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Infrastructure Development Corporation Limited
ASCI – World Bank Institute Program onStrengthening Urban Management in India – Unlocking Potential of
Indian Cities
Urban Service Delivery through PPPIssues and Perspectives
Dr. Anand ChiplunkarVice President
IL&FS Infrastructure Development Corporation
January 19, 2004
Infrastructure Development Corporation Limited
Municipal Challenges
Demand for good/better municipal services is
growing
– water and sanitation
– traffic management - flyovers, roads, bus-stands,
parking areas
– solid waste management
– commercial properties
– health and education
Infrastructure Development Corporation Limited
Initiatives GoI Budget 2002 - to develop municipal sector
– Urban Reform Incentive Fund - Rs. 500 crores linked to
reforms (rent control, stamp duty, revision of municipal
laws, levy of realistic user charges, initiation of PPP)
– City Challenge Fund -Rs. 500 crores (fund transitional costs
to develop viable projects)
– Pooled Finance Development Scheme
Use of such funds to develop viable charges and
leverage investments from the market
Reality – these are yet to take off
Infrastructure Development Corporation Limited
Issues
Lack of finances - municipal level and State government
Weak institutional delivery mechanism– technical
– managerial
– systems and processes
– record-keeping
Increasing awareness about need for– Investment
– Efficiency
– Better management practices
Infrastructure Development Corporation Limited
Financing Projects
PROJECTS
RECOVERY Capex and Opex
REFORMS
FUNDINGMunicipal
FundsState Funds
Multi-lateral agencies
LIC, HUDCO
Capital MarketCAPEX
OPEXBudgetary Allocation Project Revenues
Taxes Cost
ReductionEfficiency
GainsUser
Charges
Administrative Political Will Community Participation
Policies, Accounting Practices, Asset Inventory, Capacity Building,
Project Identification
Project Development
Project Development
Funds
Govt. guarantees
Infrastructure Development Corporation LimitedFocus Areas
for Municipal Services Improvement
Cost Reduction Measures
– Improve efficiency in operations
Financial Strengthening– revenue enhancement - increase efficiency in billing
and collection
– improving accounting practices
– taking an assets inventory
– rationalization of taxation
– rating municipalities
– raising municipal bonds
Infrastructure Development Corporation LimitedFocus Areas
for Municipal Services Improvement
Institutional Strengthening– Capacity building and on-job training
Investment in viable projects– project development and structuring
– leveraging municipal/govt. funds for induction of private capital
Infrastructure Development Corporation Limited
SECTION B
Visakhapatnam Municipal Corporation Projects
Infrastructure Development Corporation Limited
Partnership between VMC and IIDC
Vizag Municipal Corporation and IIDC entered
into an agreement in July 2003
– Plan for integrated municipal services
– Projects in urban infrastructure
• Financial Strengthening including Municipal Bonds
• Water Supply and Sewerage
• Road maintenance
• Central Business District
• School Upgradation
• Tourism and Recreation – municipal park,
convention center, resort and golf course etc.
Infrastructure Development Corporation LimitedManaging and Strengthening
of Water Supply System through PSP
Scope Benchmarking the performance
of the existing system and identifying interventions and investments required for improving the efficiency of the system
Upgrading the distribution system with investments through PSP using an appropriate long term contract such as Concession or lease
Infrastructure Development Corporation LimitedAugmentation and
Strengthening of Sewerage Through PSP
Scope Component 1: Management of
sewage collection & pumping + STRF on BOO/BOT basis through PSP for identified zone
Component 2: Management of collection and treatment for existing system through PSP
Component 3: DBOT for new system covering 70% area– Total investment Rs. 100
cr.
Infrastructure Development Corporation Limited
Corporation creates & maintains assets from annual budget normally through separate Contractors for:
–Road: Laying road, Overlaying road–Amenities/ Services
• Civil works (manholes, central median); Electrical poles and lighting (could be in-house)
Assessment of Intervention– Road & pavements - Quality and Pedestrian area– Amenities - Street Furniture, Signage, Parking, Foot-bridges, Info-kiosks / E-Seva Counters–Facilities - Police Stations, Bus Shelters, Toilets and Green area–Road Lighting – Energy Audit & Savings Strategy
Management and Strengthening of Roads through PSP
Infrastructure Development Corporation Limited
Cost Centers– Road Pavements
Pedestrian areas – Police Stations– Foot-bridges– Energy efficient
lighting
Revenue Centers Billboards Installations Parking Tickets Info-kiosks / E-
Seva Counters Bus Shelters Toilets
Savings from: New Technology
for road relaying Energy efficiency
savings
Business Plan for PPP
Optimized Funding from VMC
Proposed Road Management Model
Infrastructure Development Corporation Limited
Objectives:
To create a sustainable and replicable model for upgrading and maintaining municipal schools
School Upgradation
Infrastructure Development Corporation Limited
Present Condition of Schools
Municipal schools lack: Proper sanitation facilities Provisions for drinking water Basic facilities inside classrooms –
fans, lights, benches etc. Quality physical infrastructure Security to protect physical assets And above all provisions for its
maintenance
Infrastructure Development Corporation Limited
Proposed Model
Selection Criterion
Select 10 of ~100 schools in city as a pilot Schools would be selected in a cluster in a
locality where opportunities exist
Up-grade & maintain through PPPP or annuity format
– CAPEX by VMC + NGO+Corporates– O&M contracted to private sector on
predefined performance-related parameters– Put assets to increased utilization by
allowing their use beyond school hours and thereby earn revenues
– Monitoring through Citizens Committee
Description
Model
Infrastructure Development Corporation Limited
Central Business District
Town Center: Garden
s
Retail Space:
Jewellery
IMAX/ Multiplex
Science Park
Art Gallery
Food Court
Business Centre
ApartelsOffice Space:
Logistics, Aquaculture, Energy City
Jewellery Mfg
ITES
Retail : Lifestyle
& Fashion
•Concept driven by discussion with Pvt. Players in target segments
•Detailed studies being initiated
Infrastructure Development Corporation Limited
Central Business District
Space Utilisation15%
15%
15%15%
30%
10%
Tower 1: Gems & JewelleryTower 2: Fashion Lifestyle Store/ITESTower 3: Offices/Service Apartments/ HotelTower 4: Town Hall/ Art GalleryGreen SpaceRecreational Space
Total : 27 acreSuper Built up: 10 lakh sftEstimated Project Cost: Rs 120 cr
Infrastructure Development Corporation Limited
Opportunities for Change
Large captive market - create good investment
climate – sufficiency in revenues for works through taxation
– demonstration of service delivery followed by and reasonable charges for services
Develop viable projects and leverage investments
from the market
Infrastructure Development Corporation Limited
Approach Plan for integrated municipal infrastructure
development
– identify areas for change
– procure expertise for specialist services / detailed
studies
– strengthen finances (rating municipalities, raising
municipal bonds etc.)
– induct private sector as appropriate to the activity to
bring in efficiency, best practices and investments
Infrastructure Development Corporation LimitedProject Development Process
Manage the intensive processes involving
– sector focus
– project scoping
– site identification
– demand assessment
– master planning
– policy and operational framework
– environment and social management plan
– financial and legal assessment
Infrastructure Development Corporation Limited
Enabling Environment for PPP
In order to attract private sector, the ULBs must demonstrate / show commitment to professional management of services
In order to reduce initial tariff rise, ULB can provide cross-subsidy from surplus revenues generated from other activities
In the long run, the investments must be serviced through revenues generated by the project itself
Involvement of all stakeholders and addressing the risk perception of each is essential to sustain the PPP process