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HomePoliticsIndiaHybrid annuity-based PPP for Ganga

Hybrid annuity-based PPP for Ganga

New Delhi: The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the proposal for taking up a hybrid annuity-based public-private partnership (PPP) model under the “Namami Gange” programme which aims to reform the wastewater sector in India. Marking a paradigm shift in the implementation mode, this model will now be adopted to ensure performance, efficiency, viability and sustainability.

In this model, a part of the capital investment (up to 40%) will be paid by the government through construction-linked milestones and the balance through an annuity over the contract duration up to 20 years.

Keeping in view the specialised nature of this model and to scale it up in future on sustainable basis, the government is establishing a Special Purpose Vehicle (SPV) to plan, structure, procure concessionaires, monitor implementation of such PPP projects and develop market for treated waste water through appropriate policy advocacy under overall guidance of National Mission for Clean Ganga (NMCG). The SPV will be established under Indian Companies Act, 2013, for providing required governance framework and enabling functional autonomy.

The SPV would enter into a Tripartite Memorandum of Agreement (MoA) with participating State Governments and concerned Urban Local Bodies (ULBs) for taking up individual projects. These MoAs will aim at introducing reforms and regulatory measures for recovery of user charges on Polluters Pay principle, restrictions on usage of ground & fresh water for non-potable purposes through stricter monitoring and guidelines that promote re¬use of treated wastewater.

The ministry in a first of its kind has already entered into an MoU with Ministries of Railways for the purchase of treated water from STPs wherever feasible to facilitate faster market development for treated wastewater. Similar MoUs are also being worked out with other ministries of power, petroleum, industries etc.

This is a futuristic step taken by the government where the market development for treated waste water and structural reforms are complementing the projects. This will help taking up more projects with the same allocation as made available under programme with reduced financial liability in the initial years. Spreading the stakes of the private participant over the entire period of concession would ensure continued operations over long-term.

Linking of performance standards with the annuities will ensure the desired objective of treated water of appropriate standard. It would help build the capacity of local urban bodies gradually by setting the ground for recovery of user charges on “polluter pays” principle.

Development of the market for treated water will lead to reduced demand on riverine freshwater and will result in enhanced flows in river Ganga. These steps would also kick-start the process of responsible use of water in general and go a long way in mitigating the projected water shortage in the country.

Background

It had been observed that benefits accrued from substantial investments made under various past programmes (Ganga Action Plan I & II, NGRBA, Yamuna Action Plan) were less than optimal. According to Central Pollution Control Board (CPCB), almost 30% of the Sewage Treatment Plants (STPs) monitored in the 4 states of UP, Uttarakhand, Bihar & West Bengal were not operational and 94% were non-compliant with the prescribed effluent standards.

Cabinet’s approval addresses the above issues that acted as road blocks for all previous efforts to clean river Ganga. The approval paves the road ahead for complete reform in the wastewater sector in India, implementation of projects in a fast track mode and ensure effective utilisation of funds released under 100% funded “Namami Gange” central sector scheme.

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