Snapshot: PSP contracts in operation

Transcription

1 Why are you clearing it your Commissioner is visiting again? Private Sector Participation: INDIA: Country experience and project lesson learnt Shubhagato Dasgupta Snapshot: PSP contracts in operation Asset Capital Commercial Number of Contracts Option Ownership OM Invest. Risk Collection Transfer Treat and EPC Contracts Public Public Public Public Nil < Service Contract Public Pub. Pvt. Public Public Mgmt Contract Public Private Public Public 20 + < Lease Public Private Public Shared Nil < Concession Public Private Private Private Nil 4 Nil BOT/BOO Pvt. Pub. Private Private Private Nil Nil < 10 Divestiture Pvt/PP Private Private Private Nil Nil Nil 2 1

2 Collection and Sweeping Scenario: Mainly in the service / OM contract form to SSIP and NGOs Large number of `informal, direct contracts with communities EXNORA South India; CDC West India; JMM, Vatavaran North India; FOCUS East India Financial Flows: Recycling Composting Facility Households Composting Facility Separate Materials Recyclables Bag/Sell Recyclable Material Cycle Rickshaws collect waste from households Organic Heap /Spray Slurry/Filter Bag/Sell Compost Market Collection Flows: Revenues: Household Fee Collections and Supervisors), Rickshaws, Bins, Community Education and Awareness Capital Flows: Expenses: Land, Utilities, Facilities Composting Flows: Revenues: Compost Sales Expenses: Worker Salaries (Segregators), Composting Beds, Siev (Filter) Recycling Flows: Revenues: Recyclables Sales Expenses: Worker Salaries (Segregators) 3 Collection and Sweeping Capital OM Costs, Revenues 1,000,000 Rupees 500, ,000-1,000,000 Capital Costs OM Costs Revenues -1,500,000-2,000,000 Year Investment constraints: Large HH payment and source segregation risks Government efforts for behavior change minimum Land constraints, Manpower intensive, etc Compost sales and recyclable sales uncertain 4 2

3 Scenario : Secondary Collection and Transport Contracts Transfer operations are run at local municipality level Service contracts to individual truck operators widespread New large concessions in Chennai (1 Operator); Nagpur (1 Operator); Delhi (3 operators) Cost savings to Municipality established at ~ <35% OM costs more than > 70% of Project life cycle costs System Design Risk is most significant Operation efficiency is next key area to reduce costs Commercial Project finance has been successfully been tapped 5 Secondary Collection and Transport Contracts Investment constraints : Municipal Monitoring Independent third party monitoring Out put Specifications Regulation by Contract National level Regulation with no local inter-say Improve national regulation Encourage cities and states to have specific regulations Cash Flow Security Payment security mechanisms In house and Commercial Bank LoC 6 3

4 and Scenario: and disposal facilities are not yet at the Regional Authority level First Generation efforts 35 EPC + Service/OM Mechanized Compost Plants 1 EPC + OM Sanitary Landfill (Delhi) JVs for Compost/ to Energy Plants 2 (Composting/Recycling) and (SLF) facilities in Bangalore 7 Sri Ram Energy for power generation Process Sun drying Size reduction Preparation of Pluff Burning in Boiler Power generation from Turbine Sale of power to APTRANSCO Municipal Role Sparing 10 acres of land on lease Supply of garbage Supply of water Private Partners Role Capital investment by the firm - about Rs.54 Crores. Cost of power unit as per MOU - Rs.3.37 Ps. Bi-products - Processed Ash Employment generation - about 50 Nos. 8 4

5 and Vijaywada : - Royalty Project Capacity Royalty/Lease rent Sri Ram Energy for power generation MT/Day 21,000 $/Y Excel Industries for generation of manure MT/Day 18,000 $/Y Vegetable waste for Bio-Methanization - 20 MT/Day 55,000 $/Y Dumping Yards for disposal MT/Day Nil Tipping Fee Bangalore : Composting and Landfill 6 $/T 9 PSP in Collection and sweeping the lag in reform Starting point last 8 years Last 6 months No User Charges CBO, NGO and SSIP Hyd and Bangalore Nagpur Surat Gandhinagar First 3 Franchises CDC scaling up Mixed waste New HH Segregation of waste Ambiguous Community role Community signs on Contracts Risk Transfer - low Risk Transfer - high 10 5

6 PSP in Transfer, and - The reform process Starting point last 10 years Last 12 months 35-1 st Gen Royalty Compost plants, Short Transfer contracts Chennai Delhi Bangalore Tipping Fee Construction + OM Concession, DBOT,DBOO Public Investment Private Investment Risk Transfer - low Risk Transfer - high Contract monitoring by municipality 3 rd Party independent 11 monitoring Capacity of Local Government is a constraint : what a solution might look like SENIOR GOVERNMENT Financial contributions and formal monitoring of service national elections USERS/ PEOPLE local elections Environmental regulation REGULATORY STRUCTURE customer monitoring mechanisms Transparent taxes and user charges LOCAL GOVERNMENTS MoUs, Output based specs PSP contacts SERVICE PROVIDERS Policy/ Standards/technological choice / financing structure/specifications Competitive well monitored Service provision by intermunicipal companies, public companies, private companies, Small Scale infrastructure 12 providers 6

7 and where support can come from regulation National Govt Policy guidance State incentives Clean Kerala Mission, Karnataka/AP State effort capital capacity operating incentives City towns towns Regional systems towns 13 Example of State Govt support Maharastra: Stable industry structure, State level Policy, Model Contract documents, Output based Fiscal Incentives Gen. 1 Gen. 2 Gen. 3 Gen. n ULB Transporter Recycling Industry Operator Operator Green Lines indicate the monitoring aspects as well as payment flows Black Lines indicate the operational flow 14 7

8 Thank You 15 Emerging efforts Overall assessment Collection Large Cities: the rush to imp Transport Large Cities: the rush to imp and disposal In Large Cities: the rush to imp MSW rules yet to be comprehensively implemented Local governments more reactive than strategic in their decision making 16 8

9 adhoc experiments with small private operators for short duration service contracts government tries to create uniform service work packages and specify labor and equipment requirements, rather than obtain competitive bids that are area -specific and enable technical innovation by co ntractors minimum investment in privately owned specialized equipment, primarily use open tippers as these are useful in construction and transport work if not in solid waste sector beyond short contract no private labor capacity building, just the hiring of managers, with their trucks (usually hired) and drivers no private sector development of relationships with customers served, nor education of public to cooperate, due to short duration contracts workers exploited -- low wages, no employment security, n o benefits, swapped among contractors to avoid section 10 of Labor Act, no benefactor when ill if swapped lottery system in some areas is a divide and conquer strategy that keeps all contractors insecure about future contract awards, not rewarding the best performing contractors for their work cultural issue of harmony and sharing being placed before competition; contractors have associations and lobby together to keep work equitable for all and obtain fair contract prices for all, competition is minimal BOO concessions not given rigorous review before approval, because involve no government money, only long term use of government land every city needs a landfill, but cities don t see the risk of delaying landfill for treatment schemes, as public will give much greater opposition to landfill as each year passes without implementing a long-term landfill option contracts are short-term fixes, to match short-term political and commissioner agendas there are hidden costs to government for contractor selection, contracting, supervision, monitoring, payment, etc., and don t consider when comparing public and private sector costs multi-year contracts of at least 3 years minimum wage laws enforced need to abolish section 10 of Labor Act, regarding contracting of government perennial services 17 9