The presentation elucidates the study aimed at exploring the need of PPP model in India, with respect to capacities and capabilities of municipal governments to handle finance and governance of large scale urban infrastructure projects.

1. ALANDUR SEWERAGE PROJECT
Prepared by –
Apurva Sinkar
Trisha Bordoloi
Renuka Kulkarni
Apurva Sethia

2. Need of project:
1. Prior to 1996, no underground sewerage system,
sewage disposed off in individual septic tanks.
2. Unregulated disposal of sewage in storm water drains
3. Potential health and environmental hazard for local
residents
4. Out of total 19,800 households, 98% used either septic
tanks or holding tanks collected periodically by tankers
and disposed in low-lying areas outside municipal limits
5. Hence, Alandur Municipality announced construction
of underground sewerage system and treatment with
an objective of :
• Improving standard of living
• Provision of basic services to citizens
• Eradicate mosquito menace
• Avoid recurring expense of septic tank cleaning
• Avoid contamination of ground water
G O V E R N I N G I N S T I T U T E A N D I T ’ S N E E D
Need for separate governing institute:
1. It is duty of every municipality to provide for basic
urban services and ensuring health and safety of its
citizens.
2. The municipal finances were not adequate due to lack
of fiscal decentralisation, in spite of 74th CAA.
3. There was also technical incapability to handle large
scale, capital intensive urban infrastructure project.
4. Hence, a separate institute was required to bridge the
technical and financial gaps.
5. Governance for project was carried out through PPP
model, in which private institutions were involved to
provide the technological expertise and financial gap
was bridged using grants, loans and public
contribution.
ABOUT ALANDUR
Location : Alandur, Greater Chennai, Tamil Nadu
Area : 41.50 sq mts
Population : Year 1991 - 125,244, Year 2001 - 146,287, Year 2011 -
164,430
SALIENT FEATURES
First successful municipal water project in India undertaken
through PPP.
Strong political will and good decision making led to successful
and timely completion of project.
Stake holders involvement and interdepartmental co-ordination.
Inclusiveness through planned communication strategy leading
to good community response.
Equity achieved by provision of services in all strata of society.
ALANDUR SEWERAGE PROJECT
Sources: City Corporate cum Business Plan, Alandur Municipality, GoTN, 2007.
Public Private Partnership Projects in India (The World bank), 2010

3. Description of Works Investment
Required - IR
(in crores)
Municipal
Budget - MB
(in crores)
% of M.B.
to I.R.
Sewerage Network 18.60
2.36
Pumping Main 5.94
Pumping Station 2.44
House Service Connections 2.25
Physical Contingency (5%) 1.46
Price Contingency (10%) 3.04
Total 33.75 2.36 7%
Source: Approaches to Capital Financing & Cost Recovery in Sewerage Schemes Implemented in India: Lessons
learned & Approaches for Future Scheme (March 2016).
Case Study : Underground Sewerage System Alandur
Organization Management in Construction,2011.
S E R V I C E S C A T E R E D T O A N D I T S F I N A N C I A L D E T A I L S
As seen from the above table, the construction and operation &
maintenance is capital intensive, with total estimated project cost
coming up to 33.75 crores.
The municipality’s total budget in the year 1996 was 7% of total
project cost which was approximately 2.36 crores, hence the
financial incapability on the part of Alandur Municipality
Alandur Sewerage Project
Sewerage Network
Sewerage
Treatment Plan
Alandur
Municipality
First STP Pvt. Ltd.
(SPV)
Urban Service
Institution

4. • Policy environment and gap funding supportGovernment of Tamil Nadu (GoTN)
• Overall facilitation support
Tamil Nadu Urban Infrastructure
Financial Services (TNUIFSL)
• Term loanTNUDF and TUFIDC
Alandur municipality
Kirloskar Consultants
Consulting engineering Services
Ms IVRCL
CMA, CMWSSB and TWAD, TNPCB
• Prime borrower with responsibility for repayment, community
mobilisation, House Service Connection(HSC)
S T A K E H O L D E R S
• Assisting TNUIFSL in preparation of contract.
• Consultant contract carried out comprehensive investigations and
engineering reports including detailed designs.
Private sector company - Contractor for laying sewerage network
and construction of sewage pumping BOT basis
• Advisory role and according necessary approvals . CMWSSB also
provided land for construction of STP
Sources: Approaches to capital Financing and cost Recovery in Sewerage Schemes implemented in India

5. How the Project governed differently?
• Public Participation.
• Close involvement of Stakeholder and coordination.
• Political will and strong decision making, especially at the grass-root level.
• Maintenance of double entry accounting system for the project.
• Commitment towards project prior to implementation.
• Transparency in bidding and contracting procedure.
GoI -74th
Constitution
Amendment, 1992
GoTN Policy
framework for
Private Sector
Participation in
Municipal
Infrastructure
GoTN issued order
(GO NO. 69, dated
May 4, 1998)
Private
Participation such
as BOT, BOOT etc.
Enabling Policy at the National, State and ULB Level:
E N A B A L I N G P O L I C I E S
Source: More (2008).
Sources: Approaches to capital Financing and cost Recovery in Sewerage Schemes implemented in India

6. S T R U C T U R E O F O R G A N I Z A T I O N
BOQ (Bill of Quantities)
• Construction of
underground
sewerage system such
as laying of pipes,
construction of
pumping station, etc
BOT (Build, Operate and
Transfer)
• The sewerage
treatment plant (STP)
Operation and
Maintenance
• Contractor for 5 years.
Tariff
• Municipality.
• PPP structure – 3 contracting mechanisms awarded to one engineering, procurement, and construction (EPC)
contractor selected through a competitive bidding process:
1. A Work Contract.
2. An Operations and Management Contract.
3. A Lease Contract.
The Tamil Nadu Urban Infrastructure Financial Services Limited ( TNUIFSL ) was nominated as the agency to
coordinate the investigation and detailed studies, and to structure the finances for the project.
Sources: Public Private Partnership Projects in India (The World bank)

7. S T R U C T U R E O F O R G A N I Z A T I O N
Awarded to IVRCL Infrastructures and Projects Ltd. In technical
collaboration with Va Tech Wabag Technologies Ltd.
A Special Project vehicle (SPV) called ‘First Sewerage Treatment Plant Pvt
Ltd’ (First STP) was incorporated
First STP Pvt. Ltd signed contracts with IVRCL and Va Tech Wabag
IVRCL was to carry out the civil works for the project
Va Tech Wabag was to design the process, supply, install and commission
the equipment. It was also to carry out a contract for operating and
maintaining the facility for 14 years.
The bidding process:
Sources: Public Private Partnership Projects in india (The World bank)

8. Escrow account prepared due to financial risk
TNUIFSL - 16% pa 15 years
TUFIDCO - 5% pa 8 years
F I N A N C I A L S T R U C T U R E O F I N S T I T U T E / P R O J E C T
Sewerage Network Sewerage Treatment Plant
Alandur Municipality
Public
Deposits
Grants Loans
First STP pvt.ltd (SPV)
BOT
Agreement
Land Acquisition
(AM)
One time
connection fees
Interest earned
GoTN (VGF)
TUFIDCO
TNUIFSL
TUFIDCO
Construction
O & M
IVCRL &
Va Tech Wabag
Pvt Ltd
Loan Servicing
Alandur
Sewerage
Project
Project
Stakeholders
Activities
In flow of money
Out flow of money
Legend
BOQ contract BOT contract
One time connection fees paid in
two instalments for public
convenience Sources: Financing mechanisms for wastewater and sanitation (ADB)
Received from:Received from:
Monthly User
Charges
Municipality to pay minimum
level income to BOT operator
(Pay or take agreement)
Financing Constructing and
Operating of STP by BOT
operator for 14 years

9. Type Source Amount (in
Crores)
SEWERAGE NETWORK
Grant TUFIDCO 1.00
Own Revenue Public Deposit 8.00
VGF GoTN Grant 3.20
Loan TNUFISL (16% pa) 6.20
TUFIDCO (5% pa) 16.20
Total 34.60
SEWAGE TREATMENT PLANT
BOT Contract 6.68
Own Revenue Land Acquisition (AM) 0.25
Total 6.93
Total cost of project 41.53
2.41
7.71
19.26
39.01
14.93
16.08
0.60
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Financial Stakeholders share (%)
TUFIDCO Grant GoTN Grant (VGF)
Public Deposit TUFIDCO Loan
TNUIFSL Loan BOT Operator
Land Acquisition (AM)
1. The project was divided into two sub-parts:
• Sewerage Network – Rs 34.60 crores.
• Sewage Treatment Plant – Rs 6.93 crores.
2. Since the sewerage network was done on Bill of Quantities basis
(Works contract and O&M Contract), the grants, loans and gap
funding was allocated to it.
F I N A N C I A L S T R U C T U R E O F I N S T I T U T E / P R O J E C T
Sources: Financing mechanisms for wastewater and sanitation (ADB)
Public Private Partnership Projects in India (The World bank)

10. E Q U I T Y A N D D E B T
Type Source Amount (in
Crores)
Equity
Grant TUFIDCO 1.00
Own Revenue Public Deposit 8.00
VGF GoTN Grant 3.20
Debt
Loan TNUFISL 6.20
TUFIDCO 16.20
Total 34.60
2.89
23.12
9.2564.74
Types of Finances(%)
Grant Revenue VGF Loan
26
64.75
9.25
Equity to Debt (%)
Equity Debt VGF
SEWERAGE NETWORK
Type Source Amount (in
Crores)
BOT Contract 6.68
Equity
Own Revenue Land Acquisition (AM) 0.25
Total 6.93
SEWERAGE TREATMENT PLANT
96.40
3.60
Types of Finances(%)
BOT Operator Land Acquisition (AM)
Sources: Financing mechanisms for wastewater and sanitation (ADB)

11. T I M E C Y C L E
YEAR ACTIVITY
1996 Conceptualisation of the Project by Alandur Municipality
1997 Government Order on privatisation of Municipal Services and Willingness to Pay
Survey
1999 Project Sanctioned by GoTN
2000 BOT Contract awarded to IVRCL in association with Va Tech Wabag
Technologies Ltd.
2001 Laying of main sewers, sewer pipe line, pumping stations, STP completed
2003 Overall completion date
2005 Contract for sewer network expired, user Charges used for O&M hereafter
(Expected Project Completion date)
2011 Alandur included in Greater Chennai Corporation
Water Supply and Sewerage under CMWSSB (Chennai Metropolitan Water Supply
and Sewerage Board
2018 Today - CMWSSB as provider
2019 Termination of agreement for STP and handing over to Alandur Municipality (now
status unknown as Alandur is under Greater Chennai Corporation)
Sources: Financing mechanisms for wastewater and sanitation (ADB)
Public Private Partnership Projects in India (The World bank)

12. U S E R C H A R G E A N D I T S A F F O R D A B I L I T Y
Source:
1. Chennai metropolitan water supply and sewerage board
2. Chennai corporation website
3. World bank report
4. Kalyan city budget
5. Asian development bank report
Property Area
(Sq. ft.)
Connection Charges
(in Rs. per house hold per month)
Domestic Non domestic
<500 60 200
500-1500 80 400
1500-3000 100 600
>3000 120 1000
Type of user User Charges
(in Rs. per house hold per
month)
EWS 20
LIG 40
MIG 75
HIG 110
Alandur
Under Metro-
politan region
of Chennai
Sewerage User
charges for
MIG : 75 Rs. per
household
Kalyan
Under Mumbai
metropolitan
area
Sewerage User
charges for
MIG : 60 Rs. per
household
• Deciding tariff - Willingness to pay survey :
About 86% of the respondents were willing to pay monthly
sewer charges in the range of INR 21 to 50 per month.
Then also, they managed to take the desired charges by
providing sympathetic measures like installments
• Revenue sources – covers Operation and maintenance
and debt repayment – only user fee sufficed
Connection charges User charges

13. 1998 – Alandur
Municipality
Budget – 7% of
total estimate of
the project
Public
contribution
accounts to 23%
of the total
project estimate
Viability gap
fund of 3.20 Cr
i.e. 9.25% of the
total estimated
cost
Sustainable
financing
mechanism
F I N A N C I A L S U S T A I N A B I L I T Y & V I A B I L I T Y G A P F U N D I N G
Sources: Financing mechanisms for wastewater and sanitation (ADB)
Public Private Partnership Projects in India (The World bank)
Case Study Underground Sewerage System Alandur
Financial sustainability :
• With prior feasibility study and cost estimation, the bid criteria for the project ensured that the municipality
obtained the best offer in terms of the ‘lowest Evaluated Construction Price’ and the ‘lowest Lease Period’
and hence value for money.
• The lenders TNUIFSL and TUFIDCO placed strict lending conditions on the Municipality, leading the municipality
to accept and implement strong financial discipline measures. This lead to seamless implementation of
projects and made the project more sustainable.
• The municipality had a “pay and take” contract with BOT operator, which meant giving minimum level of
income. The minimum guaranteed inflow increased gradually per year and the price per MLD decreased the
flow increase (Underground Sewerage System Alandur, pg. 8). Hence, the BOT operator had enough
motivation to work efficiently.

14. C O N C L U S I O N :
• Since decentralization is not implemented properly, the municipalities lacked the technical and financial ability
to fund and implement capital intensive projects and hence they had to be implemented through public
private partnerships which gives the municipality the necessary technical and financial support.
• Community mobilization, transparency in financial processes from inception and prioritizing the need of public
should be carried out to achieve inclusiveness.
• Public Participation and contribution form a major source of own revenue for municipality, which increases its
viability.
• A sincere and constant involvement of all the stakeholders will lead to a smooth functioning of the whole city.
• A good communication and proper awareness is necessary to gain consensus and acceptance among the
public.

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http://awasla.org/Docs/ACCESS_Case_study_alandur.pdf-
Mathur, Mukesh P. 2002. ‘Alandur Sewerage Project—A Success Story of Public-Private Partnership Arrangements.’
National Institute of Urban Affairs. New Delhi.
Public Private Partnership Projects in India - Compendium of Case Studies. (2010). [PDF] The World Bank in association Government of India
Ministry of Finance Department of Economic Affairs. Available at: https://pppinindia.gov.in/toolkit/pdf/case_studies.pdf [Accessed 16 Nov.
2018].
Financing mechanisms for wastewater and sanitation. (2016). [ebook] Manila, Philippines: Asian Development Bank. Available at:
https://www.ircwash.org/resources/financing-mechanisms-wastewater-and-sanitation [Accessed 17 Nov. 2018].
Case Study - UNDERGROUND SEWERAGE SYSTEM ALANDUR - Sewerage. (n.d.). [PDF] Available at:
http://www.idd.kar.nic.in/docs/CS_Alandur.pdf [Accessed 14 Nov. 2018].
Approaches to Capital Financing and Cost Recovery in Sewerage Schemes Implemented in India: Lessons Learned and Approaches for
Future Schemes. (2016). [ebook] World Bank Group. Available at:
http://www.indiaenvironmentportal.org.in/files/file/Approaches%20to%20Capital%20Financing%20and%20Cost%20Recovery%20in%20Sew
erage%20Scheme.pdf [Accessed 15 Nov. 2018].
City Corporate cum Business Plan, Alandur Municipality. (2007). [PDF] Government of Tamil Nadu, TNUDF. Available at:
http://tnuifsl.com/documents/ccpbp/Alandur.pdf [Accessed 16 Nov. 2018].
Greater Chennai Corporation : http://chennaicorporation.gov.in/
Chennai Metropolitan Water Supply and Sewerage Board - http://www.chennaimetrowater.tn.nic.in/
R E F E R E N C E S