Smart City Master Planning and Sector-specific Smart City … · 2017. 12. 4. · and sustainable...

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iWATER SEWERAGE AUTHORITY - FEASIBILITY STUDY FINAL REPORT VISAKHAPATNAM

Smart City Master Planning and Sector-specific Smart City Infrastructure Projects for Visakhapatnam

WATER SEWERAGE AUTHORITY— FEASIBILITY STUDY FINAL REPORT

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ii VISAKHAPATNAM WATER SEWERAGE AUTHORITY - FEASIBILITY STUDY FINAL REPORT

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iiiWATER SEWERAGE AUTHORITY - FEASIBILITY STUDY FINAL REPORT VISAKHAPATNAM

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December 2017

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iv VISAKHAPATNAM WATER SEWERAGE AUTHORITY - FEASIBILITY STUDY FINAL REPORT

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vWATER SEWERAGE AUTHORITY - FEASIBILITY STUDY FINAL REPORT VISAKHAPATNAM

Executive summary 1Infrastructure Challenges 1Revenue Generation 2Organizational Capacity 2SWOT Analysis on Existing GVMC Operation 2Independent Authority Model 4

1. Project Rationale 71.1 Background 71.2 Infrastructure Challenges 71.3 Goals for Water and Wastewater System 81.4 SMART Vision 10

2. Assessment of “As-Is” Situation 132. GVMC Operation “As-Is” Study 132.2 Governance and Operational Process 212.3 SWOT Analysis on Existing GVMC Operation 23

3. Analysis of Organizational Governance Options 253.1 Business As-Usual Model 253.2 Private Sector Service Provider Model 273.3 Independent Authority Model 293.4 Comparative Assessment of Three Models 30

4. Case Studies on Existing Independent Water Authorities 31

Case Study # 1: Bengaluru Water Supply and Sewerage Board 31Case Study # 2: Chennai Metropolitan Water Supply and

Sewerage Board 36Case Study # 3: Hyderabad Metropolitan Water Supply and

Sewerage Board 42Case Study # 4: Tampa Bay Water, Florida, the United States of America 46

5. Next Steps 51

TABLE OF CONTENTS

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vi VISAKHAPATNAM WATER SEWERAGE AUTHORITY - FEASIBILITY STUDY FINAL REPORT

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viiWATER SEWERAGE AUTHORITY - FEASIBILITY STUDY FINAL REPORT VISAKHAPATNAM

Acronyms and AbbreviationsAPEPDCL Andhra Pradesh Eastern Power Distribution

Company Ltd.

APGENCO Andhra Pradesh Power Generation Company

CEO Chief Executive Officer

CMAR Construction Manager at Risk

DB Design-Build

DBF Design-Build-Finance

DBFOM Design-Build-Finance-Operate-Maintain

DBOM Design-Build-Operate-Maintain

EoI Expression of Interest

GHG Greenhouse Gas

GVMC Greater Visakhapatnam Municipal Corporation

HPSC High Powered Steering Committee

IT Information Technology

kV kilovolt

MW megawatts

NREDCAP New & Renewable Energy Development Corporation of Andhra Pradesh Limited

O&M Operations and Maintenance

OT Operational Technology

PV Photovoltaic

RFP Request for Proposals

RFQ Request for Qualifications

SCADA Supervisory Control and Data Acquisition

SOQ Statement of Qualification

SPV Special Purpose Vehicle

ULB Urban Local Bodies

VfM Value for Money

VUDA Visakhapatnam Urban Development Authority

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viii VISAKHAPATNAM WATER SEWERAGE AUTHORITY - FEASIBILITY STUDY FINAL REPORT

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ExEcutivE summary

1WATER SEWERAGE AUTHORITY - FEASIBILITY STUDY FINAL REPORT VISAKHAPATNAM

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 ChallengesThe 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.

EXECUTIVE SUMMARY

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ExEcutivE summary

2 VISAKHAPATNAM WATER SEWERAGE AUTHORITY - FEASIBILITY STUDY FINAL REPORT

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 GenerationThe 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 2015-16, total estimated revenue receipts were INR 1406.34 crores. (See Figure 1)

Organizational CapacityA 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 OperationThe 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

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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 cost-efficiencies

�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

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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 ModelThe 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 quasi-government 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.

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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.

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�Administrative Hierarchy: The Government of Andhra Pradesh will have to decide if the administrative control over the proposed Authority will be transferred to ULB1 / 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.

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1. ProjEct rationalE


1.1 BackgroundThe 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 ChallengesThe 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,

1. PROJECT RATIONALE

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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 guidelines1:

�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 SCADA2 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, 20132 Supervisory control and data acquisition

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�Development of GIS3 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 metering-based 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

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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 VisionThe 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

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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.

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2. Assessment of “As-Is” sItuAtIon


2. ASSESSMENT OF “AS-IS” SITUATION

2.1 GVMC Operation “As-Is” StudyBased 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.

2.1.1 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.

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Figure 1 GVMC’s Water Supply System Overview PlanSource: GVMC

Figure 2 Water Resources for Town Service Reservoir (“TSR”)

Source: GVMC

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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 169.5 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

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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

4. 32 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 2005. 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:

�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 JNNURM4 projects (which are nearing completion) and will be further reduced to less than 15 % on completion of the first year AMRUT5 investment plan.

4 Jawaharlal Nehru National Urban Renewal Mission5 ATAL MISSION FOR REJUVENATION AND URBAN TRANSFORMATION

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

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�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.

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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.

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 85,357 336,943 14,000

Source: GVMC

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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.

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 85,357 336,943 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 216.25 MLD currently to approximately 620.25 MLD in 2030.

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:

À The total capacity of STPs is projected to be 214 MLD

À Population coverage by the STPs is likely to increase to more than 10 lakhs

À 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 - 107 MLD (57 MLD spare capacity available)

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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 3 Gap in Sewerage Infrastructure as per 2021 Projected Demand

Components Existing Ongoing Projects

Total Capacity

2021 Demand Gap by 2021

Sewerage network (km) 205.15 321.2 526.35 3415 2,888.65

Number of households covered by system 83,468 100,000 183,468 423,468 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

Table 5 Gap in Existing Sewerage Service Network with Respect to MoUD Benchmarks

No. Proposed STP capacity Areas covered Coverage

1 84 MLDGajuwaka, 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

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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.

Funding/Budget Allocation

As per GVMC, for Fiscal Year 2015-16 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 239.57 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 202.52 crores

�Rajiv Awas Yojana (“RAY”) funding was INR 50.0 crores

�13th Finance Commission grant was INR 50.5 crores

Figure 4 An Organizational Structure of Engineering Verticals under GVMC Commissioner

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Besides these aforementioned funds, GVMC has obtained deposits and advances of INR 199.38 crores for its operations. Comprising all the funding sources, GVMC’s total estimated fund allocation for Fiscal Year 2015-16 was INR 2,304.0 crores against estimated expenditures of INR 2103.6 crores6.

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 2015-16, total estimated revenue receipts

were INR 1406.34 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 942.7 crores). Water Supply and Town Planning divisions accounted for approximately 15 % each (INR 210.5 crores) and the remainder came from the Health and Engineering verticals.

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.

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 2015-16

Figure 5 Distribution of Revenue Sources FY 2015-16

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2.3 SWOT Analysis on Existing GVMC OperationThe 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

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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 cost-efficiencies

�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

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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 ModelThis 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.

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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

Source: The Project Team

Figure 6 Governance Structure for the Business As-Usual Model

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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 ModelFigure 7 presents the governance structure for the Private Service Provider model for the water and sewerage services.


Figure 7 Governance Structure for the Private Service Provider Model

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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:


�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


�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-to-day 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

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3.3 Independent Authority ModelThe 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 quasi-government 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.

The discussion below summarizes key advantages and disadvantages of the Independent Authority model:


�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


Figure 8 Governance Structure for an Independent Authority Model

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�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


�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 ModelsAs 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.

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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, 1964. 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. Administration2. Operations 3. Maintenance

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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 SupplyBWSSB 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 TMC7 of water from the Cauvery River to meet the water

7 Thousand Million Cubic Feet

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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 62

10 Public taps providing free water 7,477

11 Water tanker lorries 62

12 Quantity of water supplied/month 42,200 ML

13 Average per capita consumption 65 L/day

Source: BWSSB website


Figure 9 Organizational Structure of BWSSB Operations

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Sewerage ServiceCurrently 245 sq. km of core urban area is under BWSSB sewerage service coverage, with 15 STPs operational. Due to the physical decay of 40-50-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


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 125

5 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


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Summary of Revenue and Expenses

As per the latest financial report issued by BWSSB, monthly water revenue demand was approximately INR 90.00 crores and monthly collection was approximately INR 80.00 crores during FY 2015-16. Projected annual revenue from all sources was approximately INR 1228.21 crores and monthly expenditures was about INR 138.75 crores – including repayment of a Government loan. Projected annual expenditures are INR 1665.07 crores. The resulting revenue gap is approximately INR 36.00 crores per month, or INR 436.00 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, FY2013-14 and FY2014-15

No. Income 2013-14 (INR in lakhs)

2014-15 (INR in lakhs)

1 Water Revenue including Meter Hire 59,199.19 81,103.86

2 Other Income 14,906.05 67,11.60

Total 74105.24 87815.46

1 Establishment 15,282.15 16,303.85

2 Power Charges 35,649 .95 3,9497 .69

3 Repairs and Maintenance 9,544.04 10,509.48

4 Cost of General Administration 8,653.58 7,933.14

5 Depreciation 16,330.57 16,612.74

6 Write-off 0.00 0.00

7 Interest Payment on Loans 29,985.31 30,889.95

8 Provisions 77.06 73.55

Total 115,522.66 121,820.4

Net Surplus/Deficit -41,417.42 -34,004.94


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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.

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Figure 10 presents an 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.

Source: CMWSSB website

Figure 10 Organizational Structure of BWSSB Operations

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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 1987. 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


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 16

12 Number of public fountains and mini tanks 8,916 and 3,542


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Sewerage ServiceThe 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


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 196

5 Treatment plants 5

6 Treatment capacity 486 MLD


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As per the latest revenue and expense report issued by CMWSSB, expected annual revenue for FY 2013-14 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 2013-14 was 43947.02 Lakhs. The excess of expenditure over income for FY 2013-14 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 macro-level 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 RWH8 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

Table 11 CMWSSB Revenues and Expenditures, FY2013-14 and FY2014-15



1 Sale of water and sewerage charge 26,098.7 25,968.6

2 Grants and subsidies 25,728.7 25,728.7

3 Water and sewerage tax 11,141.6 10,741.1

4 Water charges metered 73.5 -

5 Water charges unmetered 21.9 -

6 Excess of expenditure over income 18,272.9

7 Other income 8,515.5 6,432.8

Total 89,853.2 77,466.1

1 Operating and maintenance expenditure 43,947.02 32,729.7

2 Payments and provision to employees 15,726.9 15,371.3

3 Office administrative expenses 656.5 672 .8

4 Prior period adjustment 3,921.2 2,41,657.1

5 Water lorry hire charges 1,859.1 2,520.3

6 Depreciation 14,637.6 13,843.3

7 Debt service charges 9,057.2 9,604.5

8 Water charges metered - 176.7

9 Water charges unmetered - 21.3

10 Taxes 47.3 109.3

Total 89,853.3 77,466.2


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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 688.24 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


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.

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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 HUDCO9 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 MCH10 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 Co10 Municipal Corporation of Hydrabad

Source: HMWSSB website

Figure 11 Organizational Structure of HMWSSB Operations

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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 7,677

10 Mobile tankers 985

11 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

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Sewage ServiceHMWSSB 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.

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 https://www.hyderabadwater.gov.in/en/.

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

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

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�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 AMRs11 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 AmericaIntroduction

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

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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.

Source: Tampa Bay Water Report, 2017

Figure 12 Tampa Bay Water Service Coverage Area

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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 & operationTampa 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.


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.

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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

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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:

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�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


Figure 15 Key Success Indicators

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treated sewerage water for suitable domestic as well as industrial use, rain water harvesting, optimized desalination, and reuse of treated wastewater for non-industrial purposes within the industrial development jurisdiction. Consideration should be given to empower the newly constituted Authority to have complete control of water resources or at least secure a long-term commitment for raw water withdrawal rights to meet the current and future demand.

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.

�Administrative Hierarchy: The Government of Andhra Pradesh will have to decide if the administrative control over the proposed Authority will be transferred to ULB12 / 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.

12 Urban Local Body

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