Project: Alandur Sewerage Project, India
Content Table
- Project: Alandur Sewerage Project, India
1. Overview
The Alandur Sewerage Project is a unique case of Public-Private-Partnership (PPP) in the urban sanitation sector. As the first project in the municipal sanitation sector to take the PPP route in India, this example highlights a model which represents an effective institutional and financial approach towards the implementation of sustainable sewerage services in India. A combination of a well-planned communications strategy together with a high level of community involvement and a wide range of options available for users to finance the service are identified as key factors that have makes the Alandur Sewerage Project a success.
2. Background
Alandur is a town located in the South-East coast of India in the state of Tamil Nadu. The municipality is a residential suburb of Chennai with a population of 165,000 (approximately 25% of which lives in slums).
Prior to the start of the project in 1996, almost 98% of households had individual septic tanks. The fecal sludge and septage from these facilities was periodically collected, but due to a lack of a treatment facility, waste was disposed of in low-lying areas beyond Municipal limits. Where collection systems failed, overflow from tanks discharged into open drains accumulating as stagnant water. Both these situations posed immense health hazards for residents including contamination of the groundwater and creating of breeding grounds for mosquitoes and other insect vectors.
3. Project planning and design
Taking into consideration the lack of properly managed facilities, the Government of Tamil Nadu (GOT) prepared a scheme to cover 12 major urban centres of the state. Specific to Alandur, the scheme intended to:
- Improve the health and standard of living of residents of Alandur, providing them with the most essential basic facilities.
- Eradicate mosquito menace.
- Avoid recurring expenditure on septic tank cleaning and groundwater contamination.
Aiming to serve an estimated population of about 300,000 in 20271, this phased project was designed to build a sewerage stipulated that the municipality should collect deposits from at least 10,000 residents before agreeing to release the finance for the project. In addition, following the primary awareness campaigns, citizens’ commitment towards the proposed sewerage system was assessed through a Willing To Pay (WTP) survey. This highlighted the support of consumers towards contributing to connection, deposits and monthly maintenance charges reassuring investors.
Although the coverage of this network was substantial, consideration was also given to poorer clusters of the population to whom these private sewerage facilities were unaffordable. Where a need for sanitation facilities was identified by slum dwellers or by the Alandur municipality, public toilets were provided by the municipality on public land. If these toilets were unable to be connected to the sewerage network mainly due to distance from the pipe system, septic tanks were used.
4. Technology option
The sewerage system composes a main sewer of 19km, branch sewer lines covering 101km, a pumping station and a sewage treatment plant of a capacity of 24mlpd located at the south-east side of the municipality. Community toilets with on the other hand offered low cost sanitation facilities and were provided with electricity and water connections provide low-income communities with sanitation facilities.
5. Institutional and management arrangements
Tamil Nadu Urban Infrastructure Financial Services Ltd (TNUIFSL) was nominated to coordinate the project implementation (reinforcing good governance, transparency and financial discipline). This asset management company investigated and structured the finances for the project.
Initially it was decided that the municipality would operate and maintain the sewerage system however due to a lack of resources (technical and financial) it was decided by TNUIFSL that the responsibility be awarded via a bidding process to a private contractor. The engineering, procurement and construction (EPC) contractor selected was eventually given the responsibility of designing and building the sewerage system under a Bill Of Quantities (BOQ) basis, as well as financing, designing, building and operating the STP under a Build-Operate-Transfer (BOT) basis over a 14 year lease period2. In addition to construction, the contractor was to operate and maintain the sewerage system over a period of five years from the date of completion of the construction, on a fixed fee basis. The municipality on the other hand was responsible for the collection of tariffs as well as the provision of any new connections.
In order to monitor all these operations, an independent project management consultant was appointed to control, supervise and report on the project to TNUIFSL. In addition to this, a number of committees were set up to monitor activities. The first, a local committee was given the responsibility to organize rigorous weekly progress reviews. State government representatives, in charge of putting together monthly reviews and dealing with all the necessary clearances from line agencies formed a second group. Lastly, a committee composed of representatives of welfare associations contributed to the monitoring of the project bank account. Women groups were also involved in this scheme in order to manage the community toilet facilities.
6. Financing arrangements
The sewerage system component of the project was financed through several sources (Figure 1). The STP on the other hand was financed entirely by the contractor.
One-off deposits in the form of connection charges were collected from users in their different category ranges (domestic, commercial, industrial). A scheme was provided for the benefit of clients, whereby payments could be collected in two instalments as per the convenience of consumers, and a loan facility to cover these was also arranged via a national bank1. Collection centres were opened at various locations making it easy for residents to contribute. The income was put into a revolving fund for the repayment of loans to the lending institutions. In order to offset any deficit in the sewerage account, the state government (GOT) agreed to provide gap funding to bridge any shortfall in domestic connection payments. The public was also expected to contribute towards monthly sewer maintenance charges.
Financial arrangements for community toilet construction as well as connections were made by Alandur Municipality whilst CBOs were responsible for the maintenance and repairs. This money was raised from household monthly charges.
7. Project outcomes and impacts
Five years after the operation of this sewage network, nearly 8,350 of the total of 23,000 households (including slum dwellers) that paid for the sewerage service had connections to the sewerage network1. Where community toilets are concerned, by 2005 a total of 14 public toilets had been constructed in the municipality to be used mainly by the poorer sectors of the population1.
It must be taken into consideration however; that there are households which are not linked to the network whose wastewater is still being discharged into open drains. Water availability also remains to be a problem, which means that it is difficult for the self cleaning of sewers.
8. Overall sustainability of system
TNUIFSL ensured financial discipline by making sure the municipality created a separate account for all project transactions and ensuring a double entry accounting system was set up. All project expenditures and income are remitted into this bank account. In addition, community participation was seen to be key to the implementation and success of the sewage system. Consultations were carried out at all stages and people’s opinions were sought on different issues regarding the project. Institutional arrangements were such that this PPP model used followed a set of guidelines based on a fair, open and competitive bidding process, clear contracted conditions and cost control so private sector involvement did not lead to any increases in service charges for residents.
However, access to water remains a problem especially in relation to the maintenance of the sewerage system. Consequently, new sources of water must be explored in order to ensure sustainability of the sewerage network.
9. Lessons learned
Political will and community support of prime importance
The success of the project demonstrates the importance of strong political will as well as the need for community support. Whilst there was widespread support for a sewerage system in the Alandur already existing, political commitment by the Chairman and Municipal Council was essential to convince citizens to contribute significantly towards the investment cost as well as to accept the need for the involvement of the private sector. This commitment by the community was further proven through a WTP survey and the consequent collection of deposits before any contracting. This approach therefore, provided the necessary assurance to private sectors bidders on the serious engagement of the municipality.
Commitment towards project prior to implementation
In order to ensure sustainability, the lending institutions stipulated that the municipality should collect deposits from at least 10,000 residents before the project was contracted. In addition to this and following the primary awareness campaigns, citizen’s commitment towards the proposed sewerage system was assessed through a Willing To Pay (WTP) survey2. This strategy whereby users are made to pay up-front and are consulted on the tariffs for a new system, ensures their involvement and commitment before the commencement of the project, increasing the chances of it being sustainable.
The inclusive approach
The inclusive approach in which different sectors of the population are taken into consideration based on income levels, proved to be effective when aiming to increase service users. Those unable to afford connections to the sewerage network could enjoy the benefit of using public toilets. Measures such as the ability for domestic customers to pay in instalments ensured that the public’s concerns were addressed. This analysis on the population structure and the needs of residents increased the use of sanitation facilities.
Awareness campaigns and their links to collective involvement.
The Municipality’s concerted efforts in spreading awareness about the project have resulted in a good response from communities. People’s participation has been on-going and this has been encouraged through collective efforts as well as transparent procedures. Not only were the community actively involved in the Alandur Sewerage Project, but all stakeholders and departments were encouraged to make dialogue at the key-decision making stages of the project.
10. Recommendations
Accessible interest rates for citizens
Loan facilities provided by the national bank in order to support citizens towards contribution to connection deposits offered an interest rate of 14.1%2 and thus no households made use of this facility, since it was considered to be too high. It is recommended therefore that any loan facilities in the future be set taking into consideration income-levels of the resident population so as to fix interest rates in order for the loans to be accessible.
11. References
[1] Public private partnerships in india (2010/2011), Case studies Alandur Sewerage Project (online), available at: http://toolkit.pppinindia.com/highways/module3-rocs-asp8.php?links=asp8, accessed on 4th May 2011.
[2] Mathur, M. (2002), Alandur Sewerage Project – A success story of PPP arrangements, India Infrastructure Report, Governance Issues for Commercialization, 3iNetwork, Oxford University Press, New Delhi
12. Contact details
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