The increasing demand for water and sanitation services due to the growing population has put pressure on urban local bodies (ULBs). In order to efficiently operate and manage their water and wastewater infrastructure, these civic bodies are now outsourcing operations and maintenance (O&M) works to the private sector. Private sector participation in O&M activities has offered dual benefits. First, it has improved service delivery through the deployment of advanced technologies, thereby benefiting customers and second, it has reduced the financial burden on capacity-constrained ULBs by reducing their operational costs.
Indian Infrastructure takes a look at current O&M practices, and recent initiatives and trends in the sector…
O&M practices in key cities
With the aim of controlling O&M expenditure and introducing operational efficiencies, ULBs have awarded contracts to private agencies for O&M of water treatment plants, water distribution stations, valve operations and collection of water samples during the water supply period, amongst other works. Key private players involved in undertaking O&M work in the water and wastewater sector are Suez India, Veolia India Private Limited, SPML Infra Limited, Larsen & Turbo Limited, and Swach Environment Private Limited. The design-build-operate (DBO) projects awarded by civic bodies have longer O&M periods of 10-25 years, and incentivise private players to ensure timely completion of projects and the use of advanced technologies in their operations.
In November 2019, Israel-based IDE Technologies along with VA Tech Wabag Limited completed the construction of the tertiary treatment reverse osmosis plant in Koyambedu for the Chennai Metropolitan Water Supply and Sewerage Board. The scope of work for the Wabag-IDE Technologies consortium involved the setting up of the plant on a DBO basis and O&M of the plant for a period of 15 years. Technologies such as ultrafiltration and reverse osmosis are used to treat the city’s wastewater and bring it to drinking water standards.
The Delhi Jal Board is setting up the country’s largest sewage treatment plant (STP) at Okhla with a treatment capacity of 564 million litres per day (mld). The work was awarded to the Suez Group in May 2019 and comprises the O&M of the plant for a period of 10 years after a one-year defect liability period.
In October 2019, Suez also won the contract to manage the entire sewer network and all the wastewater treatment plants in Lucknow, serving a population of 2.8 million. It was the first time in the country that a single service provider had been asked to manage the entire sewer infrastructure in a city. The scope of work involves O&M of the sewer network, pumping stations and STPs for a period of 10 years.
VA Tech Wabag has also signed a contract with the Uttar Pradesh government to manage sewage treatment of over 650 mld in Agra and Ghaziabad, adhering to national treatment standards, covering over 3,000 km of sewer networks and 46 pumping stations. The O&M period is 10 years, and is extendable by five years.
Veolia Water India Private Limited, a subsidiary of France-based Veolia Water, formed a joint venture in 2011, Orange City Water, to implement India’s first project to deliver 24×7 water supply to the 2.7 million citizens of Nagpur for a period of 25 years.
While a number of cities have outsourced O&M services to the private sector, there are some ULBs that undertake the operations on their own. The Kerala Water Authority has an operations unit that monitors the O&M of water supply and sewerage services and formulates appropriate policies and operating guidelines as and when required. The O&M of the wastewater infrastructure in the outskirts of Greater Hyderabad limits is handled by the Greater Hyderabad Municipal Corporation (GHMC). In March 2020, the state government had issued orders to transfer the responsibility of sewerage maintenance in the city outskirts to the Hyderabad Metropolitan Water Supply and Sewerage Board. However, it was handed back to the GHMC in October 2020. While the Coimbatore City Municipal Corporation has outsourced the O&M of the 24×7 water supply project to Suez India, its public health engineering department is responsible for the bulk of the O&M works related to water supply services.
New initiatives and trends
One of the noteworthy trends witnessed in the O&M segment to ensure the efficient functioning of treatment plants and increasing the accountability of private contractors is increasing the concession period of projects to 25-30 years and increasing the O&M period of plants. Earlier, O&M contracts were awarded for a period of five years. The short span of the maintenance period resulted in poor performance of treatment plants. With a view to addressing this issue, the O&M period of treatment plants has been increased to 10-15 years.
In the wastewater segment, new public-private partnership (PPP) models such as the hybrid annuity model (HAM), the one city-one operator model and the long-term O&M contract model are being introduced to encourage private sector participation. This has already resulted in improvements in operational performance and wastewater management in cities such as Nagpur, Delhi, Surat, Chennai and Bengaluru. Under HAM, the player receives annuity payments from the government that are linked to performance during the O&M period of 15 years. The model has received an encouraging response and a large number of projects are being implemented under it. Some of the key projects are the setting up of STPs in the cities of Varanasi, Kanpur and Haridwar. Currently, HAM is restricted to the wastewater segment and is yet to penetrate in the water segment.
HAM has paved the way for the one city – one operator model. The model integrates building and maintenance of sewerage infrastructure under one operator for the entire city. Other than reducing costs and time delays, the one city one-operator model helps in faster implementation, provides better service delivery and ensures better coordination. The model can also be adopted in large metros and other big cities by dividing them into zones. The Uttar Pradesh government initiated and developed the concept of one city-one operator for the purpose of O&M and management of STPs, sewage pumping stations and the sewer network of Agra and Ghaziabad cities in February 2018. The contract period for the projects is 10 years, which is extendable by five years. This first-of-its-kind contract by the state government is gaining popularity. Other cities are also considering the adoption of this model as it not only ensures quality performance, but provides scope for technological improvements by the private player.
Issues and challenges
Although the private sector has come a long way in improving service delivery and reducing O&M costs in a number of cities, its overall experience in the water and wastewater sector has been mixed. The majority of the water supply and wastewater contracts in the country lack clearly defined risks and responsibilities for the parties involved, resulting in unrealistic assessments and uneven risk sharing. Further, the majority of the ULBs lack credible and updated data on key water supply networks, making the O&M process even more difficult. Another key reason behind poor O&M in the country is inadequate funds for these activities, which in turn is due to the lack of a structured approach to estimate the fund requirement for O&M activities. Moreover, while the O&M works carried out by private contractors has been satisfactory, the O&M of infrastructure maintained by public health departments has been below par due to lack of funds and interest. Further, the lack of awareness, knowledge and skilled manpower for carrying out O&M works with new technologies is another issue.
The way forward
Given the existing service backlog, delivering acceptable levels of service in the water and wastewater sector will require a multi-pronged effort. In this regard, ULBs need to build financial and operational capacity, enforce strict regulations, and attract adequate private sector participation. Going forward, the use of IT for various aspects of water supply and wastewater management such as collection, transportation, treatment, disposal, asset mapping, management and customer service is expected to increase significantly. ULBs need to work on their financial credibility for the success of PPP projects. They may also look at creating a separate department for O&M activities for efficient management of the water and sewerage infrastructure.