 Litres
Common psyche about water as a “free resource
There is a lack of political will to consider increase in water tariff
Indian Municipalities rarely recover their costs of operations given low tariff rates
7
Several municipal water bodies have poor operational and financial health
Source: Urban Water India, report by McKenzie-Ray, Asian Development Bank
~45% of Municipal water supply is leaked - does not generate revenue
Connections not metered in ~40% cases
City City Size in India
(Rank)
Leakage (%)
Connections Metered (%)
Nashik 21 60 80
Delhi 2 53 56
Nagpur 13 52 40
Hyderabad 6 50 na
Bangalore 3 45 96
Kolkata 4 35 10
Rajkot 25 23 na
Chennai 5 17 na
Mumbai 1 13 75
Municipal Leakage and Metered Connections, 2010Percentage, Millions
8
Average Meter Connection per Employee, 2003Count
Operating Ratio, 2007 Operating Ratio is defined as
O&M Costs / Revenue Operating Ratio more than 1.0
indicates utility is not able to recover even O&M costs
Ideally a utility should have a operating ratio less than 1.0 to cover for capital expenditures
Most Indian utilities are performing poorly
Private participation is expected to help in the following areas
9
More efficient operations and improved operating ratio
Access to funds for capital improvement
Access to latest technology and tools including MIS
Experience of urban water management in other geographies
Knowledge and skill transfer to municipal body staff
Better consumer complaint handling systems
Agenda
I. India Urban Water Scenario
II. JUSCO Mysore Experience
III. Future of Sustainable Water Management in India
10
A TATA Enterprise
India’s only private sector integrated civic service provider
Services:
Water & Waste Water Management
Power Distribution and Infrastructure
Solid Waste Management
Construction Services
Integrated Maintenance
Environment Management
JamshedpurA town built on a promise
JUSCO – A Comprehensive Urban Infrastructure Service Provider
Purpose
11
National Urban Water Award for Consumer Satisfaction, 2009
Total Productive Maintenance (TPM) Excellence Award held at Kyoto, 2008
JUSCO received Global Water Intelligence Award in London, 2008
Asian Water Management Excellence Award 2008
JUSCO has been recognized for excellence in Urban civic services
12
Mysore – A Heritage city in South India
Karnataka
Mysore
13
Mysore City Facts
• Area: 128.42 km2
• Population: 1,000,000• Location: 12°18′N 76°39′E•Elevation: 763 metres (203 ft.)
•Demon Mahishasura supposedly k killed in this town•One of the princely states at time of independence•Strong Arts Heritage •“Cultural Capital of Karnataka”
Mysore History
Mahishasura
Mysore Palace
Mysore Economic Profile
Jayalakshmi Vilas
• Tourism Hot spot within Karnataka •Large Software exporter• Significant handicrafts industry
• Sandalwood carving, Bronze work, •
Source of water Cauvery river fairly dependable
Civic Services administered by a Municipal Corporation (MCC)
City Council has a Mayor and Deputy Mayor; 65 elected Corporators each representing a Revenue Ward.
Core municipal area about 84 sq km. City expanding and MUDA responsible for planning & development; Master plan area: 150 sq km.
Karnataka Urban Water Supply and Drainage Board (KUWSDB) is responsible for water supply
Mysore Water Distribution Background
Mysore Urban Development Authority (MUDA Boundary)
Mysore City Corporation (MCC)
Cauvery River
Mysore Water Distribution Background
14
Water available for 3-5 hours per day in West Zone and every alternate day in East Zone
Water availability at erratic hours – middle of night, very early morning etc.
Inadequate water pressure, requiring people to install booster pump on water lines
Water contamination due to old / rusted pipes
Issues for Consumers
Mysore Water Distribution facing significant issues…
Bulk water production assets have outlived age KUWSDB is implementing a bulk
augmenting arrangement
Distribution system in the city dates back more than 100 years
18 Boosting stations provided to provide pressurized water
Around 20,000 unauthorized connections over a base of 126,000
~ 80% meters not functional
Tap pressure ~ 3-5 m, as opposed to 7 m, as per norms in India
Background for Mysore Distribution
15
Issues for KUWSDB/MCC
Inspite of a good water source (Cauvery river) being close, there is additional cost borne for bore wells and tankers to meet customer demand
NRW in excess of 40%
Poor collections from consumers
Low tariff levels – many consumers billed on avg consumption because of non functional meters
+
Mysore Civic bodies envisaged a program to solve water issues through private participation
Name of Project……………
Job Description……………
Client………………………
Project Aim…………………
Contract Start Date………
Completion Time…………
Value………………………
Funding arrangement
24X7 Water Supply performance based management contract in Mysore city.
Conversion of intermittent to 24/7 continuous water supply system for 130,000 connections
Mysore City Corporation (MCC) & Karnataka Water Supply & Drainage Board (KUWSDB)
To enable a profitable Urban Local Body (ULB); Reduce losses and improve consumer experience by providing 24x7 water
28/01/2009
72 months
Rs. 1,620 Million (~USD 36 Million)
JNNURM:State Govt:MCC – 80:10:10
16
Abstraction / Treatment
Transmission DistributionWaste Water Collection
and Treatment
Party
Notes
KUWSDB/MCC Contractor (Jusco)
Around 240 MLD water bulk supply from Cauvery river tapped at 3 different areas
4 Water Treatment Plants (WTP) under management by KUWSDB
Bulk water to WTP and Treated water to Master Balance Reservoir (MBR) under scope of KUWSDB
6 MBRs to balance water supply having capacity of 126 ML
170,000 connections of which 120,000 authorized connections
1700 KM of piping network
Consumer complaint handling
Metering and Billing Revenue collection
improvement
Responsibility for entire water cycle to be shared between public and private parties
Urban Water Supply Cycle
Responsible for waste water collection and treatment before release to Cauvery waters
KUWSDB/MCC KUWSDB/MCC
17
Mysore Project to be executed in three phases
Phase 1: Preparatory
Phase 2: Rehabilitation
Phase 3: Management
• Study existing water infrastructure & service
• Prepare O&M plan • Topographical and customer
survey for for compilation of customer database
• Hydraulic network modeling & design for rehabilitating the intermittent Supply network to Continuous Water Supply
• Operation, maintain and improve facilities and provision of water services
• Implementation of Final Investment Plan involving procurement, construction (new network, valves, meters, customer connections, creation of DMA etc), commissioning
• Implementing Integrated Management Information System (IMIS)
• Operation, and maintenance phase
1 year 3 Years 2 Years
18
India’s largest PPP project covering a population of 1 Million
Rehabilitation of ~ 1700 KMs of pipeline, pump stations, electrical and allied work
Salient Features of the Contract…
Tarriff fixed by Municipal body, Operator to bill consumers and pass the revenue to the municipal body
Risk sharing between Urban Local Body (ULB) and Contractor
Investment risk with ULB / Government (source of funds)
Tarriff risk with ULB Design and Construction risk
with Contractor Performance risk with
Contractor Operation risk with Contractor Collection risk with Contractor
Performance based management contract
Revenue and Risk Sharing Performance Gurantees
Contractor revenue linked to several performance parameters
Performance Parameter
Target
Number of connections with 24x7
Progressive
Revenue Improvement % improvement over baseline revenue
Revenue Water in 24x7 area
85%
Complaint Resolution 98%
Leakage Levels 25%
Quality Compliance 100%
Pressure Compliance 95%
19
+
JUSCO Approach for Project Execution
Development of Capital Improvement Plan
Asset Mapping Measuring bulk inputs and
outputs Base lining of losses,
existing service levels Establishment of DMAs,
Water Balance Hydraulic Modeling &
Investment Plan
Customer centre with SLGs defined Standardization of O&M practices Active leakage management Meter Management Incentive based billing and revenue collection Integration of mapping, billing, customer care &
network management Safety Management Total Productive Maintenance (TPM) Practices
1
Rehabilitation of existing network
Operations and Maintenance of existing network
Work break down packages for execution Prioritizing the works for execution Implementation of Rehab plan Service level targets delivered in stages Manage Issues Relating to Change in supply
pattern to 24X7
2a
2b
20
Jan2009
Jan2010
Jan2011
Jan2012
Jan2013
Jan2014
Jan2015
Contract Agreement – 28 Nov 2008Contract Agreement – 28 Nov 2008
Project StartJan 2009Project StartJan 2009
First Performance Target – 10k 24x7 connectionsFirst Performance Target – 10k 24x7 connections
We are hereWe are here
Next 6 monthly milestone of 70k 24x7 connectionsNext 6 monthly milestone of 70k 24x7 connections
12 months Preparatory Phase12 months Preparatory Phase
24 months MaintenancePhase 24 months MaintenancePhase
36 months Operation & Rehabilitation Phase
Start of 6 monthly Performance MilestonesStart of 6 monthly Performance Milestones
Connections, 2009 – 2014Units
Project close to mid point in duration
90
79 +14%
20102009
91
65 +40%
20102009
9477
2010
+22%
2009
9580
+19%
2009 2010
Water QualityPercent
Water AvailabilityPercent
MeteringPercent
Consumer satisfaction score, 2009 – 2010Percent
Top factors in consumer satisfaction score*
*Out of 8 factors including others such as Collection, Billing, Safety Measures and Behavior of staff
95
76
60
x Importance to customers
Already improvement in consumer satisfaction noticed
Independent study by AC Nielsen India
22
Agenda
I. India Urban Water Scenario
II. JUSCO Mysore Experience
III. Future of Sustainable Water Management in India
23
Indian Utilities face several challenges (1/2)
24
Challenges Possible way forward thru PPP approach
* Jawaharlal Nehru Urban Renewal Mission
Weak focus on customer Improve service delivery thru introducing robust operation
Management processes Consumer focus through 24x7 complaint handling and prompt
response Capture consumer data for decision making and providing
analytical support for solving issues thru IT enablement KPI for customer service level guarantee
1
Low water tariff resulting in poor recovery on investments
All connections to be metered backed up by efficient meter management process
Move from flat tariff to consumption based telescopic tariff structure to reflect economic status of the consumer and the usage, including subsidy tariff for “Lifeline supply” and facilitating demand management
Cross subsidy between domestic and industrial/commercial connections in tariff structure
2
Indian Utilities face several challenges (2/2)
25
High operational costs and not satisfactory staff productivity
Adoption of technologies and good management practices Meticulous benchmarking of good practices and processes Ring fencing of accounting system Structured skill enhancement programme for ULB staffs
3
High level of Transmission & Distribution losses
Track and report NRW for every urban ward Active Leakage Management Physical audits to address illegal connection
4
Challenges Possible way forward thru PPP approach
* Jawaharlal Nehru Urban Renewal Mission
Crumbling Infrastructure and limited funds for capital maintenance or service improvement
Improved revenue collections to improve funds availability backed up by efficient IT enabled consumer billing process
Possible corporatization for revenue and cost management thru proper ERP module
Support from State and Centre such as JNNURM* Support thru soft loan from multilateral agencies Last mile connection cost to be borne by consumers to reduce
investment Additional revenue thru NRW reduction and tariff restructuring
to repay loan and recover O&M cost Efficient use of assets with periodic good maintenance practices Efficient and innovative hydraulic modeling of network to reduce
capital investment
5
How Private participation can help ULBs (1/2) – example JUSCO’s experience in Jamshedpur
26
Parameter UnitResults (2005)Baseline
Population Covered
Metered Connections
NRW
Service Guarantee Compliance
Failures in Water Systems
Operating Ratio
% of Total
% of Total
%
% of Total
No per Month
O&M Cost / Revenue
67%
~0
36%
77%
44
1.07
JUSCO was formed as a corporate urban utilities service provider for Jamshedpur town in 2004.
Staff/1000 connections
Nos > 8.0
Results (2010)
85%
30%
9.5%
99%
1.1
0.82
4.03
How Private participation can help ULBs (2/2) – example JUSCO’s experience in Haldia
27
Parameter UnitResults (2008)Baseline
Water Production
Water Sale
NRW
Service Guarantee Compliance
Critical equipment availability
MGD
MGD
%
% of Total
%
19.7
15.2
25%
NA
85
JUSCO took over Haldia city water supply as BOT cum Concession agreement with Haldia Development Authority (HDA) from Nov 2008.
Results (2010)
27
23.6
9.7%
99%
94
Mid DecadeEarly 2000Mid 90s 2010 2015
Interest
Activity
Key Projects
Overall momentum for PPP in Water
Sector
High Interest by Foreign Players
New Concept for Indian Companies
First initiatives Poor results and
lack of momentum Many projects
grounded
Very little interest Ineffective push
from the Government
Few projects Onset of
pessimism on Water PPP
High Government focus
Domestic Interest
High level of Public and NGO opposition
High profile projects grounded
Renewed interest by International Cos.
Increased involvement by Domestic Cos.
Many ongoing projects
Commercial Success being closely monitored
Pune Hyderabad Goa Bangalore
Sonia Vihar WTP
Mumbai Kurla East
DJB Pilot Bangalore DMA Sangli
Latur Madurai Chennai Nagpur Salt Lake* Mysore* Haldia*
Source: CRISIL
Private sector participation in urban water management is becoming popular after initial reservations
28
Graph Indicative
* JUSCO Projects
Develop regulations that assure certainty of future cash flows to the extent possible
Provide political commitment for PPP as water is not perceived as a simple commodity by either the consumers or the Government
Align economic interest of all parties Accept that profit from water business is OKDefine PPP projects on a holistic basisEncourage plurality of approach and establish a framework that accepts failures
Offer a project with detailed project due diligence including adequate stake holder engagement
Source: ILFS
Private Sector Expectations from Government for Water Utilities Market Development
29
30
Thank You
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