Vishakhapatinam Bulk Water Supply Project

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The Government of Andhra Pradesh (GoAP) mandated Andhra Pradesh Industrial Infrastructure Development Corporation (APIIC) to develop a bulk water supply project to serve the needs of the industrial areas and residential users of the town through a Public Private Partnership (PPP) in 1997. A Special Purpose Company Visakhapatnam Industrial Water Supply Company Limited (VIWSCo) was set up for the development and implementation of the project on a Build,Own,Operate and Transfer (BOOT)basis. Larsen and Toubro Ltd. (L&T) held the majority equity in VIWSCo (51 per cent).The balance 49 per cent equity was held by the governmental agencies namely, Andhra Pradesh Industrial Infrastructure Corporation Limited (APIIC) and Visakhapatnam Municipal Corporation (VMC). The Concession Agreement was signed by Government of Andhra Pradesh with VIWSCo in March 2004. The VIWSP was inaugurated on 25 September 2004 and commenced delivery of water from 25 December 2004. The project was to be implemented in two phases with investments in Phase I of Indian Rupees US$ 110.75 Million (Indian Rupees 4430 Million). The project aims to supply about 520 Million Litres per Day (MLD) bulk water to develop industrial areas around Visakhapatnam and to domestic users in Visakhapatnam City. VIWSCo entered into Bulk Water Supply Agreements (BWSA) with consumers for the supply of water on a take or pay basis. GoAP had to subsidize the tariffs in the initial years and created a Transition Support fund to enable VIWSCo bridge the revenue gap due to lower tariff in initial years. This subsidy was to be repaid to GoAP by VIWSCo in the later years of the concession period as VIWSCo generated a surplus in view of the gradual tariff escalation that was planned.