Haldia Water Management Limited

active

On July 18, 2008 Haldia Development Authority (HDA) signed a 25 year concession agreement with a consortium of Jamshedpur Utilities & Services Company Limited (JUSCO), Ranhill Utilities Berhard (Malaysia), and Infrastructure Development Finance Company Limited (IDFC) for development and operation of a Water Supply Scheme in Haldia City, located in the state of West Bengal. Haldia is an industrial city with a population of 170,695 (Year 2001) and the proposed water supply project shall almost double the water availability at Haldia at a competitive cost and will make it an attractive location for existing and future industries. It could not be ascertained at the time of collection of this information if the retail water supply constituted more than 20% o the total water supply, but industry sources say that the figure is above 20%. Under the concession, the consortium of JUSCO, Ranhill and IDFC, shall set up of a new 25 MGD water treatment plant on a Design-Build-Finance-Operate-Transfer (DBFOT) basis along with operation and maintenance of the existing (WTP of 113.5 thousand cubic meters per day) and the new (WTP of 113.5 thousand cubic meters per day) water supply system for a total period of 25 years at an expected investment of about US$ 22.2 Million (INR100 Crore at 45 INR/USD). The new 25 MGD WTP will be constructed using dissolved air floatation (DAF) technology. As per the concession agreement, the entire facility shall revert to HDA at no cost, on the expiry of the concession period. The agreement specifies strict quality and service standards, lays down a detailed customer service rules and emphasis on improving customer service and response. The focus is on reduction of water losses through induction of latest technology and improvement in operational efficiency. HDA, in order to have flexibility in deciding the model for concession agreement, initially decided to invite bids for two package / options: Package 1: Operation and Maintenance of the existing plant with capacity of 113.5 MLD (25 MGD) and series tube wells of 13.62 MLD (3 MGD) capacity and New WTP of 113.5 MLD (25 MGD) constructed by HDA from its own funds and complete existing and new distribution network added by HDA during the concession period including reservoirs, pipelines and boosting pumping stations up to consumer levels during the authorization period (10 years). Package B: Construction of new 113.5 MLD (25 MGD) Water Treatment Plant in two equal modules on BOT basis and Operation and Maintenance of the existing plant of 113.5 MLD (25 MGD), series tube wells of 13.62 MLD (3 MGD) capacity and complete existing network including reservoirs, pipelines and boosting pumping stations upto consumer levels and O & M of new distribution network added by HDA during the authorization period (25 years). In response to the expression of interest, ten private operators had shown their interest for both Packages A and B and only one party had shown interest for Package-B. Finally the financial bids were received from 3 bidders for the Package A and 3 bidders for the Package B. Although the bids were called for both the packages, HDA finally opted for the Package B, given the huge demand of water supply in the future. The consortium of JUSCO, Ranhill and IDFC, won the international competitive tender, conducted by HDA, by quoting the highest license fee paid to the HDA, of USD $ 44.81million (NPV of the license fee quoted for 10 years and discounted @ 12%). HDA had asked the bidding parties to quote license fee per year, for 10 years. The license fee for 11th year shall be the highest figure of first ten years. Thereafter the license fee shall be increased by 3% every year. In return, the concessionaire would be allowed to recover the operating costs through user charges during the concession period. HDA provided for a minimum increase in the tariff of 3% to take care of the inflation. However, additional revenue due to increase in tariff (beyond 3%) shall be shared by HDA and concessionaire in the ratio of 70:30. Similarly additional revenue because of sale of water beyond a specified volume indicated in the tender document shall be shared equally by HDA and concessionaire. The other salient points of the concession were: • The expenditure due to increase / decrease in power cost shall be shared equally among HDA and concessionaire. • Additional investments for rehabilitation of the existing system shall be shared equally between HDA and concessionaire. • The financial liability of existing workers (221 nos.), engaged by the private contractors at present, shall be taken by the concessionaire. The new 113.5 TCPD capacity WTP, and the associated new network is expected to cost USD 31.1 Million (INR 140 Crores). Details of financial closure were not available in the public domain at the time of collection of information. Gov. assets is the net present value of all license fee payments.