KUWASIP Karnataka Urban Infrastructure Development & Finance Corporation Working towards better urban living 1 World Bank assisted Karnataka Urban Water.

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Karnataka Urban Infrastructure Development & Finance CorporationWorking towards better urban living

World Bank assisted

Karnataka Urban Water Sector Improvement

Project

(KUWASIP)by

S.Poornachandra AEE (UWS),

KUIDFC, BANGALORE.

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W.B. Loan No.4730-0-IN

Project Cities in KarnatakaProject Cities in Karnataka

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Objectives of the Project: Reforms & service improvements through Private Sector

Participation (PSP) in the water sector in Karnataka. Implement the strategy enunciated in the Urban Drinking

Water & Sanitation Policy of GoK. Phased approach.

Towns selected: Belgaum, Gulbarga & Hubli-Dharwad (Phase I). Continuous water supply in selected Demonstration Zones

of Phase I cities. Scaling up to the rest of the areas in the three cities and also

to more cities.

Introduction Introduction

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Project DetailsProject Details

Project Cost: World Bank loan -Rs. 182.00 crores GoK contribution -Rs. 55.00 crores Total project cost -Rs. 237.00 crores

Component wise cost:• Technical Assistance studies -Rs. 11.75 crores• Investments [P.I + D.Z + Others] -Rs. 217.40 crores• Incremental operating costs -Rs. 8.15 crores

All amount passed on to the beneficiary cities as grant by GoK, due to pilot nature of the project.

Project period: Four years: 2004-2008 (proposed to be extended up to March

2010).

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Project DetailsProject Details Project Components:

Technical Assistance (TA) studies Investments: (a) demonstrating continuous (24x7) water supply

through initial PSP in selected demonstration zones [D.Z] of the three ULBs ; (b) Bulk water improvement related investments (Priority Investments [P.I]) including critical/urgent works to improve supply frequency.

Executing Agencies: Technical Assistance studies-consultancy firms selected by

competitive bidding. Priority Investments-KUWS & DB. Demonstration project-private entity called ‘Operator’. Quality Certification:

• All Works & Operator’s performance: Technical Auditor; • Priority Investments: Third Party Inspection Agency.

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1. Establishment of Karnataka State Urban Water Supply & Sanitation Council (KSUWSC)

2. Review and Establishment of Regulatory and Legal Framework

3. Water and Sanitation Sector Investment & Tariff Frameworks

4. Strengthening of Urban Water Supply and Sanitation (UWSS) Service Delivery in ULBs

5. Creation of Water and Sanitation Information System (WASIS) and Benchmarking of Service Provision

6. Tariff Design for Continuous Water Supply

Technical Assistance Studies

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Key aspects of ProjectKey aspects of Project

Core of the project is a performance based contract with private sector firm for rehabilitation, operation and management of water service in small areas in Belgaum, Gulbarga and Hubli-Dharwad (called Demonstration Zones).

The role of private sector is limited to demonstration of improved service. Assets remain with ULBs, staff continue on ULB rolls though working under PSP, no investment risk to PSP, no role in tariff fixation & bill collection (though the PSP would develop a computerized billing & collection software system)

Fee based contract.

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Key aspects of ProjectKey aspects of Project

This is the first such structured initiative in India, coming to fruition after several years of work.

Extensive consultations with all stake holders during project preparation; ULB support by resolutions already passed.

Extensive consultations and reviews for drafting the contract/bid document; no previous model document, even with Bank, to follow.

First service improvement, then tariff hike.

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Operator Contract period: 3 ½ years Single contract for all three ULBs Single contract between five parties Vs Operator Distinct obligations for all parties Vs the Operator KUIDFC authorized to act on their behalf vis-à- vis the Operator Prime contractual responsibility – Operator

Contract DetailsContract Details

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Performance based contract. Total contract price Rs. 28 crore (Rs. 22.40 crore Remuneration;

Rs. 5.60 crore Max. Bonus). 60% of Rs. 22.40 crore i.e., Rs. 13.50 crore Fixed Remuneration: 40% of Rs.22.40 crore i.e., Rs.8.90 crore Performance

Remuneration. Fixed Remuneration: 15 equal quarters 12% of Performance Remuneration, if all targets achieved, 18

months after effective date; 28% of Performance Remuneration spread over two year Operation & Management Period, if targets achieved.

Penalties (max. 10%) for failure; termination.

Contract Price DetailsContract Price Details

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Preparatory Period A - Survey, Design, Estimation; Preparation of Draft/Final Investment Programme.

Preparatory Period B - Selection of sub-contractors (contract document preparation, tender process management); meeting performance targets for Preparatory Period B.

Demonstration of performance targets in preparatory period B and O & M period.

Customer grievance redressal.

What the Operator will do?What the Operator will do?

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Operator Performance TargetsOperator Performance Targets

At the end of Implementation Period:

To demonstrate Continuous Pressured Water Supply to every Customer in each Demonstration Zone. Metering of minimum of 90% property connections. Maintenance of computerized records of readings. Reduction of the losses to 30 litre / connection / day / metre pressure in each Demonstration Zone. Operation on a 24 hour basis of the Customer service centers established at Demonstration Zone.

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Operator Performance TargetsOperator Performance Targets

During O&M Period: Continuous Pressured Water Supply must be provided to every

connected property and stand-post. Emergency stoppages shall not exceed twelve hours and no more than an average of four emergency stoppages in a period of 12

months. 100% of all property connections and public stand-posts must be metered. 100% of Customer meters must be read and billed every month. Losses must be reduced to 20 litres per connection / day / metre

pressure by the end of 24 months. System connection requests must be fulfilled within 7 days. All Customer complaints to be responded to within 24 hours and redressed within 7 days of such complaint. Leaks appearing at the surface must be repaired within 24 hours of notification/observance.

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Services to the Urban PoorServices to the Urban Poor

Defined as those living in houses < 600 Sq. ft. built up area. No deposit for water connection. Minimum lifeline supply of 8000 litres per household. Provide water free of charge through public kiosks to

vulnerable sections with involvement of NGOs and / CBOs.

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8 Priority Investment works for augmenting bulk water supply completed and commissioned.

Laying of distribution network in 5 Demo Zones – completed. House service connections - completed. All the five DZs operationalised and O&M phase commenced on

3rd April 2008. Technical Assistance Studies - two completed, four in progress. Social Intermediation & Communication activities are being

conducted. Expenditure as on 31st January 2009 – Rs 172 Crores.

Status of the Project Status of the Project

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Demonstration ProjectDemonstration Project

Sl.No.

Demo Zone No. of Wards. HSCs Target

(Nos.)HSCs Achievement

(Nos.)

1.1. Belgaum (South) 5 3610 4216

2.2. Belgaum (North) 5 3510 3909

3.3. Hubli 4 6410 7258

4.4. Dharwad 4 4900 5581

5.5. Gulbarga 11 4020 3201

6.6. Total 29 22450 24165

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First instance of a new model of PSP in water service -challenge & opportunity.

Pressures of differing expectations - even of partner agencies. Impatience / unrest of non demo zone residents in chosen cities. Contract model & document format chosen - grey areas. Conservative mindset of client staff to many issues, differing

from conventional contracts. Curbing un-authorized / illegal connections and transition from

flat to volumetric tariff.

ChallengesChallenges

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Thank you

KUWASIP Karnataka Urban Infrastructure Development & Finance Corporation Working towards better urban living 1 World Bank assisted Karnataka Urban Water.

Documents

KUWASIP Karnataka Urban Infrastructure Development & Finance Corporation Working towards better urban living 1 World Bank assisted Karnataka Urban Water.