Development of Desalination Plant at Bhavnagar / Mundra Water Supply Government of Gujarat
Contents Project Concept 3 Demand & Supply 4 Market Potential 5 Growth Drivers 7 Gujarat Competitive Advantage 8 Project Information 10 - Location/ Size - Infrastructure Availability/ Connectivity - Project outline - Raw Material/ Manpower - Key Players/ Machinery Suppliers - Potential collaboration opportunities - Key Considerations Project Financials 15 Approvals & Incentives 16 Key Department Contacts 17 Page 2
Project Concept Only 3% of the total water reserves of earth constitutes freshwater reserves in contrast to 97% which is saline water, leaving very low quantity of water for consumption Desalination is a process that removes minerals from saline water to produce fresh water suitable for consumption. It is used in municipal, industrial, or commercial applications. Desalination process separates saline water into two parts. One is a treated water which has low concentration of salt and other part is concentrated water that has the higher concentration and is not usable. Desalination Technologies Thermal Technology Multi-Stage Flash Distillation (MSF) Multi-Effect Distillation (MED) Vapor Compression Distillation (VCD) Membrane Technology Electrodialysis (ED) Electrodialysis reversal (EDR) Reverse Osmosis (RO) Desalination Process- Membrane technology Sea water Evaporator Vapor Brine Condenser Vapor Water Water Condenser Brine 85% of the Indian desalinated plants are membrane based because membrane based technology are 23% cheaper compared to thermal technology Membrane Drinking Water Clean Water Evaporator Brine Waste Tank Desalination in India Despite India being a peninsula region, desalination technology is not seen as a natural fit, mainly because of the costs involved. The technology of separating brine from sea water to make it potable for daily use is expensive and energy-intensive. Apart from the cost, for every 100 mld of sea water treated, only 40 mld is made potable and the remaining 60 mld of concentrated saline water has to be discharged back into the sea. However, increasing population, industrialization and demand for fresh water has derived India s desalination market over the past few years Page 3
Market Potential Water demand on the rise in India Water demand across India (bcm) 1,093 813 688 910 2010 2025 Others Drinking Water Industry Irrigation Key metrics 230 cubic km of groundwater is drawn by India per year 40% water losses out of total distributed water, highest in world 33% expected rise in Indian population, from 1.2 bn in 2015 to 1.6 bn by 2030 Total water production is estimated to rise but water production per household is expected to decrease. Rising demand and low per capita production is increasing the over exploitation of ground water. Ground water extraction accounts for nearly 37% of the total water production. Still, around 225mn people in India do not have access to safe drinking water. Total water production (bcm) Total water production/ Household (litre/day) 94.7 94.8 2012 2019 1,032 933 Source: Business Monitoring Intelligence (BMI) The widening gap between growing water needs of population and scarcity in supply in major coastal cities in India is giving rise to alternative water sources A number of coastal regions are turning to desalination and reverse osmosis treatments. At present, Indian desalination market with coastline of 7,517 km is at approximately US$660 mn. Desalination water technology is widely used in water scarce states such as Gujarat, Tamil Nadu, and Rajasthan. Many big Industries such as Nirma, Gujarat Heavy Chemicals Ltd, Indian Rayon are exploring the option of using sea water for their industries. Page 4
Market Potential As of 2013, India has 182 desalination plants operating majorly in western and southern parts and is expected to increase to 500+ by 2017 Key drivers 0.5 Water production growth by type (%) 60 Low population: water resources ratio Growth in industrialization Irregular monsoons Industrial contamination High water salinity in coastal areas 0.0-0.5-1.0-1.5 2014 2015 2016 2017 2018 2019 Underground water production, % y-o-y Desalination plant water production, % y-o-y Source: Business Monitoring Intelligence (BMI) Surface water production, % y-o-y Treated wastewater reused, mcm, % y-o-y 40 20 0-20 Desalination market- Global and Indian scenario Global Installed capacity of Desalination plants (in MLD) 78,400 47,600 2008 2014 Source: Global Water Intel At present, Gulf countries account for over 50% of world desalination capacity South Asian market is expected to reach at 14% of global desalination market by 2019 US$1.9bn Desalination market in India by 2019 22% CAGR growth expected in desalination market by 2020 400% Increase in installed capacity of desalination plant from 290 MLD in 2008 to 1450 MLD in 2015 Page 5
Growth Drivers - Gujarat Gujarat, one of the leading state in terms of economic growth and industrialization, falls under the water-stressed category Uneven water distribution: Despite having 185 rivers, 5.96% of the total area of the country and 4.93% of the total population, Gujarat has only 2.28% of the total surface water resources available in India. 70% of Gujarat's fresh water resources are located only in 30% of its geographical area. At present, there is disparity in water availability across different regions as South and Central Gujarat has more than 50% of the total water availability. The total available water resources of the state is ~55608 MCM, out of which, utilizable surface water in the state is only 38100 MCM. Rising water demand supply gap in Gujarat Water demand (bcm) in Gujarat is expected to rise 35 57 2010 2050 however per capita availability of water (in bcm/annum) is decreasing 1.1 0.8 0.7 0.6 2001 2011 2015 2025 Industrial growth Gujarat accounts for 13% of the net value of manufacturing in India. Many industries in Maharashtra, Gujarat and Tamil Nadu are already paying high price of INR60 per cubic metres for their water supply. Low quality standards 85% of the available water has high pollution level Of 33 districts in the state, 20 are severely affected by salinity, 18 are affected by fluoride, 17 are affected by chloride Decreasing per capital water availability, high industrial consumption and low water quality generates the strong growth opportunities for the water, wastewater recycling and desalination market Page 6
Gujarat - Competitive Advantage Overexploitation of ground water, irregular monsoons and high water contamination has made coastal area of Gujarat one of the most saline region in the country Gujarat has the largest coastline of 1600 km in India, making it one of the state with high levels of saline water Of the total 70+ coastal talukas, more than 50 coastal talukas are effected partially or fully by salinity Salinity has impacted 1200 to 1500 villages and 12.90 lakh hectare of land since 1960 in Gujarat In Bhavnagar district, four talukas (Bhavnagar, Ghogha, Mahuva, Talaja) and more than 100 villages are effected partially or fully by salinity Gujarat accounts for more than 40% of desalination plants in India Gujarat government is working on increasing desalination installed capacity to 300 MLD by 2018 and is estimated to reach around 1500 MLD by 2030 Over the years, Gujarat has emerged as one of the front running states in adopting desalination technology for water sourcing and many private and technological players have entered the Gujarat market In partnership with Gujarat government, a group of Singaporean and Japanese companies, such as Hyflux, Itochu and Hitachi are developing Asia s largest desalination plants of 336 MLD capacity with an investment of INR4,000 crore in Dahej, Gujrat. In 2016, Gujarat Water Infrastructure Limited (GWIL) & Gujarat Water Supply & Sewerage Board (GWSSB) are planning to develop a 150MLD seawater-based desalination plant for industrial water supply in Kutch at the cost of INR700 crore. Many Indian industries such as Reliance, Nirma have also developed desalination plants in the state of Gujrat. Page 7
Gujarat - Competitive Advantage First state to address the water waste issue and brought treatment, stabilization and disposal facility for cluster of industries. Gujarat provides 100 litre daily rural water supply per head against the country average of 55 litres Gujarat is one of the top states with more than 650 dams and 35 large and medium reservoirs First state in Asia and fourth state in the world with a Department for Climate Change State-wise number of dams Maharashtra Madhya Pradesh 905 Gujarat 666 Chhattisgarh 258 Karnataka 231 Rajasthan 211 Odisha 204 1800 Gujarat governments' initiatives to flourish the water market INR24.5 bn for 361 km long pipeline networks, supplying daily 165 crore litre Narmada water to total 5,587 villages and 116 cities/towns INR2 bn invested by Gujarat government in the area of Kachchh with coastline of 406 km as part of development projects to reduce salinity 9 sites Out of total 27 Common Treatment, Stabilization and Disposal Facility (common TSDF) in the country are in Gujarat in which 6 are in operation 160% Rise in budget from INR70 crores to INR183 crores as part of its drought mitigation plan Policy Initiatives Coastal Salinity Prevention Cell (CSPC); a joint initiative of Aga Khan Rural Support Programme (India), Ambuja Cement Foundation and Sir Ratan Tata Trust has launched many projects for the issues related to coastal area salinity in Gujarat. CSPC works in coastal districts of Gujarat including Bhavnagar and reaches out in 450 coastal villages through 17 partners in the state. Indian government has established wastewater discharge standards for all segments such as municipal, industrial, commercial and residential. Page 8
Gujarat - Competitive Advantage Ease of Doing Business: Only state which comply 100% with environmental procedures. Gujarat fares highly when it comes to setting up a business, allotment of land and obtaining a construction permit Key industries: Gujarat is the leader in key industrial sectors such as chemical, petrochemical, auto and its allied sector, pharmaceuticals, engineering, textile, jewellery etc. Gujarat ranked first in ease of doing business as per DIPP report 2015 Gujarat has attracted cumulative FDI worth US$12 bn from April 2000 to March 2015 Gujarat clocked the highest growth rate in pharmaceutical market at 22.4% surpassing the industry growth rate of 10.9% Gujarat contributes around 19.1% to India s total exports of goods in 2014-15 More than 10% of the country s factories are in Gujarat while manufacturing sector contributes 28% to its GSDP Gujarat, with 42.6% of its population residing in the urban areas, is among the top three urbanized states in the country Gujarat is one of the power surplus states in the country, as a result it helps in bringing huge amount of investment from the industries and tagged as preferred investment destination in the country Skill development industry in the state is well-developed with many technical institutions (786 ITI s and 52 Skill upgradation centres) Page 9
Project Information Site Location Development of Desalination Plant at Bhavnagar / Mundra in Gujarat on PPP The project details are as follows: Locations Mundra, Gujarat India Bhavnagar, Gujarat India Mundra taluka comes under Kachchh district with 14 approved coastal SEZ area. Mundra port is among the important port of the state Bhavnagar: Out of total 33 districts, there are 16 coastal districts of Gujarat. Bhavnagar is one of the major coastal districts in the state Mundra is situated in Kachchh (Bhuj), Gujarat, India with geographical coordinates area 22.85 North, 69.73 East. Bhavnagar is a district in Gujarat and its geographical coordinates area 21.76 North, 72.15 East. Mundra Bhavnagar Maximum temperature : 28.3 C Maximum temperature : 27.2 C Minimum temperature : 15.9 C Minimum temperature : 11.8 C Key Notes: Fitment of other locations is being done so if they are more suitable then the Govt. could come up with a plant there. Locations like Dev Bhoomi, Dwarka, Gir Somnath, Bhavnagar, Jamnagar are considered Page 10
Project Information Infrastructure availability / connectivity Logistics & Connectivity Air Road Gujarat has highest number of operating airports in India including 16 Domestic and 1 international airport. Daily air services are available between Bhavnagar and Mumbai. Nearest international airport Ahmedabad is 177 km from Bhavnagar and Bhuj is at 60 km distance from Mundra. Mundra and Bhavnagar is well connected with district roads, state highways and national highways NH-8. Road connectivity increases the efficiency for water networks and monitoring particularly in remote areas. Port IT Mundra port by Adani group is the India s biggest commercial port and 1st port in country to handle over 100 MMTPA commercial cargo. Gujarat handles around 73% of India s nonmajor port traffic and around 14% of India s major port traffic. Many city-surveillance projects are prominent in Mundra and Bhavnagar for the real-time monitoring using technology project execution. The State Government ensures robust physical/industrial infrastructure & utility linkages Water Gujarat has a state wide water supply grid spread across 1,20,769 km that aims to serve 75% of the Gujarat s population. Power Gujarat boasts of 24 hours 3- phase uninterrupted power supply under the Jyotigram Yojana. Gujarat Energy Transmission Corporation Limited (GETCO) is an electrical power transmission company with total of 1473 no pf substation for 400 KV, 220 KV, 132 KV and 66 KV system voltage. Page 11
Project Information Desalination Process Pre-treatment of raw sea water Filtration system Reverse Osmosis Post treatment process Water Outlet into sea Storage The RO technology of the plant produces 100mld of desalinated water from 273mld of sea water Components Stilling Chamber Flash Mixer Sand filters Ultra Filtration Storage Tank Dosing System High Pressure Pump Reverse Osmosis System Water Tank Page 12
Project Information India Leading Players Company Corporate office Business Offerings Larsen & Toubro Vadodara Water & Effluent Treatment business, Desalination Plants, Municipal and Industrial Water Treatment VA Tech Wabag Vadodara Municipal and industrial water and wastewater treatment, Desalination plant Thermax Ltd. Pune Waste water treatment, water & waste water / effluent treatment plant Kirloskar Brothers Ltd. Pune Water Supply, Power Plants, and Irrigation Aquatech Systems Desalination, Waste water treatment, Industrial Pune Asia Pvt. Ltd. process water Techline Green Ltd. Bangalore Water treatment plants, RO Systems, Filteration System Chempure Waste water, water treatment plants, chemical, water Chennai Technologies Pvt Ltd. treatment chemicals Wesco Water and Environmental Services Co Pvt. Ltd. Mumbai Sea water desalination and waste water reuse Titanium Tantalum Heat exchangers, pressure vessels, reactors, tanks, Chennai Products Ltd pumps, industrial valves Compact Aqua Technocrats Noida Water treatment / purification technology AirScience Air pollution control, process gas treatment and Ahmedabad Technologies Inc. process gas separation systems Page 13
Project Information Potential Collaboration Opportunities Desalination service providers/ manufacturers can look for two types of business avenues Desalination Service Providers/Equipment Manufacturers Industrial Desalination Plants : Large companies inclination to have captive desalination plants to meet their process water demands State Government-Owned Desalination Plants: Government comes out with desalination plants to fulfil state s household and municipal water needs The model used in tenders/projects by industrial institutions is custom build and transfer. In some projects, O & M is also taken care for 3 to 5 years The model used in tenders/projects by government is BOOT (build, own, operate and transfer). Usual time spread is of 10 to 20 years Most of the projects running in India are on PPP and BOOT Model The foreign companies are performing well in the Indian market. The INR13.71bn reverse osmosis seawater desalination facility will be developed in Tamil Nadu using funds provided by German state-backed development bank Kreditanstalt für Wiederaufbau (KfW) Israel's IDE has more than 20 functional projects in India on PPP & Boot model and is looking forward to bring more innovative water treatment technologies to India Players such as Saudi Arabia's Bushnak Group, Japan s Hitachi, and domestic players such as VA tech are already running desalination plants in different parts of the country Strong partnerships with Japanese, Korean and European agencies are helping Gujarat government set up water projects and can lead to more technological and financial collaborations in future Page 14
Project Financials Cost structure of developing a water desalination plant in Gujarat The project cost for the proposed Desalination plant of capacity 100 MLD is arrived at based on the estimated unit cost which includes all machineries, erection charges, civil works etc. Water Desalination Plant Capacity 100 MLD Equipment s/components Units Total Price (INR) Seawater RO membranes 8,500 Pressure vessels 248 Pressure exchanges 23 High pressure pumps 5 Pressure filter vessels 16 Civil and Electrical works, automation and control systems Environment Impact Assessment study, Environment Management plan, DPR, Obtaining mandatory clearances etc Cost for Intake and Brine disposal system NA Approximate cost for all the equipment/ study is estimated to be around INR2bn Total Capital Investment Description Total Price (INR) Equipment Cost/ Engineering cost 2,00,00,00,000 Land lease rent & development (242811 sq.m x 36.00x100) Working capital ( O&M, Cost of consumables and chemicals) for next 5 years 87,41,19,600 100,00,00,000 Total 3,87,41,19,600 The above estimates are derived from similar projects executed in India. The total price can vary based on plant size and need of additional equipment's. Page 15
Approvals / Incentives Approvals Required Entry & Exit Procedure: Desalination projects are usually funded through a PPP model in which private players are invited via competitive bidding. Setting up of Business: The facility can be operated by the private player through a builtoperate-transfer (BOT) model. Power & Water Connection: Additional power for the project can be procured from the existing supplier Paschim Gujarat Vij Company Ltd. (PGVCL). Similarly, water for the project can be procured from the Gujarat Water Supply and Sewerage Board. Environmental Clearance: CRZ Clearance (Coastal Clearance) needs to be obtained from Gujarat Coastal Zone Management Authority (GCZMA). Additionally, pollution clearance from Gujarat Pollution Control Board (GPCB) is also required. Incentives from Government of Gujarat 1 2 Gujarat government is also promoting solar powered desalination plant because of environmental concerns. The use of solar photo voltaic power in the process would further reduce the operation cost. Financial assistance for skill development centres, for technology acquisition and also for supporting energy and water conservation as well as for environmental compliance. 3 Tax holidays: The benefits of tax holidays as provided under Section 80 (I) (A) of the Income Tax Act for development, operation and maintenance of power plants, airports, ports, waste management facilities, water treatment plants, etc. is available to the developer. Page 16
Gujarat Water Supply & Sewerage Board https://gwssb.gujarat.gov.in/ Gujarat Pollution Control Board, Government of Gujarat http://gpcb.gov.in/ Gujarat Water Infrastructure Limited http://www.gwil.in/ Gujarat Infrastructure Development Board http://www.gidb.org/index Gujarat Industrial Development Corporation http://www.gidc.gov.in/ Gujarat Water Resources Development Corporation https://guj-nwrws.gujarat.gov.in This project profile is based on preliminary study to facilitate prospective entrepreneurs to assess a prima facie scope. It is, however, advisable to get a detailed feasibility study prepared before taking a final investment decision. Gujarat Water Supply Sewerage Board "Jal Seva Bhavan" Opp. Air Force Station, Sector - 10A, Gandhinagar 382010 Office : +91-79-23251050, 23220857 E-mail : msgwssb@gmail.com