1. Infrastructure Development Corporation Limited ASCI – World Bank Institute Program on Strengthening Urban Management in India – Unlocking Potential of Indian Cities Urban Service Delivery through PPP Issues and Perspectives Dr. Anand Chiplunkar Vice President IL&FS Infrastructure Development Corporation January 19, 2004

2. Infrastructure Development Corporation Limited SECTION A MUNICIPAL INFRASTRUCTURE ISSUES

3. Infrastructure Development Corporation Limited Municipal Challenges Demand for good/better municipal services is growing –water and sanitation –traffic management - flyovers, roads, bus-stands, parking areas –solid waste management –commercial properties –health and education

4. Infrastructure Development Corporation Limited Initiatives GoI Budget 2002 - to develop municipal sector –Urban Reform Incentive Fund - Rs. 500 crores linked to reforms (rent control, stamp duty, revision of municipal laws, levy of realistic user charges, initiation of PPP) –City Challenge Fund -Rs. 500 crores (fund transitional costs to develop viable projects) –Pooled Finance Development Scheme Use of such funds to develop viable charges and leverage investments from the market Reality – these are yet to take off

5. Infrastructure Development Corporation Limited Issues Lack of finances - municipal level and State government Weak institutional delivery mechanism –technical –managerial –systems and processes –record-keeping Increasing awareness about need for –Investment –Efficiency –Better management practices

6. Infrastructure Development Corporation Limited Financing Projects PROJECTS RECOVERY Capex and Opex REFORMS FUNDING Municipal Funds State Funds Multi-lateral agencies LIC, HUDCO Capital Market CAPEX OPEX Budgetary AllocationProject Revenues Taxes Cost Reduction Efficiency Gains User Charges AdministrativePolitical Will Community Participation Policies, Accounting Practices, Asset Inventory, Capacity Building, Project Identification Project Development Project Development Funds Govt. guarantees

7. Infrastructure Development Corporation Limited Focus Areas for Municipal Services Improvement Cost Reduction Measures –Improve efficiency in operations Financial Strengthening –revenue enhancement - increase efficiency in billing and collection –improving accounting practices –taking an assets inventory –rationalization of taxation –rating municipalities –raising municipal bonds

8. Infrastructure Development Corporation Limited Focus Areas for Municipal Services Improvement Institutional Strengthening –Capacity building and on-job training Investment in viable projects –project development and structuring –leveraging municipal/govt. funds for induction of private capital

9. Infrastructure Development Corporation Limited SECTION B Visakhapatnam Municipal Corporation Projects

10. Infrastructure Development Corporation Limited VMC-IL&FS IDC Partnership

11. Infrastructure Development Corporation Limited Partnership between VMC and IIDC Vizag Municipal Corporation and IIDC entered into an agreement in July 2003 –Plan for integrated municipal services –Projects in urban infrastructure Financial Strengthening including Municipal Bonds Water Supply and Sewerage Road maintenance Central Business District School Upgradation Tourism and Recreation – municipal park, convention center, resort and golf course etc.

12. Infrastructure Development Corporation Limited Managing and Strengthening of Water Supply System through PSP Scope Benchmarking the performance of the existing system and identifying interventions and investments required for improving the efficiency of the system Upgrading the distribution system with investments through PSP using an appropriate long term contract such as Concession or lease

13. Infrastructure Development Corporation Limited Augmentation and Strengthening of Sewerage Through PSP Scope Component 1: Management of sewage collection & pumping + STRF on BOO/BOT basis through PSP for identified zone Component 2: Management of collection and treatment for existing system through PSP Component 3: DBOT for new system covering 70% area –Total investment Rs. 100 cr.

14. Infrastructure Development Corporation Limited Corporation creates & maintains assets from annual budget normally through separate Contractors for: –Road: Laying road, Overlaying road –Amenities/ Services Civil works (manholes, central median); Electrical poles and lighting (could be in-house) Assessment of Intervention – Road & pavements - Quality and Pedestrian area – Amenities - Street Furniture, Signage, Parking, Foot-bridges, Info-kiosks / E- Seva Counters –Facilities - Police Stations, Bus Shelters, Toilets and Green area –Road Lighting – Energy Audit & Savings Strategy Management and Strengthening of Roads through PSP

15. Infrastructure Development Corporation Limited Cost Centers – Road Pavements Pedestrian areas – Police Stations – Foot-bridges – Energy efficient lighting Revenue Centers Billboards Installations Parking Tickets Info-kiosks / E- Seva Counters Bus Shelters Toilets Savings from: New Technology for road relaying Energy efficiency savings Business Plan for PPP Optimized Funding from VMC Proposed Road Management Model

16. Infrastructure Development Corporation Limited Objectives: To create a sustainable and replicable model for upgrading and maintaining municipal schools School Upgradation

17. Infrastructure Development Corporation Limited Present Condition of Schools Municipal schools lack: Proper sanitation facilities Provisions for drinking water Basic facilities inside classrooms – fans, lights, benches etc. Quality physical infrastructure Security to protect physical assets And above all provisions for its maintenance

18. Infrastructure Development Corporation Limited Proposed Model Selection Criterion  Select 10 of ~100 schools in city as a pilot  Schools would be selected in a cluster in a locality where opportunities exist  Up-grade & maintain through PPPP or annuity format – CAPEX by VMC + NGO+Corporates – O&M contracted to private sector on predefined performance-related parameters – Put assets to increased utilization by allowing their use beyond school hours and thereby earn revenues – Monitoring through Citizens Committee Description Model

19. Infrastructure Development Corporation Limited Central Business District Town Center: Gardens Retail Space: Jewellery IMAX/ Multiplex Science Park Art Gallery Food Court Business Centre Apartels Office Space: Logistics, Aquaculture, Energy City Jewellery Mfg ITES Retail : Lifestyle & Fashion Concept driven by discussion with Pvt. Players in target segments Detailed studies being initiated

20. Infrastructure Development Corporation Limited Central Business District Total : 27 acre Super Built up: 10 lakh sft Estimated Project Cost: Rs 120 cr

21. Infrastructure Development Corporation Limited SECTION C WAY FORWARD

22. Infrastructure Development Corporation Limited Opportunities for Change Large captive market - create good investment climate –sufficiency in revenues for works through taxation –demonstration of service delivery followed by and reasonable charges for services Develop viable projects and leverage investments from the market

23. Infrastructure Development Corporation Limited Approach Plan for integrated municipal infrastructure development –identify areas for change –procure expertise for specialist services / detailed studies –strengthen finances (rating municipalities, raising municipal bonds etc.) –induct private sector as appropriate to the activity to bring in efficiency, best practices and investments

24. Infrastructure Development Corporation Limited Project Development Process Manage the intensive processes involving –sector focus –project scoping –site identification –demand assessment –master planning –policy and operational framework –environment and social management plan –financial and legal assessment

25. Infrastructure Development Corporation Limited Enabling Environment for PPP In order to attract private sector, the ULBs must demonstrate / show commitment to professional management of services In order to reduce initial tariff rise, ULB can provide cross-subsidy from surplus revenues generated from other activities In the long run, the investments must be serviced through revenues generated by the project itself Involvement of all stakeholders and addressing the risk perception of each is essential to sustain the PPP process

26. Infrastructure Development Corporation Limited THANK YOU