The Ministry of Housing and Urban Affairs (MoHUA) has taken proactive steps to identify potential sources of funding for smart city projects, including from external agencies such as the World Bank, Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB), Japan International Cooperation Agency (JICA), Agence Française de Développement (AFD) and the European Union (EU).
In a recent development, ADB has authorised a $76.25 million, or Rs 5.51 billion, loan for three projects under Agartala Smart City Limited. It has agreed to fund retrofitting of 23 km of roads (15 stretches) at a cost of Rs 4.44 billion, revival of lakes and waterbodies at the Maharaja Bir Bikram College and its surrounding areas at a cost of Rs 0.3 billion, and renovation and restoration of Ujjayanta Palace and its vicinity at a cost of Rs 0.35 billion in the current financial year.
Further, AIIB has sanctioned the $150 million Chennai City Partnership: Sustainable Urban Services Program aimed at strengthening institutions and enhancing the quality and financial viability of selected urban services in Chennai. International development agencies such as Deutsche Gesellschaft für Internationale Zusammenarbeit, the United Nations Environment Program, the United Nations Development Program, the International Finance Corporation (IFC) and the United States Department of the Treasury (US Treasury) also provide technical assistance to some smart cities.
The City Investments to Innovate, Integrate, and Sustain (CITIIS) Program was launched in July 2018 in collaborative efforts with AFD, the EU and the National Institute of Urban Affairs with the objective of providing technical and financial assistance totalling Euro 100 million to cities for the implementation of integrated, innovation-driven and sustainable urban infrastructure projects.
Agartala, Amravati, Amritsar, Bhubaneswar, Chennai, Dehradun, Hubbali-Dharwad, Kochi, Puducherry, Surat, Ujjain and Visakhapatnam have been selected for funding and technical assistance under the CITIIS Program through a challenge process. MoHUA has also signed an agreement with the US Treasury to provide technical assistance to the cities of Vadodara, Rajkot, Pimpri-Chinchwad, Mysuru, Mangaluru and Faridabad in issuing municipal bonds. An MoU has been signed with the United States Trade and Development Agency for the purpose of implementing the National Urban Innovation Program.
PPP prospects and promise
With the focus of the Smart Cities Mission (SCM) shifting from durability to sustainability, the government is actively pushing private sector involvement in smart city initiatives through consultancy, construction and operation. The SCM is banking on the possibility of private finance. The mission has proposed a target of 20 per cent private sector investment in smart city projects.
The mission aims to increase private participation, particularly in innovation, data management and start-ups that can address urban concerns through cutting-edge solutions.
Smart city proposals highlight the heterogeneity of the PPP criteria. For instance, private sector participation is necessary for projects involving land monetisation, such as waterfront development, redevelopment and transit-oriented development. Private funds are being used to finance rooftop solar, parking and street lighting systems. Service delivery programmes include water supply and smart metering, wastewater recycling and waste collection. Cycle sharing, IT-enabled solutions and smart parking are a few examples of technology ventures.
Smart cities have immense PPP potential, and their success necessitates clarity of purpose, application in all initiatives, adequate preparation and learning from experience.
MoHUA and Invest India recently conducted a virtual roadshow to highlight PPP opportunities under the SCM. This was the first investor roadshow of its kind, allowing various smart city CEOs to directly pitch private investors and start-ups on PPP prospects in their communities. The mission has completed 228 PPP projects worth $220 billion in more than 60 cities with the help of the private sector, demonstrating the importance of finding new approaches to urban development.
As of February 2022, around 160 PPP early-stage projects worth Rs 150 billion have benefited from private sector investment and development. Indore Smart City won the Public-Private Partnership Innovative Award for two of its efforts, namely, She Kunj, and Innovative Smart Parking for multilevel parking of two-wheelers.
There is PPP potential in urban transport, commercial infrastructure, hospitality, education, and energy. Some recent initiatives include the development of multimodal transportation hubs such as Sanyojit Kashi in Varanasi, multilevel smart parking structures such as Jammu and Kashmir’s City Chowk, market redevelopment, urban mobility, solar energy generation, and the establishment of educational hubs.