Tamil Nadu PPP

7/30/2019 Tamil Nadu PPP

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CONFRONTING INDIAs INFRA BOTTLENECK: Practical, Collaborative Solutions to Increasing Flow &

Success of PPP Projects in Gujarat, Tamil Nadu & Uttar Pradesh

Public Private Partnerships in Tamil Nadu:Experiences and Outlook


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Collaboratory for Research on Global Projects

Roadmap

1. Existing Institutional Environment for PPPs

2. Recent PPP Experiences

3. Upcoming PPP Projects

4. Issues for Discussion


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Institutional Environment - Enablers

While there is no specific law or policy framework for PPP inTN, private sector participation is being sought in select

sectors like SEZs, AEZs, agricultural marketing, tourism,housing and urban services

Drivers GOI policies (e.g. terminal markets, viability gap

funding) and public sector capacity issues Institutional elements TNUIFSL and NTADCL kind of

organizations

Political climate not averse to PPPs in certain areas

Mixed success stories Alandur sewerage project, Tirupurwater supply project, Coimbatore bypass, East Coast Road,

SWM privatization in Chennai


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Institutional Environment - Bottlenecks

Absence of a specific PPP enabling law or policy Political indifference to PSP

Bureaucratic distrust of private sector; unwilling to share risk, leading tounbalanced terms Legacy of witch-hunting Lack of capacity to engage private sector (e.g. in preparing bid

documents, drafting contracts and enforcement); e.g. tourism project

No shelf of projects; lack of clarity on how to deal with unsolicitedproposals (say through Swiss-challenge) or what PPP model to apply

Crowding out effect of robust state finances and huge capital investments Propensity for grant based funding in contrast to more efficient financing

models; e.g. roads infrastructure project Multiplicity of agencies impinging on a project; absence of single-window

approach Bitter experiences of past PPP contracts; e.g. Karur toll bridge,

Coimbatore bypass


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Recently Completed Project 1 :

Alandur Underground Sewerage

Sector: Sanitation Underground sewerage treatment

Size: 12 MLD

Location: Alandur (outskirts of Chennai)

Cost/Value: Rs.34 cr, including STP for Rs.8 cr. Duration: 5 years; concession period 13 years

Key Players: Concessionaire (IVRCL), ULB (Alandur),

MA&WS deptt, TUFIDCO and TNUDF PPP model adopted: BOT for STP

Outcome: Working, with some outstanding dispute


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ALANDUR UNDERGROUND SEWERAGE SCHEME




Alandur Underground Sewerage

Project Cost : Rs.34 cr

Initial tariff Rs.150 per house per month

TNUDF organized peoples participation through deposits @ Rs.5000per house and generated Rs.14 cr

STP bid out on BOT arrangement

With this, tariff reduced to Rs.75 per house per month Crucial role of Project Champion in the form of the Chairman, Alandur

Municipality

Support from Government

The Alandur model is being adopted with some modifications (DBOT)and learnings (providing h/s connections as part of project) in othertowns

Contract structuring important (e.g. decision to entrust collection systemEPC to same BOT operator for STP)




Karur Toll Bridge

Sector: Road (Bridge)

Size: < 1 km

Location: Karur

Cost/Value: Rs.16 cr Duration: About 2 years; Concession period 13 years

Key Players: Concessionaire (ECCI), ULB (Karur

Municipality), MA&WS deptt, TNUDF PPP model adopted: DBOT

Outcome: Failed




Karur Toll Bridge

TNUDF facilitated the first toll bridge contracted by a ULB inIndia cost Rs.16 crore under DBOT arrangement

TN State Toll Act amended to facilitate ULB to enter intoDBOT contract stable regulatory framework

Predictable cash flows ensured project structuring

However, damage to bridge approach road during rainsgave pretext to Government to terminate contract withoutcompensation



Upcoming Project 1 :

Energy-saving using ESCOs

Sector: Energy

Existing Situation: High energy costs in street lighting andwater pumping

Proposed Solution: Implementation of energy-savingmeasures

Government Agencies Involved: Commissioner of MunicipalAdministration, Urban Local Bodies, TNUDF

Size: 29 towns

Cost/Value: Indeterminate

PPP model envisaged: DBOOT through Energy SavingCompanies (ESCOs) Shared savings model




Energy-saving using ESCOs

Structuring the project IGA and bid evaluation criteria achallenge, given limited past experience (first of its kind)

Benefit of a partner NGO (Alliance to Save Energy)

Now a BEE manual for bid process put in place

ULBs buy-in took time; several rounds of discussionsincluding 4 pre-bid meetings

Contentious issues raised by ESCOs, especially on bidevaluation parameters and baseline

IGA may reveal non-implementability

Complaints on performance may derail the project, despiteclear performance indicators and 3rd party oversight




Old Prison Land Project

Sector: Real Estate

Existing Situation: Old Prison land vacated and proposed to

be handed over to Chennai Metro Rail Ltd for commercialexploitation to augment capital

Proposed Solution: Lease out to private sector for creating

commercial complex, MLCP and public park

Government Agencies Involved: Special Initiatives deptt,Prison deptt, CMRL, TNUIFSL

Size: 12 acres approx.

Cost/Value: Around Rs.600 crore

PPP model envisaged: DBOOT



Old Prison Land - Chennai




Old Prison Land Project

Government commitment and political support

Competing demands from other agencies (e.g. Health

department for expansion of GovtHospital) Locational factors like access to land, proximity to slums and

river/canal (CRZ, pollution)

Market demand and bid price Design of project being subject to Govt clearance

CMDA regulations under Master Plan/DDP

Upcoming transportation projects like Chennai Metro, PortConnectivity corridor, Central-Egmore railway link

Competence of the concessionaire to complete project asper schedule and market / maintain it for the duration



Issues for Discussion

What kind of a PPP model should be adopted in this case?

How should this project be structured? How can we go about gathering stakeholder and political

commitment?

What are the perceived bottlenecks to this project?

What other international / national experiences can we drawupon?

How to ensure transparency in the bidding procedure?

How to select a competent bid process manager and how tofund its cost?

What are the safeguards that need to be built in into the projectto secure the legitimate interests of the agency and the privatesector operator / concessionaire?


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Thank You

Documents

Tamil Nadu PPP