The Hindu : Alandur experiment casts shadow on public-private partnership projects

Online edition of India's National Newspaper
Tuesday, Mar 23, 2004

Tamil Nadu

Tamil Nadu

Alandur experiment casts shadow on public-private partnership projects

By T. Ramakrishnan

CHENNAI, MARCH 22. Sustainability of public-private partnership (PPP) in water and sewer projects comes under focus, with the Alandur underground sewerage scheme caught in a row again.

Residents of the Municipality say the levy of a monthly maintenance charge of Rs. 150 for sewer connections is too high. But officials say `unwillingness' on the part of the beneficiaries to pay the charge will only hit the operation and maintenance of the assets created under the underground sewerage scheme and may eventually derail it.

Hailed at the national level as an innovative model of PPP, the scheme is unique in that a sizable portion of the capital cost is met by the beneficiaries, who, essentially belong to the middle class. Of the total cost of Rs. 40 crores, the public contribution has come to about Rs. 10.5 crores. The Government has provided Rs. 3 crores towards the capital cost and a subsidy of Rs. 2.90 crores for operation and maintenance. Construction of the sewer network has been entrusted to a private agency on a build, operate and transfer basis.

The Alandur project faced teething problems. Nearly one year after the commissioning of a sewage treatment plant, the local body started providing individual connections in July last. Now, the issue of maintenance charge has arisen. The residents' request to the Government for lowering it is "under consideration," says an official.

With the Alandur model being sought to be replicated in other urban areas, the sustainability question assumes critical relevance. "In Alandur, we were able to raise a substantial amount from the beneficiaries because of their paying capacity. In other areas, this may not work, given the economic conditions of the people. So, the State Government has to support such schemes by giving grants," says R.S. Bharathi, Chairman of the Municipality.

Another PPP project now under way is the Tirupur water supply and sanitation project. The Rs. 1,023-crore project envisages supply of 185 million litres a day (MLD) in the initial phase to domestic and industrial consumers and 250 MLD ultimately.

It is being executed on a build, own, operate and transfer basis and is slated for completion next year.

Apart from the Government and the Infrastructure Leasing and Financial Services, the Tirupur Exporters' Association is a promoter of the New Tirupur Area Development Corporation Limited (NTADCL), a special purpose vehicle (SPV).

"We will not have the problem of our beneficiaries refusing to meet the running cost because their survival depends on sustained supply," says an NTADCL official.

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