India: first "full city" public-private partnership

Apr 05, 2012

Veolia Water India, a Veolia Water subsidiary, has been awarded the drinking water service operation and maintenance contract by the city of Nagpur for 25 years. A multi-local player, Veolia Water India has set up a special purpose entity, Orange City Water, in a joint venture with Vishvaraj Environment Ltd., one of India's leading civil engineering and services companies.

Orange City Water will have to deliver a continuous supply of drinking water to the homes of the 2.7 million people living in Nagpur, 24 hours a day and seven days a week, up from the current two to 12 hours a day. The service will be provided to the entire population of Nagpur, including the third of the population living in the city's slums. This will be a first in India.
It is estimated that the cumulative revenue for Veolia Water will be 387 million euros.
Awarded following an international call for tenders, the contract includes an initial five-year works program, mainly to rehabilitate and upgrade the network and connections to homes, at a cost of 60 million euros. This part of the contract will be 70% funded by the Indian government, through the Jawaharlal Nehru National Urban Renewal Mission and Maharashtra State, and 30% by the operator.
Located in the heart of India, Nagpur is the country's tenth largest city and the second largest in Maharashtra State. Nagpur is experiencing very rapid urban growth (the population is expected to reach 5 million within the next 30 years), and has a highly dynamic economy.
This is the first time that an Indian city has decided to outsource the entire operation and maintenance of its water service to a private operator for such a lengthy term.
The aim of the Nagpur Municipal Corporation, up until now in charge of the service, is to provide sustainable water supply to the city's entire current and future population, and especially to the most underprivileged living in the slums. The water, compliant with WHO quality standards, will be provided continuously at a constant pressure. This marks considerable progress in India where no large city has continuous access to drinking water and where it is at times of very poor quality, leading to the spread of waterborne diseases.
Under the contract, the water service includes management of drinking water production, treatment, transport, storage and distribution through to the consumer's tap.
The technical challenge is considerable, as it involves connecting up 2.7 million people, or 350,000 to 450,000 homes, to the distribution network. The amount of water available per person will be increased from 90 liters a day to 130 liters a day over the next five years. This will be quite a feat as an average of 6,000 to 8,000 water meters a month will have to be installed to meet the target. By way of comparison, in France 2,000 meters per month are installed on average.
Orange City Water (OCW) will invest 18 million euros in the project to renovate the city's six water production plants and repair the 2,500 km of network. The production capacity of the system managed by OCW will eventually be close to 750 million liters a day and leakage from the network, which is currently 60%, will gradually be lowered to international standards.
« Our responsibility is to encourage access to water for all, whatever people's social level and living conditions. In Nagpur, as elsewhere, we will always ensure we do that, and we will pay more attention than ever before tothe most underprivileged people. That's the challenge we have to take up. But at the same time as extending access to this basic service to everyone, wealso have to take action to limit the environmental impacts of our activities by making sure to conserve water resources and combat all wastage in a country where water is scarce and precious. »

Jean-Michel Herrewyn
Chief Executive Officer of Veolia Water
To be able to complete all of the rehabilitation and extension works in the space of five years, OCW will employ the 430 people who worked for Nagpur Municipal Corporation and who will join the new company over the next few weeks. OCW will also call on the dozens of subcontractors available in the city, thereby maintaining thousands of people in work without them being direct employees. The subcontractors' personnel will receive the same training as OCW's employees, both for technical areas and in how to work safely.
In Nagpur, the needs of the local communities will be the focus of Veolia Water's concern, as it works to provide access to water for everyone. A 24/7 customer service will be set up to meet, listen to and inform users, and to help them understand their new water consumption habits and how to keep control over their water bills.
To better understand the needs of the local population, especially the slum dwellers, and fulfill their expectations as best possible, Veolia Water India launched a wide-ranging study with the ESSEC business school's IRENE institution for research and education in European negotiations. The project's aim is to analyze the conditions for providing service in the slums. An external entity will assess the current situation of water in Nagpur's slum dwellings and the network of existing players involved in access. A report is under preparation and should be submitted within the coming weeks to provide a better understanding of issues of service access, affordability and equality in a very specific local context.
The project is a very big challenge but the personnel on the ground are confident that they can succeed. They are buoyed by the accomplishment already seen in the "demozone" in the Dharampeth neighborhood, which represents 8% of the city of Nagpur. Thanks to the work of Veolia Water India, all households in Dharampeth now have continuous water supply.

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