WATER SEWERAGE AUTHORITY - FEASIBILITY STUDY FINAL REPORT

Transcription

1 Smart City Master Planning and Sector-specific Smart City Infrastructure Projects for Visakhapatnam WATER SEWERAGE AUTHORITY FEASIBILITY STUDY FINAL REPORT i

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3 Copyright Wilson Blvd. Suite 900 Arlington, VA USA Telephone: +1 (703) Internet: December 2017 Rights and Permission The material in this work is subject to copyright. Because encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. General Limiting Conditions devoted effort consistent with (i) that degree of care and skill ordinarily exercised by members of the same profession currently practicing under same or similar circumstances and (ii) the time and budget available for its work in its efforts to endeavor to ensure that the data contained in this document is accurate as of the date of its preparation. This study is based on estimates, assumptions and other information developed by from its independent research effort, general knowledge of the industry, and information provided by and consultations with the Client and the Client s representatives. No responsibility is assumed for inaccuracies in reporting by the Client, the Client s agents and representatives, or any third-party data source used in preparing or presenting this study. assumes no duty to update the information contained herein unless it is separately retained to do so pursuant to a written agreement signed by and the Client. s findings represent its professional judgment. Neither nor its parent corporation, or their respective subsidiaries and affiliates, makes any warranty, expressed or implied, with respect to any information or methods disclosed in this document. No recipient of this document other than the Client shall have any claim against, its parent corporation, and its and their subsidiaries and affiliates, for any liability for direct, indirect, consequential, or special loss or damage arising out of its receipt and use of This document whether arising in contract, warranty (express or implied), tort or otherwise, and irrespective of fault, negligence and strict liability. iii

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5 TABLE OF CONTENTS Executive summary 1 Infrastructure Challenges 1 Revenue Generation 2 Organizational Capacity 2 SWOT Analysis on Existing GVMC Operation 2 Independent Authority Model 4 1. Project Rationale Background Infrastructure Challenges Goals for Water and Wastewater System SMART Vision Assessment of As-Is Situation GVMC Operation As-Is Study Governance and Operational Process SWOT Analysis on Existing GVMC Operation Analysis of Organizational Governance Options Business As-Usual Model Private Sector Service Provider Model Independent Authority Model Comparative Assessment of Three Models Case Studies on Existing Independent Water Authorities 31 Case Study # 1: Bengaluru Water Supply and Sewerage Board 31 Case Study # 2: Chennai Metropolitan Water Supply and Sewerage Board 36 Case Study # 3: Hyderabad Metropolitan Water Supply and Sewerage Board 42 Case Study # 4: Tampa Bay Water, Florida, the United States of America Next Steps 51 v

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7 Acronyms and Abbreviations APEPDCL Andhra Pradesh Eastern Power Distribution Company Ltd. APGENCO CEO CMAR DB DBF DBFOM DBOM EoI GHG GVMC HPSC IT kv MW NREDCAP O&M OT PV RFP RFQ SCADA SOQ SPV ULB VfM VUDA Andhra Pradesh Power Generation Company Chief Executive Officer Construction Manager at Risk Design-Build Design-Build-Finance Design-Build-Finance-Operate-Maintain Design-Build-Operate-Maintain Expression of Interest Greenhouse Gas Greater Visakhapatnam Municipal Corporation High Powered Steering Committee Information Technology kilovolt megawatts New & Renewable Energy Development Corporation of Andhra Pradesh Limited Operations and Maintenance Operational Technology Photovoltaic Request for Proposals Request for Qualifications Supervisory Control and Data Acquisition Statement of Qualification Special Purpose Vehicle Urban Local Bodies Value for Money Visakhapatnam Urban Development Authority vii

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9 Executive summary EXECUTIVE SUMMARY The aim of Mission Smart City is to efficiently utilize available Assets, Resources, and Infrastructure to enhance the quality of Urban Life and provide a clean and sustainable environment for living. The primary focus of this initiative is to develop and maintain core infrastructure and public services like providing adequate clean water supply, power supply, sanitation, disaster management, solid waste management, wastewater treatment, efficient urban mobility and public transportation, public healthcare system, education, affordable housing, robust IT connectivity, e-governance, safety, and social security. The Government of Andhra Pradesh ( GoAP ) with the assistance of the Government of the United States of America ( USA ) Department of Commerce, United States Trade Development Agency ( USTDA ), and United States Export-Import ( EXIM ) Bank is keen on developing the city of Visakhapatnam ( Visakhapatnam ) as a Smart City under the 100 Smart Cities Project of the Government of India ( GoI ). Infrastructure Challenges The residents of GVMC receive limited water supply due to inadequate infrastructure in terms of water supply sources, treatment, distribution, collection, treatment, and disposal networks. The raw water sources are dependent upon monsoon, thus placing additional pressure on supply and usage during low-rainfall years. Metering along the network and / or at connections combined with progressive tariff structures, and enhanced focus on long-term planning for the raw water sources, conveyance, treatment, distribution as well as collection, treatment and safe disposal of treated wastewater can contribute to better water supply, efficiency of use, and long-term sustainability. 1

10 Executive summary GVMC has initiated public sector participation in expanding the water supply to provide safe drinking water to its residents on a 24/7 basis, and strengthening the wastewater system, which currently covers approximately 50 percent of GVMC geographic area. Key challenges include the following: Increasing the coverage area Developing a comprehensive master plan for safe drinking water supply and wastewater system Fostering data creation on water and wastewater systems performance Developing an effective communication strategy Energy conservation Promoting rainwater harvesting Reuse of treated wastewater / effluent Safe disposal of treated sewage into water bodies. Revenue Generation The Revenue Department of GVMC is responsible for revenue generation by levying the Property Tax and Vacant Land Tax as well as its collection and dealing with Remunerative Enterprise and Water Charges. During Fiscal Year , total estimated revenue receipts were INR crores. (See Figure 1) Organizational Capacity A Special Purpose Vehicle ( SPV ) has been established for the purposes of delivering key infrastructure projects under the Smart City initiative. The SPV, in coordination with GVMC and a Program Management Unit ( PMU ), is responsible for developing and implementing planned infrastructure projects. The PMU will provide advisory services on technical and financial aspects during the implementation of various smart city projects. SWOT Analysis on Existing GVMC Operation The discussion below summarizes major strengths, weaknesses, opportunities, and threats under the existing operational model of GVMC for the water and sewerage services. Key aspects of the SWOT analysis are listed below. Strengths City Development Plan and comprehensive approach to infrastructure development across GVMC service area Inclusion of VUDA Master Plan and City Mobility Plan VISWCO provides water supply and treatment for industrial use 2

11 Executive summary Approximately 15 percent of total annual revenues generated are contributed from water supply services Proposal for 4 additional STPs to provide for 100 percent coverage under GVMC Identification of 30 urban infrastructure projects as candidates for potential EPC and/or PPP delivery Proposal to build 1,079 km of new water supply lines to reach 85 percent water supply coverage and to cater the growing per capita water demand of 150 LPCD Weaknesses Prolonged process of fund allocation and utilization of available funds for the planned infrastructure projects Approximately 35 percent gap in water supply network Loss of potential revenues due to lack of metering and monitoring infrastructure Unaccounted loss of water resource due to leakage Out of 436,300 households only 85,357 have a direct sewer-line connection Inadequate asset management and information collection system Opportunities Potential to establish a separate entity responsible for water supply and sewerage services across greater Visakhapatnam, inclusive of all municipalities to drive operational improvements and costefficiencies Development of water supply and sewer infrastructure under AMRUT scheme Implementation of SCADA system and GIS for information-based live monitoring of service quality and to prevent water loss Creation of MIS system for financial performance and project progress monitoring SPV-driven implementation model for SMART infrastructure projects as well as leveraging international funding for infrastructure development Threats Rapid growth in water demand for domestic and industrial purposes Regional inadequacy of raw water sources and lack of desalination infrastructure Unsustainable financial model for water supply and growing revenue loss Inadequate technology implementation to monitor supply network and leakages 3

12 Executive summary There are distinct advantages and disadvantages to using each of these three governance models to provide water and wastewater services to the residents of greater Visakhapatnam metro region and adjoining jurisdictions. The Business as Usual model is familiar and known well by all stakeholders. A transition from a Business As-Usual model to either the Private Sector Service Provider or an Independent Authority model could significantly enhance the organizational efficiencies, the level of service and overall customer satisfaction. While the Private Sector Service Provider model can improve organizational performance and service delivery through innovation, expertise and technology and operational improvements, the Independent Authority model offers the best elements of both with enhanced transparency in operations, access to public sector funding and financing and improved level of service. One of the additional benefit of an Independent Authority model is that the proposed Authority will be able to effectively leverage the private sector expertise and innovation through Public-Private Partnerships ( PPP / P3 ) to serve the existing water supply network and to expand the service areas to adjoining jurisdictions. The PPP/P3 procurement method will allow the Authority to transfer appropriate risks to the private sector, including design, construction, operation, maintenance and performance risks. Independent Authority Model The Independent Authority Model is mid-way between the Business As-Usual and the Private Sector Service Provider models. Under this model, GVMC would establish an Independent Authority a quasigovernment entity responsible for providing water and sewerage services in the greater Visakhapatnam metro area. The Authority will be responsible for performing all functions associated with ensure that the current and future demand for services is met, including long-term planning of resources and ensuring financial stability of the Authority. In regards to the governance structure, the Authority could have a Board of Directors from GVMC and other local entities. Figure 2 presents the governance structure for an Independent Authority model for the water and sewerage services. The proposed Independent Water Authority model is widely used as the governance / organizational structure for delivering water and wastewater services across the world. In most cases, these independent authorities operate under an Enterprise Fund basis and typically have a Board of Directors that provide guidance on policy matters and future direction in terms of meeting the needs of existing and future customers / service areas, rate-setting and planned investment. 4

13 Executive summary As GVMC explores the feasibility of establishing an Independent Water and Wastewater Authority for the greater Visakhapatnam region and adjoining jurisdictions, the analysis should be guided by the following principles: Water as a product / service Full recovery of the cost of service Restructuring of the role of GVMC Increasing participation of the private sector Decentralization of governance Several major Indian cities like Bengaluru, Chennai, Hyderabad, and New Delhi have adopted an independent authority model for public services including water Supply and sewerage services. As such, GVMC should leverage these entities experience and lessons learned. The Project Team understands that in order to establish an independent water and wastewater authority, the Government of Andhra Pradesh has to enact legislation establishing the proposed entity (including outlining its core roles, responsibilities, powers, governance structure, transfer of physical and financial assets / resources and liabilities, etc.). Further, the Act will need to contain an enforceable set of regulations or standard practices in terms of resource management, supply of water as a commodity, quality assurance of services, sustainable revenue model and standards of operational practice to ensure a sustainable water cycle. Such a transition from the current GVMC functional structure to the proposed authority model will require the following considerations to ensure uninterrupted service, improved service quality, increased revenue generation, reduction in water loss, smooth transfer of all physical and financial assets and resources, and protected benefits (e.g., health, salary, pension, seniority, etc.) for current employees. Legislation: The proposed transformation of water and wastewater services in the greater Visakhapatnam metro area will require a legislation outlining the roles, responsibilities of the Authority and enforceability of the legislation. In other words, the Authority has to be properly constituted legally empowered to deliver its mission effectively and cost-efficiently. Asset Management: Responsibilities for maintaining / servicing all physical assets related to water supply and wastewater service (i.e., plants, mains, pumping stations, buildings, fleet, etc.) should be with the proposed Authority. The proposed Authority can perform these services using internal resources or contract with either GVMC or private sector contractors. Consideration should be given to the transfer of assets and liabilities associated with the water and wastewater services to the proposed Authority. 5

14 Executive summary Administrative Hierarchy: The Government of Andhra Pradesh will have to decide if the administrative control over the proposed Authority will be transferred to ULB 1 / GVMC. It is assumed that all existing employees associated with the water and wastewater services will be transferred to the proposed Authority with the same salary, benefits, pension plan and seniority. However, these costs will be reflected in the cost of service and revenues collected under an Enterprise Fund will be able to reimburse GVMC and / or the Government of Andhra Pradesh for any financial contributions made to the Authority. Funding and Financing Sources: The proposed Authority should have full access to various funding and financing sources that are currently available to GVMC. Consideration should be given to allow the proposed Authority to issue taxable and tax-free bonds to finance long-term capital improvement projects as well as access to various procurement methods (i.e., design-build, design-build-maintain, PPP/ P3, others) to delivery planned projects and services. 6

15 1. Project Rationale 1. PROJECT RATIONALE 1.1 Background The Government of Andhra Pradesh ( GoAP ) with the assistance of with the assistance of the United States Trade and Development Agency ( USTDA ) is keen on developing the city of Visakhapatnam as a Smart City under the 100 Smart Cities Mission of the Government of India ( GoI ). The aim of the Smart Cities Mission is to efficiently utilize available assets, resources, and infrastructure to enhance the quality of urban life and provide a clean and sustainable environment for living. The primary focus of this initiative is to develop and maintain core infrastructure and public services like providing adequate clean water supply, power supply, sanitation, disaster management, solid waste management, wastewater treatment, efficient urban mobility and public transportation, public healthcare system, education, affordable housing, robust IT connectivity, e-governance, safety, and social security. As a key deliverable for Task # 18, under Phase-III of the Visakhapatnam Smart City project, this Feasibility Study Report is intended to provide guidance for the identification of high-level governance and organizational requirements and target implementation frameworks for an independent Water and Wastewater Authority dedicated to water sector services across the Greater Vishakhapatnam under Greater Visakhapatnam Municipal Corporation ( GVMC ) jurisdiction. The report outlines current water supply and wastewater infrastructure scenarios and key requirements in Vishakhapatnam through an As-Is study of current GVMC operations. It also assesses pros and cons of three Operational Governance Options including business as-usual, a private service provider model, and an independent authority model. A preferred governance option is identified, with further evaluation relating to implementation cost, preliminary economic analysis, business model and financing structure detailed later in the study. The feasibility study also includes a baseline assessment of positive environmental and social impacts of the proposed water supply and wastewater operational structure. 1.2 Infrastructure Challenges The residents of GVMC receive limited water supply due to inadequate infrastructure in terms of water supply sources, treatment, distribution, collection, treatment, and disposal networks. The raw water sources are dependent upon monsoon, thus placing additional pressure on supply and usage during low-rainfall years. Metering along the network and / or at connections combined with progressive tariff structures, and enhanced focus on long-term planning for the raw water sources, 7

16 1. Project Rationale conveyance, treatment, distribution as well as collection, treatment and safe disposal of treated wastewater can contribute to better water supply, efficiency of use, and long-term sustainability. GVMC has initiated public sector participation in expanding the water supply to provide safe drinking water to its residents on a 24/7 basis, and strengthening the wastewater system, which currently covers approximately 50 % of GVMC geographic area. Key challenges include the following: Increasing the coverage area Developing a comprehensive master plan for safe drinking water supply and wastewater system Fostering data creation on water and wastewater systems performance Developing an effective communication strategy Energy conservation Promoting rainwater harvesting Reuse of treated wastewater / effluent Safe disposal of treated sewage into water bodies. 1.3 Goals for Water and Wastewater System GVMC has established the following operational goals in alignment with the Ministry of Urban Development s ( MoUD ) Service Level Benchmarks ( SLB) from Urban Local Bodies ( ULBs ), as per Water Supply, Wastewater and Storm Water Drainage Services guidelines 1 : 24/7 supply of water supply to the City in phases 100 % of households with direct water supply connections 135 liters of safe drinking water supply per capita 100 % metering of water connections to minimize losses 100 % efficiency in collection of water related charges Implementation of SCADA 2 and SMART metering system 100 % of households should be connected to the wastewater / sewerage network 100 % efficiency in the collection and treatment of wastewater / sewerage 100 % of households should have access to toilets 100 % of schools should have separate toilets for girls Cost recovery of water and wastewater services through SMART installations 1 Source: GVMC Presentation, Supervisory control and data acquisition 8

17 1. Project Rationale Development of GIS 3 and mapping of water and sewerage connections Policy and regulatory framework for all major stormwater drains across service area 100% coverage of road network with connections to storm water drainage network Zero incidents of water logging reported in a year 100 % rainwater harvesting and improving the environment Operational Benefits GVMC will realize operational efficiencies and cost-benefits by achieving the goals listed above. In previous years, the organization has identified several operational issues related to low service coverage, restoration of surface water resources, water logging during monsoon season, lack of mapping of water bodies, irregular branching of major drains, issues related to safe disposal of treated sewage, drinking water quality and health hazards, growing demand of safe drinking water supply, distribution loss, low revenue generation and cost recovery, and loss of potential revenue due to lack of metering. Through effective water supply resource management and monitoring, SCADA, GIS-based information analysis, and a SMART meteringbased billing system, GVMC can achieve significant operational efficiencies and cost-benefits, and enhance revenues from water and wastewater services to maintain a high level of service. Financial Benefits GVMC is supplying safe drinking water service at a subsidized rate to its residents. The revenues generated through water supply networks is typically lower than the total costs of sourcing raw water, conveyance of raw water to treatment facilities, and operational costs (e.g., treatment, distribution, administrative, etc.). GVMC is also facing significant revenue loss due to leakage of treated water from the distribution network, and supplying of safe drinking water to certain urban areas with no metering system to determine the per capita usage. GVMC could improve its financial strength by requiring the full cost recovery for its water and wastewater services on an equitable basis. For example, with a renewed focus on revising the tariff structure for the water and wastewater services, GVMC will be able to fast track planned water supply and wastewater projects to address the gap in services. Additionally, installation of the SMART metering system and SCADA and GIS-based information technology/management systems will help to save water resources and reduce financial losses, and aid GVMC in systematically monitoring the entire service area, helping to address the challenges inherent in rapid growth of water demand. 3 Geographic information system 9

18 1. Project Rationale Administrative Benefits Presently, the drinking water supply network covers the geographic areas of GVMC, Visakhapatnam Urban Development Authority ( VUDA ) and Visakhapatnam Industrial Water Supply Company ( VIWSCO ). The coverage area has four divisions, including one division for the Old Town area, Central area, Gajuwaka area, and one for the remaining 32 Peripheral areas. Currently, not all service areas are covered by the metering system and there are several slums and informal settlements which are provided with non-revenue drinking water services. As a result of disparate and devolved responsibility for collection of revenue, allocation of funds among separate jurisdictions, and competing constituencies / local interests, the administrative process of managing the current water and wastewater system is highly complex. GVMC recognizes that an independent entity responsible for the planning and operations of a water and wastewater system covering the entire GVMC and adjoining jurisdictions could be helpful in terms of efficient allocation of resources, generation of adequate revenues to meet the current and future demand for water and wastewater services and to provide a higher level of services in a cost-efficient manner. Social Benefits GVMC s drinking water supply service is currently facing an approximately 30 % gap as compared to the current demand requirements. This gap is expected to increase unless effective measures are taken to augment the current water supply infrastructure, including the installation of a SMART metering system, and implementation of critical operational reforms. With respect to social benefits, public awareness programs will need to be launched for citizens across all jurisdiction to promote efficient use of the available water resources, to explain how citizens can participate in water saving initiatives, including rainwater harvesting and reuse of treated effluent, reduce water pollution, and safeguard surface water resources. Public participation, access to critical water data, education on water resources and usage, environmental programs, and transparency in services through e-governance platforms will benefit the residents of Visakhapatnam and help to foster a long-term sustainable community for future generations. 1.4 SMART Vision The Smart City Master Planning and Sector Specific Infrastructure Project Plans for the Visakhapatnam assignment is set to expand upon the vision set out in the successful Smart City Challenge Proposal in two key ways geographically, to include the entire VUDA planning area, and programmatically, to address regional social and economic aspirations within the State of Andhra Pradesh, India and South / Southeast Asia. Over the course of the execution of the Smart City Mast Planning and Sector Specific Infrastructure Project Plan meetings with GVMC, VUDA, infrastructure providers and key stakeholders, it was determined that for Visakhapatnam and its surrounding region, the 10

19 1. Project Rationale concept of a Smart City must be more than simply a series of new developments. Rather, it must serve as a means to achieving a new sustainable model of clean and diverse economic growth based on enhanced quality of life for residents, visitors and corporate citizens. In this way, Smart City systems, as well as their planning, procurement, and implementation, act as catalysts that accelerate progress towards regional aspirations. The primary goal of Smart City projects in the region will be to improve livability for individual and corporate citizens. The intent of these projects is to set in motion a virtuous circle of sustainable infrastructure investments, high-quality urban environmental initiatives, investments in workforce attraction and retention, and increase local government revenue base to maintain a high level of service. The forthcoming plans and projects are intended to serve as catalysts for sustainable, cyclical progress towards regional goals by promoting: Higher customer satisfaction and citizen buy-in for planned investments More responsive service delivery and smaller carbon footprint Conservation and enhancement of natural and social resources Lower marginal costs for improved services Lower overall infrastructure development and operations costs for improved services Closure of infrastructure gaps in the most cost-effective manner In the water sector, a key smart initiative includes effective metering systems to track accurate water usage and loss of resources due to technical issues like leakage in the distribution system. Considering regional scarcity of water resources and high importance of availability of adequate safe water supply for economic growth, GVMC should work to augment smart infrastructure with initiatives such as implementation of SCADA and sensors, SMART metering, rainwater harvesting, advanced wastewater treatment, and water recycling to maximize the usage of treated effluent. Ultimately, real time Information as it relates to system performance and availability is the core initiative underlying all other smart city initiatives. This real-time data will include information regarding water levels at all reservoirs in terms of volumetric capacity, daily and peak water demand and supply gaps for service areas under different zones, and information about water recycling data and usage. These network vital signs will allow the service provider to analyze, assess and interpret for mitigation of any operational issues or risks. In order to provide better services to citizens and cater to the rapidly growing demand for industrial water, a region-based GIS should be developed, incorporating the data related to water services through the SCADA system. This report has evaluated and incorporated analyses of similar smart initiatives undertaken by other independent authorities. 11

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21 2. Assessment of As-Is Situation 2. ASSESSMENT OF AS-IS SITUATION 2.1 GVMC Operation As-Is Study Based on the primary information collected through discussions and meetings with GVMC, other relevant authorities and key stakeholders, the Project Team has briefly summarized the existing water sector infrastructure scenario in the discussion below Water Supply Currently in Vishakhapatnam there are three operational water supply entities as listed below: GVMC VUDA Visakhapatnam Industrial Water Supply Company Limited ( VIWSCO ) GVMC possesses baseline information on various sources of water supply throughout the GVMC area, including source canals, raw water transmission mains, water treatment plants, zone-wise data, and major clear water trunk and distribution pipes. As per the details provided, GVMC is currently supplying approximately 285 million liters per day ( MLD ) of safe drinking water supply to the Visakhapatnam region, which includes approximately 74 MLD to bulk consumers. To meet the daily water supply requirements, approximately 246 MLD of raw water is being drawn from seven surface water sources and 30 MLD of raw water is drawn from four sub-surface sources (Infiltration wells in river course / near vicinity of reservoirs). An additional 10 MLD of raw ground water is drawn through bore wells (pilot water supply schemes). For additional information, refer to zone-wise water distribution information available with GVMC. VIWSCO was established to meet the industrial water needs of the major corporations operating in the region, including RINL, NTPC and VMC. 13

22 2. Assessment of As-Is Situation Source: GVMC Figure 1 GVMC s Water Supply System Overview Plan Source: GVMC Figure 2 Water Resources for Town Service Reservoir ( TSR ) 14

23 2. Assessment of As-Is Situation The Godavari River serves as the primary source of raw water for GVMC, located around 56 kilometers ( km ) from the Yeleru reservoir and connected to Yeleru Left Main Canal ( YLMC ). Other sources to TSR are the Raiwada, Meghadri Gedda Reservoir ( MGR ), Thatipudi, Gosthani, and Mudasarlova Reservoirs. The sub-surface sources (infiltration wells) of raw water to GVMC include the Boni, Samayyavalasa and Nagaripalem in Gosthani course, MGR downstream infiltration wells, and infiltration wells from the Sarada River. Pilot water supply schemes (ground water) with bore wells also contribute to the GVMC water supply. In terms of storage of raw water, based on available data, total water storage capacity in GVMC region is estimated at about 129 ML. There are a total number of 317 reservoirs in the GVMC area; approximately 91 ML is the total Ground Level Service Reservoirs (GLSRs) storage capacity and 38 ML is the total storage capacity of Elevated Level Service Reservoirs (ESSRs). The increase in storage capacity of ELSRs and GLSRs nearing completion as part of on-going projects is around 40.5 ML. Total storage reservoirs storage capacity is about ML. The raw water storage capacity is being planned in some areas to meet summer water demand / supply requirements. Storage reservoir capacity at Kondkarlava and Gopalpatnam is scheduled to be increased through a series of expansion projects, along with construction of the Annicut / check dam at the Gosthani River at Boni headworks. Water is being supplied to consumers through ELSRs and GLSRs at various locations in respective water zones. Source: GVMC Figure 3 Geographic Areas Water Supply Service 15

24 2. Assessment of As-Is Situation Presently, the GLSRs and ELSRs storage capacities are adequate to meet demand at the current service level. Overall, there are four areas that represents the water supply network for the region: 1. Old town area 2. Central area 3. Gajuwaka area Peripheral areas Prior to 2005, GVMC area was divided into four zones: Old city, North East Central City, North West Central City, and South West Central City. Gajuwaka Municipality and 32 surrounding peripheral panchayats merged into the GVMC area in Two water supply zones including the Gajuwaka Zone and 32 Peripherals (there are an additional three sub zones Gajuwaka region, Pendurthi region and Maduravada region), the Bheemili and Anakapalli Municipalities, and five surrounding panchayats ( local governments ) have been recently merged into GVMC. Current Water Supply Service The summary of a high-level review of the current water supply service with respect to the MoUD GoI for water supply services is summarized below: Table 1 Status of Water Supply Service Levels Number Indicators Current Status MoUD Benchmark 1 Coverage of water supply connections 65% 100% 2 Per capita supply of water 114 LPCD 150 LPCD 3 Extent of metering of water connections 20% 100% 4 Extent of non-revenue water 40% 20% 5 Quality of water supplied 100% 100% Source: GVMC Coverage of water supply connections The existing gap in water supply coverage of approximately 30 % is targeted to be reduced to less than 25 % upon completion of on-going JNNURM 4 projects (which are nearing completion) and will be further reduced to less than 15 % on completion of the first year AMRUT 5 investment plan. 4 Jawaharlal Nehru National Urban Renewal Mission 5 ATAL MISSION FOR REJUVENATION AND URBAN TRANSFORMATION 16

25 2. Assessment of As-Is Situation Per capita supply of water The estimated gap in per capita supply of water of 35 LPCD is primarily due to transmission losses in the Raiwada and Yeleru canals, which is resulting in less than optimal utilization of existing water treatment plants. However, the Project Team understands that efforts are underway to bridge this gap in per capital supply of water through increased output from existing and new raw water sources. Extent of metering of water connections GVMC has an approximately 80 % gap in metering of water connections. This deficit is being addressed in a phased manner as it is directly dependent on public acceptance of metered services for safe drinking water supply as well as stakeholder collaboration and coordination. Extent of non-revenue water The estimated gap of approximately 20 % in non-revenue water is primarily due to factors such as 7,963 public stand posts in GVMC, water tankers supplying unserved and ill served areas of GVMC where there is no existing piped water supply, and issues in certain housing developments and communities in administering and collecting the water tax. Quality of water supplied Overall the water quality is as per the requirements for safe drinking water supply. No specific issues regarding water supply quality have been identified by GVMC studies and data. The existing system will not be able to address the gaps in water supply and improve coverage of the water network unless the above ongoing projects are completed and newly proposed projects now under consideration are funded and implemented. An additional 1,079 km of network has been proposed under JNNURM (under construction), Asian Development Bank ( ADB ) projects, and AMRUT. On completion of these planned projects, the per capita water supply is likely to increase to 150 LPCD, in line with MoUD benchmarks. The coverage of water supply connections is likely to increase from 70 % to more than 85 % and collection efficiency of water tax / fees is likely to increase further from the present levels. Wastewater Management Currently in Vishakhapatnam, two authorities are primarily responsible for wastewater / sewerage management: GVMC VUDA The sewage network system of GVMC is divided into 20 zones (excluding Anakapalli and Bheemili). Presently, approximately 32 % of the region s population is covered with an underground drainage ( UGD ) network. It is estimated that upon completion of the on-going projects, the coverage is likely to increase to more than 50 % of the region s population with an UGD network. Total network coverage is anticipated to be completed in 9 phases. 17

26 2. Assessment of As-Is Situation GVMC has prepared detailed plans and information regarding UGD for the existing system network in the central zone, the Old City area, and on-going projects under implementation. Presently, Detail Project Reports ( DPRs ) are being developed for the remaining zones through help from external consultants appointed by GVMC. The Anakapalli and Bheemili non-ugd system already exists. Out of 20 total zones / blocks, 9 zones are completed, 5 zones / blocks are covered in JNNURM and work is in progress, and 3 blocks, in the Bheemili and Anakapalli area, are in the process of preparing DPRs through help from external consultants appointed by GVMC. GVMC divides the region into 20 sewerage blocks. The current status of these sewerage blocks are summarized below: Completed - 9 Blocks; In progress - 5 Blocks; To be taken up - 6 blocks Existing sewerage network is approximately 496 km Number of sewerage connections are about 91,000 (new connections in progress) Total area of sewerage covered corresponds to approximately 60 % by population Two Sewerage Treatment Plants (STPs) are currently functioning with capacity of 63 MLD Presently, the sewerage system covers about 30 % of the area with a sewerage network along with decentralized STP, while some areas have individual septic tanks and no standard method of draining / cleaning septic tanks; while in Anakapalli efforts are on-going to develop septate management STP. Overall, of the 9 planned phases to complete the UGD scheme of GVMC s network, 3 phases have been completed and Phase 4 is currently in progress. Upon completion of on-going and planned projects, 14 out of 20 blocks will be covered with UGD, resulting in more than 50 % of network coverage (blocks 1-11, 14, and 15). 3 blocks (12, 13, and16) have submitted their DPRs to the Government for review and approval. While DPRs are under preparation for the remaining 3 blocks (16, 17, and 19), merged villages, Anakapalli and Bheemili separately. A total of 213,000 households were in the service area in year 2011, of which 83,486 HSE existed, excluding the Bheemili and Anakapalli areas where no sewerage system exists. 18

27 2. Assessment of As-Is Situation Table 2 Status of Household Sewerage Connections for all Zones: Total number of households Households with sewerage network Households with septic tank Households without any outlets for toilets 436,300 85, ,943 14,000 Source: GVMC Available data indicates that the UGD sewerage system coverage in the region is as low as 6 % of dwellings. With the ongoing projects by JNNURM, the UGD area under sewerage is projected to increase to more than 18 % of the region s dwellings, covering approximately 54 of the population in those areas. Given population growth projected through 2030 based on 2011 census figures, the population trend will require an increase in STP capacity to rise from MLD currently to approximately MLD in Summary of existing sewerage service, treatment capacity and infrastructure gap: Volume of sewage treated in existing STPs: 57 MLD Total sewage generated (including in Anakapalli and Bheemili): 181 MLD Sewage treatment rate: Approximately 31 % of the total sewage volume generated on a daily basis Estimated population covered by existing STPs: Approximately 3.52 lakhs Current area covered / serviced by existing STPs: 19 sq. km On completion of on-going projects: ÀÀ The total capacity of STPs is projected to be 214 MLD ÀÀ Population coverage by the STPs is likely to increase to more than 10 lakhs ÀÀ Area coverage by STPs: 106 sq. km Number of currently operational STPs and their capacities, by area, are listed below: 1. Appughar - 25 MLD (20 MLD spare capacity available) 2. Old City - 38 MLD (15 MLD spare capacity available) 3. Mudasarlova - 13 MLD (6 MLD spare capacity available) 4. Mini STPs - 31 MLD (16 MLD spare capacity available) 5. Total capacity MLD (57 MLD spare capacity available) 19

28 2. Assessment of As-Is Situation Table 3 Gap in Sewerage Infrastructure as per 2021 Projected Demand Components Existing Ongoing Projects Total Capacity 2021 Demand Gap by 2021 Sewerage network (km) , Number of households covered by system 83, , , ,468 2,400,000 Source: GVMC Table 4 Gap in existing Sewerage Service Network with respect to MoUD Benchmarks No. Indicators (as per SLB framework) Existing Service Level MoUD Existing Gap 1 Coverage of latrines (individual or community) 96.69% 100% 3.21% 2 Coverage of sewerage network services (household services) 19.56% 100% 80.44% 3 Efficiency of collection of sewerage 26.64% 100% 73.36% 4 Efficiency in Treatment: Adequacy of sewerage treatment capacity 47% 100% 53% Source: GVMC There are 4 STPs proposed in different areas to achieve 100 % sewerage treatment coverage. With the planned STPs, the proposed combined treatment capacity of existing and planned STPs will reach approximately 167 MLD. Table 5 Gap in Existing Sewerage Service Network with Respect to MoUD Benchmarks No. Proposed STP capacity Areas covered Coverage 1 84 MLD Gajuwaka, Malkapuram and Yarada Blocks 12,13,16 Coverage of population is 22.67% Coverage of area is 21.15% 2 51 MLD 32 merged peripherals Blocks17,18,19 Coverage of population is 16.16% Coverage of area is 54.25% 3 18 MLD Anakapalli Coverage of population is 4.78% Coverage of area is 4.11% 4 14 MLD Bheemili Coverage of population is 2.88%, Coverage of area is 3.34% Source: GVMC 20

29 2. Assessment of As-Is Situation 2.2 Governance and Operational Process Organizational Structure GVMC has a total of 11 functional verticals led by the Commissioner, including: General Administration, Projects, Engineering, Revenue, Public Health, Town Planning, Horticulture, UCD, Education, Finance, and Information Technology & E-Governance. Responsibilities for the water supply and sewerage services are under the Engineering Operational Head and Superintendent Engineer, supported by: Three Executive Engineers and a Superintendent Engineer ( WSM ); Two Executive Engineers. Figure 4 An Organizational Structure of Engineering Verticals under GVMC Commissioner Funding/Budget Allocation As per GVMC, for Fiscal Year GVMC had an estimated authorized budget of approximately INR 1,690 crores with an opening balance for the fiscal year amounting approximately INR 110 crores. Total estimated capital funds under the allocated budget was approximately INR 285 crores and estimated revenue was approximately INR 1,405 crores. The Water Supply Division was allocated INR crores, while the annual allocated fund for the Engineering vertical was approximately INR 171 crores. In addition to the allocated budget, funding from various GoI programs were as follows: JNNURM program funding was INR crores Rajiv Awas Yojana ( RAY ) funding was INR 50.0 crores 13th Finance Commission grant was INR 50.5 crores 21

30 2. Assessment of As-Is Situation Besides these aforementioned funds, GVMC has obtained deposits and advances of INR crores for its operations. Comprising all the funding sources, GVMC s total estimated fund allocation for Fiscal Year was INR 2,304.0 crores against estimated expenditures of INR crores 6. Revenue Generation The Revenue Department of GVMC is responsible for revenue generation by levying the Property Tax and Vacant Land Tax as well as its collection and dealing with Remunerative Enterprise and Water Charges. During Fiscal Year , total estimated revenue receipts were INR crores. A large majority of revenues were estimated to have been contributed by General Administration, mostly in the form of municipal taxes amounting to 67 % of total revenue generation (INR crores). Water Supply and Town Planning divisions accounted for approximately 15 % each (INR crores) and the remainder came from the Health and Engineering verticals. Organizational Capacity Figure 5 Distribution of Revenue Sources FY A Special Purpose Vehicle ( SPV ) has been established for the purposes of delivering key infrastructure projects under the Smart City initiative. The SPV, in coordination with GVMC and a Program Management Unit ( PMU ), is responsible for developing and implementing planned infrastructure projects. The PMU will provide advisory services on technical and financial aspects during the implementation of various smart city projects. Presently, approximately 30 projects have been identified for implementation through Engineering, Procurement, and Construction ( EPC ), Public-Private Partnership ( PPP ), and / or other Alternative Project Delivery ( APD ) methods. These projects will be funded through various central and state government schemes as well as user fees and local taxes. 6 Source: GVMC Budget Estimate

31 2. Assessment of As-Is Situation 2.3 SWOT Analysis on Existing GVMC Operation The discussion below summarizes major strengths, weaknesses, opportunities, and threats under the existing operational model of GVMC for the water and sewerage services. Key aspects of the SWOT analysis are listed below. Strengths City Development Plan and comprehensive approach to infrastructure development across GVMC service area Inclusion of VUDA Master Plan and City Mobility Plan VISWCO provides water supply and treatment for industrial use Approximately 15 % of total annual revenues generated are contributed from water supply services Proposal for 4 additional STPs to provide for 100 % coverage under GVMC Identification of 30 urban infrastructure projects as candidates for potential EPC and/or PPP delivery Proposal to build 1,079 km of new water supply lines to reach 85 % water supply coverage and to cater the growing per capita water demand of 150 LPCD Weaknesses Prolonged process of fund allocation and utilization of available funds for the planned infrastructure projects Approximately 35 % gap in water supply network Loss of potential revenues due to lack of metering and monitoring infrastructure Unaccounted loss of water resource due to leakage Out of 436,300 households only 85,357 have a direct sewer-line connection Inadequate asset management and information collection system 23

32 2. Assessment of As-Is Situation Opportunities Potential to establish a separate entity responsible for water supply and sewerage services across greater Visakhapatnam, inclusive of all municipalities to drive operational improvements and costefficiencies Development of water supply and sewerage infrastructure under AMRUT scheme Implementation of SCADA system and GIS for information-based live monitoring of service quality and to prevent water loss Creation of MIS system for financial performance and project progress monitoring SPV-driven implementation model for SMART infrastructure projects as well as leveraging international funding for infrastructure development Threats Rapid growth in water demand for domestic and industrial purposes Regional inadequacy of raw water sources and lack of desalination infrastructure Unsustainable financial model for water supply and growing revenue loss Inadequate technology implementation to monitor supply network and leakages 24

33 3. Analysis of Organizational Governance Options 3. ANALYSIS OF ORGANIZATIONAL GOVERNANCE OPTIONS This chapter explores three potential options for the proposed water and sewerage services in the greater Visakhapatnam metro region. Business As-Usual Model Private Sector Service Provider Model An Independent Authority Model The primary responsibilities of the proposed entity will be to: Provide retail and bulk water and wastewater (sewerage) to greater Visakhapatnam metro region Operate as an Enterprise Fund to recover the costs of service and financing for planned capital projects Plan and execute capital projects associated with the water and wastewater infrastructure Perform long-term planning and related activities / coordination to ensure that adequate resources (i.e., natural, financial and people) are available to provide water and sewerage services in a sustainable manner Meet the current and future water supply and sewerage service demand in a cost-efficient and effective manner Coordinate with VUDA and other planning agencies to identify adjoining areas / jurisdictions to expand water and sewerage services Plan, manage and coordinate operation and maintenance of existing networks of water and wastewater infrastructure 3.1 Business As-Usual Model This option explores the feasibility of improving the water and sewerage services and related processes, including the planning, development and delivery of capital projects and operations and maintenance of existing infrastructure assets that are essential for providing water and sewerage services in the greater Visakhapatnam metro region. Under this option, it is assumed that the existing organizational and governance structure will be retained with no major changes and the manner in which water and sewerage services are being provided to the residents and business of the greater Visakhapatnam metro region will continue in its current form. However, under this option, potential opportunities for improving the capital projects planning and delivery as well as revenue enhancement could be explored further. 25

34 3. Analysis of Organizational Governance Options Source: The Project Team Figure 6 Governance Structure for the Business As-Usual Model The discussion below summarizes key advantages and disadvantages of the Business As-Usual model: Key Advantages / Pros Little disruption: long history of acceptance of the current approach for providing water and sewerage services All business units and staffing know their roles and responsibilities i.e., planning, design, procurement, operations, and maintenance Ability to leverage larger reach and organizational leadership of GVMC Role of planning and execution of capital projects remains with the Government / GVMC Customers will not experience any changes in terms of business processes i.e., application for new connection; paying water and sewerage fees, etc. Financial strength of the Government / GVMC Access to funds from the State and Central Government as well as multi-lateral donor agencies for improvement / expansion of water and sewerage services network Ownership of utilities assets stays with the Government / GVMC 26

35 3. Analysis of Organizational Governance Options Key Disadvantages / Cons Lack of long-term planning of resources and shortage of funding under the Business As-Usual model could make the proposed transformation of water and sewerage services challenging Under the existing set-up, the entity will continue to face challenges in terms of long-term planning, execution of capital projects, operations, and delivery of quality level of service Adopting new business processes and SMART technology could be difficult due to lack of available funding for existing and planned utilities infrastructure Financial degradation due to current practices of recovering only operational costs i.e., ability to improve / expand the service network will be severely constrained Limited ability to undertake major expansion of services within the greater Visakhapatnam metro area and in adjoining jurisdictions due to inadequate budget and inconsistent / unreliable revenue streams Ability to reduce local political interference to stay the long-term course 3.2 Private Sector Service Provider Model Figure 7 presents the governance structure for the Private Service Provider model for the water and sewerage services. Source: The Project Team Figure 7 Governance Structure for the Private Service Provider Model 27

36 3. Analysis of Organizational Governance Options The Private Sector Service Provider model involves leveraging private sector expertise and possible financing of planned capital improvement projects to deliver water and sewerage services in the greater Visakhapatnam metro region on a performance-based contract. Under this option, GVMC would continue to retain ownership of all infrastructure assets; however, the private partner would be responsible for managing those assets as well as making any future capital improvements required to meet current and future demand for water and sewerage services. The discussion below summarizes key advantages and disadvantages of the Private Sector Service Provider model: Key Advantages / Pros Enables the public sponsor to focus on system / network outcomes and core businesses Performance-based contract would require the private sector partner to deliver agreed upon services in a cost-effective manner Allows the public sponsor to transfer operational and performance risks to the private sector service provider Ability to increase water and sewerage service rates to recover the costs of operations Incentivized to reduce costs and increase operational efficiencies Strong customer service orientation driven by performance standards Enables the public sponsor to ensure funding of much-needed infrastructure that might not otherwise be possible due to budgetary constraints or lack of expertise Public sponsor can significantly reduce the current level of subsidies for the water and sewerage operation Leverages the freedom that the private sector has to invest in new technologies and innovative solutions Provides better opportunity to encourage private sector participation and market-based financing Key Disadvantages / Cons Transition phase from Business As-Usual to the Private Sector Service Provider Model will require strong commitment from all concerned parties and will involve learning new, complex processes and systems Customers may not accept / support this model as they may have to pay for a higher water and / or sewerage charges GVMC will have less control over the new entity in terms of day-today operations and management Future governments / political leaders may not accept / agree with prior agreements / commitments adequate safeguards need to be placed in the Concession Agreements to mitigate future political risks 28

37 3. Analysis of Organizational Governance Options 3.3 Independent Authority Model The Independent Authority Model is mid-way between the Business As-Usual and the Private Sector Service Provider models. Under this model, GVMC would establish an Independent Authority a quasigovernment entity responsible for providing water and sewerage services in the greater Visakhapatnam metro area. The Authority will be responsible for performing all functions associated with ensure that the current and future demand for services is met, including long-term planning of resources and ensuring financial stability of the Authority. In regards to the governance structure, the Authority could have a Board of Directors from GVMC and other local entities. Figure 8 presents the governance structure for an Independent Authority model for the water and sewerage services. Source: The Project Team Figure 8 Governance Structure for an Independent Authority Model The discussion below summarizes key advantages and disadvantages of the Independent Authority model: Key Advantages / Pros Efficient and timely decision making on water and sewerage services related projects / issues Integrated responsibilities for the planning, development, implementation, operations and maintenance of water and sewerage infrastructure assets 29

38 3. Analysis of Organizational Governance Options Efficient usage of available funding and ability to generate required funding / financing for the planned capital improvement projects Organizational structure and alignment will support improved utilization of existing human resources Develop and retain strong technical and managerial capabilities Ability to increase rates / cost recovery and O&M efficiencies Comprehensive approach for asset management and level of service Improved financial position as the revenues would be dedicated for delivery of capital projects in water and wastewater projects Key Disadvantages / Cons Transition phase from Business As-Usual to the Independent Authority model may require strong commitment from all concerned parties and will involve learning new, complex processes and systems Customers may not accept / support this model as they may have to pay for a higher water and / or sewerage charges GVMC will have lesser control over this Independent Authority in terms of day-to-day operations and management Revenues generated from delivery of water and wastewater (sewerage) services will not be available to subsidize other infrastructure services 3.4 Comparative Assessment of Three Models As discussed in the previous section, there are distinct advantages and disadvantages to using each of these three governance models to provide water and wastewater services to the residents of greater Visakhapatnam metro region and adjoining jurisdictions. The Business as Usual model is familiar and known well by all stakeholders. A transition from a Business As-Usual model to either the Private Sector Service Provider or an Independent Authority model could significantly enhance the organizational efficiencies, the level of service and overall customer satisfaction. While the Private Sector Service Provider model can improve organizational performance and service delivery through innovation, expertise and technology and operational improvements, the Independent Authority model offers the best elements of both with enhanced transparency in operations, access to public sector funding and financing and improved level of service. One of the additional benefit of an Independent Authority model is that the proposed Authority will be able to effectively leverage the private sector expertise and innovation through Public-Private Partnerships ( PPP / P3 ) to serve the existing water supply network and to expand the service areas to adjoining jurisdictions. The PPP/P3 procurement method will allow the Authority to transfer appropriate risks to the private sector, including design, construction, operation, maintenance and performance risks. 30

39 4. Case Studies on Existing Independent Water Authorities 4. CASE STUDIES ON EXISTING INDEPENDENT WATER AUTHORITIES The discussion below provides a brief summary on four case studies that are operating under the Independent Authority model. Case Study # 1: Bengaluru Water Supply and Sewerage Board Introduction Prior to the creation of Bangalore Water Supply and Sewerage Board ( BWSSB ), water supply services for the cantonment area was the responsibility of the Bangalore City Corporation ( BCC ) whereas the Karnataka Public Works Department ( KPWD ) was responsible for the rest of the Bangalore region. On August 14, 1961 the entire water distribution system was transferred to BCC for its comprehensive operation and maintenance. After three years of public water supply under BCC, an independent board was constituted by the act of the Karnataka State Legislature on September 30, All services related to water supply were transferred to the newly created Board on December 1, 1964 and all sewage infrastructure followed suit within one month. BWSSB became one of the first exclusive Water Supply and Sanitation Utility authorities in India with an operational jurisdiction of the entire Bruhat Bengaluru Mahanagara Palike ( BBMP ), an area of roughly 800 sq. km. The Board was created with a vision to ensure the following standards of operation: Streamlining water supply and sewage services for Bangalore and greater municipal areas Assuring quality of potable water and adequate supply capacity as per domestic and industrial need Better and regular maintenance of distribution networks and utility assets under one entity Quality infrastructure development for sewerage treatment and safe post-treatment disposal of wastewater Levy and collection of water charges on no loss no profit basis for sustainability of the system A. Organizational Structure BWSSB has three major functional jurisdictions: 1. Administration 2. Operations 3. Maintenance 31

40 4. Case Studies on Existing Independent Water Authorities Administration is headed by the Chairman of the organization and supported by five Chief Engineers ( CE ), Chief Administrative Officer, Financial Advisor and Chief Accounts Officer (Revenue / Expenditure / Projects), Public Relations Officer, and other officers in the work of day-to-day administration. The five Chief Engineers lead individual operational wings with the following key responsibilities: 1. CE (Projects): Project monitoring and replacement of sewerage pipelines and implementation of Environmental Protection Plan for each project 2. CE (Kaveri): Supply of Kaveri-Arkavathi water across distribution system under 4th stage of Kaveri water supply scheme and receiving treated water from STPs 3. CE (Wastewater Management): Wastewater management and exploring new water resources, technology implementation, and acquiring foreign investment 4. CE (Quality Assurance): Supplying materials for projects, maintaining standards, and assuring quality of engineering works through a central warehouse 5. CE (NI & NW): Responsible for new projects and expansion of service networks The Maintenance wing of BWSSB is headed by one Chief Engineer responsible for the upkeep of the entire water supply network, sewerage treatment facilities, safe wastewater disposal system, and underground storm water drainage within the BBMP and BDA jurisdictions. CE (Maintenance) is also responsible for sanctioning domestic and commercial water supply connections and collection of revenue from all subscribers of BWSSB services. Figure 9 presents an organizational structure of BWSSB operations. Chief Engineers are assisted by the respective Executive Engineers and their ground engineering team comprising of Assistant Executive Engineers, Assistant Engineers and Junior Engineers for all operational activities, management of project issues, scheduling, budgeting, metering, revenue collection and addressing public grievances. Overview of Operations Water Supply BWSSB is responsible for providing water supply to 800 sq. km of the BBMP area, out of which 570 sq. km (8.65 lakhs households) have Cauvery water supply connections. Cauvery Water Supply Scheme (CWSS) Stages I, II, III and Stage IV (Phase I & II) have cumulative installed capacity of 1350 MLD. The Government of Karnataka (GoK) allocated 19 TMC 7 of water from the Cauvery River to meet the water 7 Thousand Million Cubic Feet 32

41 4. Case Studies on Existing Independent Water Authorities Source: BWSSB website Figure 9 Organizational Structure of BWSSB Operations supply requirements of 8.5 million citizens of the City of Bangalore. For Stage V, an additional 10 TMC (775 MLD) allocation of Cauvery Water for Bangalore and CWSS, has been conceptualized for implementation under financial assistance from the Japan International Co-operation Agency. All current and upcoming water supply programs under BWSSB are exclusively targeted to ensure regular supply of safe drinking water supply to all of its 11 functional sub-divisions, irrespective of adverse scenarios of water resource availability given a three year drought across the State of Karnataka. Table 6 Key Information on BWSSB Operations No. Proposed STP capacity Areas covered 1 Present supply from Cauvery source 1350 MLD 2 Present population served 8.5 Millions 3 Area of water supply served 570 sq. kms 4 House service connections 8.65 lakhs 5 Total length of water supply pipelines 8,746 kms 6 Pipe diameters' range 100 to 1800 mm 7 Number of ground-level reservoirs (capacity) 57 ( 885 ML) 8 Number of overhead tanks (capacity) 36 (33 ML) 9 Booster pumping stations Public taps providing free water 7, Water tanker lorries Quantity of water supplied/month 42,200 ML 13 Average per capita consumption 65 L/day Source: BWSSB website 33

42 4. Case Studies on Existing Independent Water Authorities Sewerage Service Currently 245 sq. km of core urban area is under BWSSB sewerage service coverage, with 15 STPs operational. Due to the physical decay of year old trunk level drainage infrastructure, part of the domestic as well as industrial wastewater supply is getting mixed with storm water and regularly being discharged in urban water bodies and rivers, creating serious environmental and pollution concerns. BWSSB is taking measures to repair leaks and damage in the system and slum improvement programs for informal settlements to address the issues. Table 7 Overview of BWSSB Sewerage System No. Proposed STP capacity Areas covered 1 Total length of sewerage system 6800 kms 2 Number of manholes 2.25 lakhs 3 Sanitary house service connections 9 lakhs 4 Number of sewerage cleaning combination for sewerage system Sewage network laterals (< 300 mm diameter) 3367 kms 6 Trunk Sewers (> 300 mm diameter) 302 kms 7 Number of STPs 14 8 Sewage generation 1400 MLD 9 Sewage treatment capacity 721 MLD 10 Average treatment 520 MLD 11 Water treatment capacity (Phase III by 2017 ) 300 MLD 12 Proposed rain water harvesting area 1250 sq. km Source: BWSSB website 34

43 4. Case Studies on Existing Independent Water Authorities Summary of Revenue and Expenses As per the latest financial report issued by BWSSB, monthly water revenue demand was approximately INR crores and monthly collection was approximately INR crores during FY Projected annual revenue from all sources was approximately INR crores and monthly expenditures was about INR crores including repayment of a Government loan. Projected annual expenditures are INR crores. The resulting revenue gap is approximately INR crores per month, or INR crores on an annualized basis. The deficit in revenue is primarily due to an increase in the power tariff as well as higher operations and administrative costs. Table 8 BWSSB Revenues and Expenditures, FY and FY No. Income (INR in lakhs) (INR in lakhs) 1 Water Revenue including Meter Hire 59, , Other Income 14, ,11.60 Total Establishment 15, , Power Charges 35, , Repairs and Maintenance 9, , Cost of General Administration 8, , Depreciation 16, , Write-off Interest Payment on Loans 29, , Provisions Total 115, ,820.4 Net Surplus/Deficit -41, , Source: BWSSB website 35

44 4. Case Studies on Existing Independent Water Authorities Major Initiatives BWSSB implemented a new SCADA system in 2015 for its Centralized SCADA Monitoring Center, which will monitor the city s water distribution network and wastewater facilities. The system is monitoring all data in the BWSSB water supply network that brings water from the Cauvery River to the city of Bangalore a distance of approximately 150 km and also the data from all wastewater treatment facilities. The system is contributing to a cost cutting process for BWSSB services through the FAST/TOOLS SCADA application and the STARDOM network-based control system. A GIS database covering the BBMP administrative area and a predictive analytics dashboard have been created for the BWSSB command center to monitor the water flow in at least 284 of 784 bulk flow meters across the city. BWSSB has envisioned a strategic master plan to illustrate its future outlook. This study includes a holistic and integrated evaluation of all available and current water resources, including recycled water, and identification of alternatives and strategies which can be further developed as future water resources. In the strategic master plan, BWSSB has identified potential Water Supply and Sewerage Schemes along with an implementation framework in order to use it as a technical guidance document for operational services. Case Study # 2: Chennai Metropolitan Water Supply and Sewerage Board Introduction The Chennai Metropolitan Water Supply and Sewage Board ( CMWSSB ) was constituted in 1978 as a statutory body vested with the responsibility of planning, construction, operation, and maintenance of the water supply and sewage system in the Chennai Metropolitan Area ( CMA ). Though its operation is limited to the City Corporation s boundaries, CMWSSB has extended its services to the surrounding urban local bodies and has initiated measures to provide services for the entire metropolitan area. CMWSSB s mission is to enhance the health and quality of life of the citizens of Chennai by providing them with an adequate supply of safe, high quality drinking water and safe disposal of sewage / wastewater at a reasonable price, and to improve the environment in a sustainable manner. 36

45 4. Case Studies on Existing Independent Water Authorities Organizational Structure Figure 10 presents an organizational structure of BWSSB operations. Source: CMWSSB website Figure 10 Organizational Structure of BWSSB Operations CMWSSB s operational responsibilities includes the following key activities: Promoting and securing the planned development of water supply and sewage services Efficient operation, maintenance, and regulation of the water supply and sewage systems in the CMA Preparing the immediate and long-term measures to meet the future demands of water supply and sewage services in the Chennai Metropolitan area At present CMWSSB serves a population of about 60 million, mostly in the Chennai city area. CMWSSB has taken a number of initiatives to supply adequate quantity of safe drinking water and to redress the grievances of the citizens in a timely and efficient manner. 37

46 4. Case Studies on Existing Independent Water Authorities Overview of Operations Water Supply The water distribution network in Chennai City covers a length of approximately 2,582 km and is divided into 159 divisions. About 98 % of the population of the city is covered through piped water supply, with the balance through water tankers. The water is distributed through 27 main and subsidiary water distribution stations comprising overhead tanks and underground tanks with combined storage capacities of 322 ML. An additional 1,130 MLD of water is expected to be realized at the completion of three surface sources projects including the Telugu Ganga Project, Chennai City Water Supply Augmentation Project-I, and the Chennai City Water Supply Augmentation Project-II. To regulate and control the extraction, use, and transport of ground water thereby conserving ground water the Chennai Metropolitan Area Ground Water (Regulation) Act was enacted in CMWSSB has taken a number of steps to supply an adequate quantity of good quality water and to redress the grievances of the citizens in a timely manner. Table 9 Overview of Water Supply System under CMWSSB No. Proposed STP capacity Areas covered 1 Length of distribution network in Chennai 2,582 km 2 Water produced (normal years) 760 MLD 3 Area covered with piped supply 100% 4 Pipe diameters' range 100 to 1800 mm 5 Number of ground-level reservoirs 57 (885 ML) 6 Number of overhead tanks 36 (33 ML) 7 Number of slum households covered 58,631 8 Number of consumers 497,811 9 Treatment capacity 1,398 MLD 10 Length of water mains 2,930 km 11 Distribution stations Number of public fountains and mini tanks 8,916 and 3,542 Source: CMWSSB website 38

47 4. Case Studies on Existing Independent Water Authorities Sewerage Service The city has almost 100 % coverage in terms of the sewage collection system consisting of a total length of 2,583 km of sewers. The sewerage network is comprised of 2,432 km of gravity mains and 151 km of pressure mains, and the system covers 15,460 streets, covering an area of 174 sq. km. A comprehensive project for sewage system improvement, the Chennai City River Conservation Project ( CCRCP ), is currently being implemented to help address the increased sewage flow resulting from the growth in water and sewage network, and to prevent the overflow of sewage into the city s waterways. Table 10 Overview of Sewerage System under CMWSSB No. Proposed STP capacity Areas covered 1 Area covered 100% 2 Number of dwellings with sewerage connections 598,249 3 Length of sewerage mains 2,677 km 4 Number of pumping stations Treatment plants 5 6 Treatment capacity 486 MLD Source: CMWSSB website 39

48 4. Case Studies on Existing Independent Water Authorities Summary of Revenue and Expenses As per the latest revenue and expense report issued by CMWSSB, expected annual revenue for FY was INR 89,853.2 Lakhs. The income from the sale of water and sewage charges was INR 26,098.7 Lakhs. The operating and maintenance expenditure for FY was Lakhs. The excess of expenditure over income for FY was INR 18,272.9 Lakhs. Table 11 presents a summary of CMWSSB revenue and expenditures for two fiscal years. Major Initiatives CMWSSB is in the process of implementation of the SCADA system to continuously monitor the transfer of data on water flow, performance and efficiency of pumps and motors, and the physical and chemical quality parameters of water. In general, physical development initiatives taken by CMWSSB are categorized into macro-level and micro-level initiatives. As a macrolevel development, the Board has constructed a number of check dams to recharge ground water for irrigated areas served by wells, as well as developing injection wells to arrest saline water intrusion in one of the selected lands close to the coast. At the micro-level, the Board has taken a number of steps to popularize RWH at the individual household level in Chennai city. The Board has also implemented RWH 8 in public buildings such as Raj Bhavan, Children s Park, Edmore Museum, Presidency College, Stanley Hospital, Nochikuppam slum, and Lady Willington Higher Secondary School to create models for demonstration. In Chennai city, a total number of 38,218 RWH structures have been constructed by individuals and in Government Buildings. In order to reassess the ground water potential in the Arani-Koratalaiyar river basin, a detailed technical study of the entire river basin has been developed by the Board with the assistance of the World Bank. 8 Rain Water Harvesting 40

49 4. Case Studies on Existing Independent Water Authorities Table 11 CMWSSB Revenues and Expenditures, FY and FY No. Income (INR in lakhs) (INR in lakhs) 1 Sale of water and sewerage charge 26, , Grants and subsidies 25, , Water and sewerage tax 11, , Water charges metered Water charges unmetered Excess of expenditure over income 18, Other income 8, ,432.8 Total 89, , Operating and maintenance expenditure 43, , Payments and provision to employees 15, , Office administrative expenses Prior period adjustment 3, ,41, Water lorry hire charges 1, , Depreciation 14, , Debt service charges 9, , Water charges metered Water charges unmetered Taxes Total 89, ,466.2 Source: CMWSSB website 41

50 4. Case Studies on Existing Independent Water Authorities Case Study # 3: Hyderabad Metropolitan Water Supply and Sewerage Board Introduction The Hyderabad Metropolitan Water Supply and Sewerage Board ( HMWSSB ) was constituted on November 1, 1989 under the provisions of the Hyderabad Metropolitan Water Supply and Sewerage Act 1989 (Act No: 15 of 1989). HMWSSB service area spans over sq. km, comprising 150 wards that adjoin 10 municipalities, the Osmania University campus, and Secunderabad Cantonment. HMWSSB s operational responsibilities includes the following key activities: The supply of potable water, including planning, design, construction, maintenance, operation, and management of the water supply system Sewage, sewage disposal and sewage treatment works including planning, design, construction, maintenance, operation, and management of all sewage and sewage treatment works Monitoring of water supply in the entire GHMC area, including those of ten peripheral municipalities and sewerage operations in the core city Organizational Structure HMWSSB has four tiers of functional areas: Section Sub-Division Division Circle HMWSSB operates under three principles of public service, including: 1. All consumer needs are addressed at a single point 2. Empowerment of first level managers for reduced lead time in decision making 3. Greater functional diversification at the top level with on-line control of all verticals at a higher professional standard Figure 11 presents an organizational structure of HMWSSB operations. 42

51 4. Case Studies on Existing Independent Water Authorities Source: HMWSSB website Figure 11 Organizational Structure of HMWSSB Operations Overview of Operations Water Supply HMWSSB has 80 water reservoirs of 200 MLD storage capacity. While there is no infrastructure to store water transported from the Krishna water project, HMWSSB is planning to build 60 new reservoirs (including eight in old Hyderabad city), as well as to lay pipelines to supply Krishna water to all areas supported by HUDCO 9 and the state government budget. According to the Hyderabad City Development Plan, about 70 % of the city s population residing within the municipal boundary and about 43 % of population in surrounding municipalities make up the total service network i.e., the existing network covers approximately 90 % of the region s population with access to piped water supply. As per HMWSSB, Hyderabad has over 387,532 water connections in the MCH 10 area and 194,600 water connections in surrounding municipalities. The city has 8,353 public stand posts ( PSPs ) for those who do not have individual house connections among the poorer sections of society. Slums have 98,696 water connections, while commercial and industrial sectors have 13,451 and 936 connections, respectively. 9 Housing and Urban Development Co 10 Municipal Corporation of Hydrabad 43

52 4. Case Studies on Existing Independent Water Authorities Table 13 Overview of Water Supply System under HMWSSB No. Parameter Value 1 Water treatment pumping stations 6 (1,568 MLD) 2 Primary pumping stations 12 3 Master balance reservoirs 10 4 Service reservoirs 70 5 Length of raw water mains 144 kms 6 Length of treated water mains 1,200 kms 7 Length of distribution mains 8,051 kms 8 Public working power driven bore wells 3,712 9 Public working hand pump bore wells 7, Mobile tankers Households dependent on stand posts 7% Source: TISS report Table 14 Service Level Benchmark ( SLB ) of HMWSSB Water Supply Services with Respect to MoUD Standard No. Parameter Value Hyderabad s Score 1 Coverage of water supply connections 100% 90% 2 Per capita supply of water 135 LPCD 162 LPCD 3 Extent of metering of water connections 100% 20%-30% 4 Extent of non-revenue water 20% - 5 Continuity of water supply 24 hours Intermittent/ 0-3 hrs. 6 Efficiency in redressal of consumer complaints 80% 87% 7 Quality of water supplied 100% 94% 8 Cost recovery in water supply services 100% 66% 9 Efficiency in collection of water supply-related charges 90% 68% Source: TISS report for USAID 44

53 4. Case Studies on Existing Independent Water Authorities Sewage Service HMWSSB has taken a number of steps to strengthen the sewage system of Hyderabad in order to control the pollution levels caused due to increased sewage flows generated in Hyderabad on account of rapid urbanization. Key initiatives taken include laying of sewerage lines (laterals, branch mains, trunk mains and large conveying mains) and construction of STPs for treatment of sewage and disposal in accordance with the applicable standards. Table 12 Overview of Sewerage System under HMWSSB No. Parameter Value 1 Length of 600 mm diameter and above 572 km 2 Length of Laterals and Sub Mains (Excluding all surrounding municipalities) 3,500 km 3 Number of Sewerage Manholes 1.72 Lakh 4 Sewerage treatment facility (Including GHMC, HMDA & Board) 750 MLD 5 Estimated Sewerage generated 1,250 MLD Source: HMWSSB report Following implementation of NRCD Project Phase-I, the sewage pollution level in the Musi River has come down significantly, with treatment of sewage rising to 650 MLD through various STPs and further improved sanitation facilities. Phase-II, still in planning / development phase, is focused on maintaining hygienic conditions in the region and improved hydrology in the river. Core city network coverage is about 80 % and peripheral city network coverage is about 30 %. Most of the network is 30 to 40 years old and is not sufficient to cater to the current sewage flows, as HMWSSB has a demand for 1,300 MLD of treatment capacity with a current capacity of only 750 MLD. Summary of Revenue Collection HMWSSB is a public utility service organization existing to serve the people. The project team was unable to obtain the latest version of the entity s financial information for the case study. For more information, please visit their website at Initiatives Taken HMWSSB has undertaken the following initiatives to drive better and more transparent governance across its jurisdiction of water supply and sewage services: Approximately 80 % of total water and sewerage services represent domestic needs 45

54 4. Case Studies on Existing Independent Water Authorities Proposed establishment of Water Tariff Regulatory Authority to regulate rate setting and rate making processes Proposed automatic revisions of water tariff to compensate for increased power tariffs Installation of AMRs 11 for all bulk connections is in progress HMWSSB has adopted a new universal metering policy, making meters compulsory, along with revisions of non-metered tariffs to reflect this policy SCADA project under JNNURM on a pilot basis, wherein 184 flow meters are installed to enable water accounting of each O&M Division Reduction in physical losses by repairing all visible leakages and replacing the network s oldest segments Pursuing punishment / court action against those who have established illegal water connections Simplifying procedure for providing new water supply connections similar to the procedure of Electricity Distribution companies Use of digital revenue billing system Strengthening and improvement of existing sewerage network through a refurbishment project taken up in the Old City area of Hyderabad and in two municipalities of peripheral areas under JNNURM Remodelling of sewers for newly merged municipal areas Efforts to increase STP water recycling rates Case Study # 4: Tampa Bay Water, Florida, the United States of America Introduction Tampa Bay Water, formerly known as West Coast Regional Water Supply Authority, was created in 1974 by an inter-local agreement for the purpose of production and delivery of water for its six member governments. In 1998, the Authority was reorganized into Tampa Bay Water, a public sector utility board responsible for providing drinking water to three counties and three cities, including Hillsborough, Pasco and Pinellas counties and New Port Richey, St. Petersburg and Tampa cities. The reorganization was completed through governance, an agreement with its members to eliminate rate differentials in terms of water supply and provide environmental leadership in the production and delivery of water. Tampa Bay Water primarily supplies raw water at wholesale rates to the six administrative jurisdictions and the respective governments tap the resource for further distribution at the end-user network. 11 Automated Meter Reading 46

55 4. Case Studies on Existing Independent Water Authorities Source: Tampa Bay Water Report, 2017 Figure 12 Tampa Bay Water Service Coverage Area Tampa Bay Water s operation is based on the following three key pioneering visions to ensure sustainable water supply to the region as a: Model for regional water supply in the nation Leader in innovation and best practices Respected member of the Tampa Bay community Major responsibilities of Tampa Bay Water include: Planning, developing, producing and delivering a high-quality drinking water supply Continuously meeting the wholesale drinking water needs of Hillsborough County, Pasco County, Pinellas County, New Port Richey, St. Petersburg and Tampa (about 185 million gallons per day) Advocating for the protection of the public water resources Tampa Bay is a regional utility, funded through the sale of wholesale drinking water to the member governments, who share the cost of developing new supplies, support environmental stewardship, share voting rights equitably among the three counties and three cities, and pay the unitary wholesale water rates. 47

56 4. Case Studies on Existing Independent Water Authorities Overview of Operations Tampa Bay Water on average provides 185 million gallons per day ( MGD ) of potable water to nearly 2.4 million people. Since 1998, growth of the system has provided service to an additional 600,000 customers, which represents an increased demand of 30 MGD. Tampa Bay Water has received approximately 400 million USD in federal, state and Southwest Florida Water Management District funding for capital improvement projects. The water supply infrastructure has three major facilities a regional reservoir, a seawater desalination plant and a water treatment plant. The groundwater system includes 180 production wells within 13 wellfields throughout the Tampa Bay tri-county area, 1,500 permitted monitoring wells and three water treatment facilities. The pipeline system, which distributes raw and treated water, has 200 miles of pipe, ranging from 16 inches to 84 inches in diameter with seven booster pumping stations. Tampa Bay Water is always reviewing the need for new projects. The system is projected to grow at a demand of 3 MGD per year for at least next 20 years. Information based management & operation Tampa Bay has created an effective management program using an electronic database, consultant contracts, project files and the use of standardized forms. Data is received from outside sources such as projects, surveys or appraisal information, entered into the real estate manager database, and the information can be easily retrieved by staff members. A project may be identified in the long-term plan or as an individual project with a single parcel. Each project and facility is assigned a permanent number, which follows the parcel throughout its entire lifecycle from design, through construction to operation. Organizational Structure Policies at Tampa Bay Water are established by a nine-member board of directors, with two elected commissioners from each member county and one elected representative from each member city. Further responsibility in regard to implementation of policies belongs to the General Manager who is supported by Chief Communication Officer, Chief Financial Officer, Chief Operating Officer and Chief Technical Officer and their respective team members. For employee benefits and skill development, a Human Resource Manager is responsible whose team also supports the organization to implement employment policies. 48

57 4. Case Studies on Existing Independent Water Authorities Source: Tampa Bay Water Figure 13 Tampa Bay Water s Service Coverage Area Source: Tampa Bay Water Figure 14 Presents Tampa Bay Water s Organizational Structure 49

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59 5. Next Steps 5. NEXT STEPS This chapter briefly presents the Project Team s suggestion on the governance / organizational model for the water and wastewater services, and steps that GVMC will need to take to advance this initiative. As discussed earlier, the current GVMC operational model for the water and wastewater services has several challenges related to allocation of funds for capital projects, prioritization and implementation of planned projects, technological augmentation, financial and governance structure, and operational capacity. Based on this high-level review conducted by the Project Team, it is apparent that GVMC has an opportunity to further streamline its business model into a more efficient governance / organizational structure for the water and wastewater services. Streamlining the organizational structure and driving operational and financial improvements are both essential for GVMC as the rapid growth of the region will drive a major increase in demand for water supply and sewerage services across the greater Visakhapatnam area. The three models analyzed as part of this feasibility study to varying degrees accomplish the primary objective of efficiently utilizing available assets, resources, and infrastructure to enhance the quality of urban life and provide a clean and sustainable environment for living. All three models have certain advantages and disadvantages; however, as discussed earlier, the Project Team recommends that the Independent Authority model should be pursued as the organizational model for managing the region s water and wastewater services going forward. The Independent Authority model can lead to effective implementation of planned capital improvement projects and enhanced customer service delivery levels for the residents of the greater Visakhapatnam metro region. In the long-term this model can help Visakhapatnam to realize its vision of becoming the leading commercial center of the South India. Key Considerations The proposed Independent Water Authority model is widely used as the governance / organizational structure for delivering water and wastewater services across the world. In most cases, these independent authorities operate under an Enterprise Fund basis and typically have a Board of Directors that provide guidance on policy matters and future direction in terms of meeting the needs of existing and future customers / service areas, rate-setting and planned investment. As GVMC explores the feasibility of establishing an Independent Water and Wastewater Authority for the greater Visakhapatnam region and adjoining jurisdictions, the analysis should be guided by the following principles: 51

60 5. Next Steps Water as a product / service Full recovery of the cost of service Restructuring of the role of GVMC Increasing participation of the private sector Decentralization of governance Several major Indian cities like Bengaluru, Chennai, Hyderabad, and New Delhi have adopted an independent authority model for public services including water Supply and sewerage services. As such, GVMC should leverage these entities experience and lessons learned. The Project Team understands that in order to establish an independent water and wastewater authority, the Government of Andhra Pradesh has to enact legislation establishing the proposed entity (including outlining its core roles, responsibilities, powers, governance structure, transfer of physical and financial assets / resources and liabilities, etc.). Further, the Act will need to contain an enforceable set of regulations or standard practices in terms of resource management, supply of water as a commodity, quality assurance of services, sustainable revenue model and standards of operational practice to ensure a sustainable water cycle. The regulatory framework should be comprehensive, mirroring current requirements to bridge the gap of water supply through recycling of Source: The Project Team Figure 15 Key Success Indicators 52