djb+nangloi+water+project term+sheet+ bidders 06092011+pg

Draft for Discussion of 13

PROJECT RESUME – Key Contractual Parameters

PARAMETER PARTICULARS

Title of the Project Improvement & Revamping of Existing Water Supply, Transmission and Distribution Network under the Command area of Nangloi Water Treatment Plant, Delhi

Basic Objective

To renovate the Raw Water Main, WTP, connect the entire project area with piped network, migrate from intermittent and tanker supply to continuous system within a defined period, and achieve marked improvement in service and operational efficiency by reducing both Technical and Commercial Losses to predefined targets.

Project Components and basic details Existing Situation

• WTP Capacity – 40 MGD

• Bulk Water to WTP is being supplied from Bawana Intake Works. Raw Water Feeder Main from Bawana intake works to Nangloi WTP (Approx Length 12‐14km) is included in the Operator’s scope.

• The WTP to be rehabilitated / upgraded; and construction of recycling plant. • Present Output at Nangloi WTP: 34 MGD( Project Area – 22.33 MGD and outside Project Area – 11.67 MGD)

• Supply to outside project area (11.67 MGD) includes:

Supply to Bodella UGR Supply to CT‐2 Dwarka Supply to BPS at Uttam Nagar

• Losses at WTP: Approx. 19.5% observed during the period (May 2011 – July 2011)

• Supply to the project Area from Other Sources:

Haiderpur WTP: 5.12 MGD (will be discontinued after commissioning of Dwarka WTP (by 2016)) Khyala UGR: 0.3 MGD (shall be discontinued after 6 month from Initial Handover Date) Bodella UGR: 0.28 MGD (shall be discontinued after 6 month from Initial Handover Date) Tube wells & Tanker Supply: 2.27 MGD



Total: 7.97 MGD

• Supply to Bodella UGR from Nangloi WTP will be shifted to Haiderpur WTP from Initial handover Date.

• Supply to CT‐2 Dwarka, Ujwa and Daulatpur UGRs will be as Bulk Supply from Nangloi WTP till Dwarka WTP is commissioned

fully.

• Project Area: Nangloi WTP Command with an approx. built‐up area – 65 Sq Kms. (excluding Ujwa and Daulatpur) • Present Network Coverage: (Planned – 99.3%, UA Reg – 100%, UA TBR – 49.3%, UA – 32.2%, Villages – 99.1%) • Proposed Network Coverage‐ (Planned – 100%, UA Reg – 100%, UA TBR – 100%, UA – 100%, VILLAGES – 100). The cost of

proposed Network is included in the Capex however, the implementation of the same shall be done priority‐wise depending upon the availability of water

• Population in project area:

Existing – Approx. 10,72,000 (excluding Ujwa and Daulatpur) Projected in Yr (2027) – Approx. 16,16,000 (excluding Ujwa and Daulatpur)

• No of Consumer connections: Existing ‐ 80,724 (including Ujwa and Daulatpur)

• Existing UGRs/ BPS with Capacities & Yr of commissioning: Nangloi – 9.2 MG commissioned in 2008 Najafgarh – 2.2 MG commissioned in 1992 Mohan Garden – 1.0 MG commissioned in July 2009 Ujwa – 1.2 MG commissioned in 2009 Daulatpur – 1.1 MG Commissioned in 2009

• Existing OHSRs with Capacities & Yr of commissioning: Nangloi ‐ 3 Lakh Gallon

• Proposed UGRs with Capacities: Najafgarh – 8.0 MG (In Operator’s scope) Mundka – 6. 5 MG (Not in Operator’s scope)



• Length of transmission system : Approx. 31 kms • Length of distribution system: Approx. 1127 kms

The material‐wise distribution is as follows:

Pipe Material Length in km AC (75mm to 500mm) 105.7 PVC (75mm to 150mm) 34.7 CI/DI (75mm to 1000mm) 973.9 MS (100mm to 1500mm) 4.8 PSC (600mm to 900mm) 8.0 GI (100mm) 0.024

• No of borewells: Nos: 126, Output – 1.55 MGD

• Per capita Supply at present in Project Area: 150 LPCD with the existing network coverage

Average LPCD for the Project Area (including unauthorised + Colonies and villages not under network)– 65 LPCD

• Tanker supply: in 2010 Najafgarh UGR Nangloi OHT Paschim Vihar OHT Nos.: 59 Nos.: 21 Nos.: 22 Trips: 410 Trips: 137 Trips: 66 Volume supplied: 0.49 MGD Volume supplied: 0.16 MGD Volume supplied: 0.07 MGD

• NRW % : 78%

Broad Project Scope

Capex • Rehabilitation of Raw water Feeder Main from Bawana Intake works to Nangloi WTP. • Rehabilitation and automation of Nangloi Water Treatment Plant including construction of recycling Treatment unit.

• Repair, Rehabilitation and Construction of Underground reservoirs (UGRs)/ BPS/ Tube wells • Installation, replacement, Rehabilitation, Automation of Transmission & Distribution system in the Service Area; • Replacement of existing service connections and meters for all categories of consumers. •

Operation and Maintenance • Operation and Maintenance of Raw Water Feeder Main from Bawana Raw Water Pump House to Nangloi WTP.


PARAMETER PARTICULARS • Operation and Maintenance of Nangloi Water Treatment Plant and Transmission and peripheral mains. • Operation and Maintenance of UGRs/Tube wells and distribution network • Fixing of system leakages with the aim of reducing Technical Losses from the system Billing, & Collection of water charges

from Consumers in the Service Area and depositing into the Project Escrow account; • Meter Replacement to be undertaken as and when required. • Management, Operation & Maintenance of the Project Components during the project period. • Customer Service and Grievance Redressal • Energy and water Audit It is envisaged that implementation of the entire Rehabilitation & Development works envisaged in DPR provided by DJB, will spread over 3 yrs.

Bid Variable for selection of Operator

Option 1: Gross Operator Rate ‐ Rs. Per kl of water Billed in the Project Area Gross Operator Rate is inclusive of Operator’s all O&M expenses, cost of Bulk Water, Electricity charges, and also factors in recovery of Operator’s capital investment. Option 2: Net Operator Rate ‐ Rs. Per kl of water Billed in the Project Area with Power Guarantees. Net Operator Rate is inclusive of Operator’s all O&M expenses and factors in recovery of Operator’s capital investment.

Key Contract Provisions PARAMETERS PARTICULARS

Implementation Format PPP – Concession

Funding

• Project Cost (excluding Road Repairs) to be undertaken in the 3 yrs o DJB: 50% of actual project cost, as Grant, subject to a ceiling of 50% of capital cost estimated in DJB’s DPR & RFP. o Operator: Balance 50% of the actual project cost, and cost incurred beyond the capital cost estimated in DJB’s DPR &

RFP

• DJB’s Contribution to be released through Escrow mechanism, as described later.


PARAMETERS PARTICULARS

Contract Period The water demand and supply scenario was discussed and it was decided that the Project Period will be of 15 years including 6 months for Due Diligence and 2.5 years for Construction (COD) described in this document as COD.

PARAMETERS PARTICULARS Project Facilities Will include

• All Existing Assets of DJB in the Project Area handed over to the Operator • All Assets Rehabilitated /Repaired by the Operator during the Term of the Concession • All new Assets installed by the Operator/DJB during the Term of the Concession

Ownership of Project Facilities

• Entirely remains with DJB, including all new assets built/installed by the Operator.

Scope of Work / Operator’s Obligations during different phases of the Concession

Mobilisation / Compliance Period

• Project mobilisation, Establishment of SPC’s office(s) in the project area, deployment of key staff & equipment on site, • Comprehensive assessment of the water supply system in the service area and establishing the baseline of existing service levels,

connections, billing and revenue collection position. • Review of DPR provided by DJB as part of the RFP and preparation of Operator’s own Implementation Plan.

o The plan should cover all findings related to baseline conditions; Consumer survey and demand assessment, details of hydraulic model; Engineering Designs; Project Cost / investment required; Funding and execution plan / methodology; Financial Management Plan and a specific O&M Plan laying down the practices proposed by the Operator for achieving the targeted KPIs.

• Obtaining approval of DJB on the Implementation Plan and MIS Plan

• Getting the Existing Assets (All assets or only visible structures like WTP, UGRs, BPS, etc.?) valued jointly by DJB and Operator with the assistance of third party approved valuers (for the purpose of Insurance). Cost of valuation exercise to be shared equally1.

• Achieve Financial Closure Rehabilitation & Development Period

1 DJB to check and inform accordingly.


PARAMETERS PARTICULARS • Take over responsibility of the management and O&M of water supply facilities including monthly billing & revenue collection in

the project area, • Adherence to specifications and standards (CPWD Manual and Standards) • Replacement of all the existing meters and house connections and installation of new meters • The meter installation work to commence after 6 months from the Initial Handover Date. • Replacement of all AC and

PVC Pipes in the project Area. • Replacement of CI and DI

Pipes in the project Area to the extent required. • Formation of DMZs of 10,000 connection during initial 3 years which then will be converted into DMA of 1,500 connections by

the end of 10th year. • Energy and water Audit to be undertaken by Operator on yearly basis. The operator should inform DJB about significant

problems and its remedial measures including anticipated fresh investment through an Annual Plan in advance to DJB so as to allow DJB to make necessary Budget provisions.

• Adopt the computerized Billing or Revenue Management System of DJB for the Project Area, if necessary, and ensure that are installed and functioning properly

• Operationalise the Escrow Account ‐ Generate & Issue Bills to Consumers on behalf of DJB, Collect and Deposit consumer payments into escrow account

• Undertake ‘Rehabilitation & Development Works’ in accordance with approved Implementation Plan, o Operator to ensure that all DMZs in the distribution network are set up, all bulk & consumer meters and Pressure

Data Loggers are installed, calibrated and functioning, • Identify all illegal connections and take appropriate action as per instructions from DJB • Provide new connections with meters, replace old / defective meters, provide individual and group connections to consumers in

urban poor area. • Arrange Security of project establishments like WTP and UGR/BPS, offices, etc. • Take Insurance Cover for all existing, rehabilitated and new Project Assets • Set up a Management Information System and provide information to DJB on technical and commercial aspects / performance of

the project on daily basis as well as aggregate monthly, quarterly and annual basis. • Set up and operate a Consumer service centre & helpline (24 x 7)

2 Base Service charge shall include all expenses for operating and maintaining the facility as provided in the condition of contract for O&M, except for the cost covered by the other components and shall include without being limited to cost of staffing and personnel, administrative expenses, cost of routine maintenance, repairs and replacements.


PARAMETERS PARTICULARS • To provide Rain Water Harvesting at all the DJB facilities within the project area.

By the end of 30 months from Initial Take Over Date, Operator should achieve

- Installation of meters for all existing Consumer connections and Bulk Meters - Commissioning and testing of WTP and distribution system in the Service Area as per Approved Implementation Plan - Achievement of Baseline Service Levels post improvement, and KPI targets for O&M Period (jointly with DJB) - Computerised Billing System should be fully functioning - Obtaining Completion Certificate from DJB for ‘Rehabilitation & Development Works’

O&M period

• Ensure continuous pressurized water supply to all registered consumers at prescribed service levels, including standby operations through Tankers.

• Undertake calibration of meters as and when required during the Concession period • Replace water meters (bulk + consumer) and Service Connections as and when required during the Concession period • Ensure minimum basic supply to unauthorized colonies through tankers as per DJB Policy, till area coverage is 100% • Undertake 2% of the existing network (not replaced in the CAPEX Period) replacement each year during the O&M period. • Provide new service connections and prevent proliferation of unauthorised connections in the Project Area. • Generate & issue bills to consumers on behalf of DJB, collect and deposit consumer payments into escrow account • Continuously strive to improve the levels of service to consumers and achieve the targeted KPIs • Operate requisite number of Consumer service centre & helpline (an IVR system based on K nos. on MTNL pattern). Should also

maintain mobile service centers. • Handover of project facility to DJB at the end of Concession Period in good working condition (as per prescribed handover

requirements) • Management of Bulk Water Shortage

o Operator & DJB to mutually work out strategies for meeting the service standards in project area o DJB (and Operator) to communicate to the Public about the shortage and its period of subsistence o Operator will not be considered to be in default during such period (and DJB compensating him through Idle/Base charges2 )

General Obligations during entire Concession Period • Submit MIS Reports to DJB on technical and commercial aspects / performance of the project on daily basis plus monthly,

quarterly and annual reports. • Submit Audited Annual Reports to DJB and PMC


PARAMETERS PARTICULARS • Meeting the Debt Service Obligations as per Financing Agreements • Indemnifying DJB against any claims that may arise on DJB on account of any default or inaction on the part of the Operator • Refrain from creation of encumbrances on project assets except to raise finance after permission from DJB. • An Escrow with 2 or more sub A/c s may be established: One for Construction and One for Revenue Collection • Enabling provision under Section 62 of Delhi Water Board Act, 1992 • Escrow Agent – Any Scheduled / Nationalised Bank acceptable to DJB Construction Escrow • Funds from this account permitted to be spent till Rehabilitation and Development works (RDCD) • To be operationalised on/before the Initial Takeover Date and continue till end of works identified under Rehabilitation &

Development Works. • Inflows to comprise the following:

• Equity Contribution by Operator ‐ To be deposited in tranches in accordance with Implementation Phasing Plan • Debt from Lenders in accordance with Implementation Phasing Plan. • Capital Grant from DJB ‐ To be disbursed in tranches after the Concessionaire has expended the Equity, and shall be

disbursed proportionately along with the loan funds thereafter remaining to be disbursed by the Senior Lenders under the Financing Agreements. The Authority shall disburse each tranche of the Grant Support as and when due, but no later than 15 (fifteen) days of receiving a request from the Concessionaire along with necessary particulars.

• Outflows – priority of Charges

• Statutory Dues & applicable Taxes; • Payment to Contractors and Suppliers towards Rehabilitation and Development works in accordance with

Implementation Phasing Plan • Payments to be released by Escrow Agent only after the invoices have been certified by the PMC/TPA or DJB, within 30

days of submission of Invoices

Escrow Mechanism

DJB Revenue Escrow • To be also operationalised on/before the Initial Takeover Date • Inflows to comprise the following:

• Receipts from Consumers (including Arrears) to be deposited on daily basis; • Authority’s contribution towards shortfall – in terms of Gross payment to Operator;


PARAMETERS PARTICULARS • Outflows – Waterfall

• Statutory dues, if any (separate sub a/c) • Payment of Electricity Dues, salaries of DJB Staff and Bulk Water Charges will be directly debited on instructions from

DJB. While Sewerage Charges will also be part of the billing, but they will be set aside / credited toDJB’s sub‐account under the Escrow.

• Operator’s Sub A/c (for Monthly Payments to Operator net of the above) • Balance, if any, to DJB sub account • A Reserve equivalent to Operator’s average net payment for two months will be kept aside by DJB. • In case the amount directed to Operator’s sub A/c after debiting Electricity Dues, salaries of DJB Staff and Bulk Water

Charges is less than his net Fee entitlement, the shortfall will automatically flow in from the Reserve A/c which in turn will be topped up by DJB immediately.

• Separate sub‐account for Retention Money during the Construction period. The Retention money will be deducted at the rate of 5% of the gross amount of each running bill. Any amount of greater than 5 Lakh in the Retention Money sub‐account shall be given to the Operator against an equivalent amount of Bank Guarantee.

• The amount in the Retention Money sub‐account shall be given to the Operator after 6 months of CoD.

Operator’s Remuneration

• No payment due for Compliance Period of 6 months. During the Concession Period, Operator’s entitlement = Quoted Rate @Rs. ___Per kl of water x minimum guaranteed volume. There will be no escalation from Initial Take over Date till COD (COD period is envisaged of 30 months).

o However if Operator is able to bill more than minimum guaranteed volume, it will paid on the basis of actual volume Billed by it.

OPTION 1: • Operator to be paid on the basis of Gross Operator Rate quoted by him ‐ Rs. Per kl of water Billed in the Project Area. • Gross Operator Rate will factor

o O&M expenses to be incurred by the Operator, o Cost of Bulk Water charges to be paid to DJB @ Rs. __ per kl., o Electricity charges to be paid by DJB, o Recovery of Operator’s Investment

OPTION 2: • Operator to be paid on the basis of Net


PARAMETERS PARTICULARS Operator Rate quoted by him ‐ Rs. Per kl of water Billed in the Project Area.

• Net Operator Rate will factor o O&M expenses to be incurred by the

Operator, o Recovery of Operator’s Investment

• Operator’s entitlement = Quoted rate (Rs. Per kl of water billed) x Volume of Water Billed x Collection Efficiency

• However, In case of Option 1, , Net Fee payable to Operator will be = [Quoted Gross rate (Rs. Per kl of water billed) x Volume of Water Billed x Collection Efficiency] – [ Payment of electricity charges, Bulk Water charges ]

• Operator shall also get paid for the Bulk Water Supply to outside project Area as per the rate in the Concession Agreement. • Operator will also be entitled to reimbursement of Service Tax from DJB as applicable. Since there is generally a time lag between

billing and collections, Monthly Payments to the Operator will be released in the same proportion of the payment made in the corresponding month of the previous year to the total annual payment of the previous year. Reconciliations against actual achievements will be done on quarterly and annual basis.

• The Operator will be entitled to Escalation in quoted Rates as per a Rebasing formula which will be factor in change in costs of the above input items year on year.

Incentives & Penalties to Operator

• Collection of Past Arrears (before Initial Takeover Date)of DJB: As ‐‐‐% of the Arrear collected, ‐ slabs based on age of the dues; • However, if the past arrears are collected after announcement of some scheme by DJB then only ‐‐‐% (significantly lesser than the

above) will be shared with the Operator • Optimisation of Energy Costs: There could be set certain benchmarks for optimal energy consumption over the life of the

concession. If the Operator is able to save more energy, he automatically benefits, but if he exceeds the prescribed levels, DJB may consider whether to levy additional penalties. For this purpose, a set of benchmarks will be given in the RFP. Operator will also be required to specify his benchmarks for optimal energy consumption as part of his Implementation Plan after studying the project area, and whichever is lower, will be adopted as the target for his KPIs.

• Failure by Operator to deposit Consumer payments into the designated Escrow A/c within 1 working days from date of receipt of payments ‐ Penalty levied @ Rs. 10,000 per day of delay for each bill.

• Clearing of construction debris: removal from service area all surplus construction machinery and materials, waste materials (including without limitation, hazardous material and waste water) rubbish and other debris (including without limitation accident debris) – Rs 5,000 for each day of delay after lapse of 3 Calender days from the day of complaint from Consumer or notice.

Additional Capex, • Possible Scope under Additional Capex


PARAMETERS PARTICULARS Change of Scope, Change in Law items

o Due to addition of Areas which are outside the Project Area but to be supplied water by the Operator.

• DJB to select a third party contractor for execution of the works through a transparent, competitive tendering process to determine the optimum cost for the works.

• DJB to fund the entire capital investment. • DJB to fund replacement of pipes having dia

more than 350 mm in the project Area. • Operator to supervise the execution of such

works and is expected to include such supervision cost in his quoted rate.

Payment Guarantee Mechanism

• DJB to sign a escrow agreement before Initial take over date with Operator, Lender and a bank for setting up of Escrow account (agreement draft provided)

• Initial amount from DJB into the account should be equal to two months of the Operator Remuneration which shall be replenished regularly as per agreement conditions

• Purpose and manner of utilization of amount deposited provided in Escrow agreement. • Further interest charges on delayed payment are applicable (delay in days and rate :______)

Standard Operator’s Rate Adjustment

Rebasing ‐ Every Financial year Coefficients to be defined based on the factor of cost each year As per the OPTION 1 for Operator Remuneration: Factors to be considered during rebasing are Bulk Water, Power and O&M Expenses. As per the OPTION 2 for Operator Remuneration: Factors to be considered during rebasing are O&M Expenses (on WPI Index) DJB to form a separate Committee for Rebasing and may include experts from outside DJB like academicians from IITs, Technical experts in Water field, representative of DIPP (which undertakes WPI indexing activities), CPHEEO etc. to bring in more objectivity and transparency in the process.


Key Performance Indicators

SLB target S. No. KPI SLB as per MoUD 2015 2016 2019 2024

1 Coverage of water supply connections 100% 100% for areas covered in Phase I

100% for areas covered in Phase II

‐

2 Per capita supply of water 135 lpcd Refer chapter 2

3 Extent of metering of water connections* 100% 100% for areas covered in Phase I


4 Extent of non‐revenue water (NRW) 20% 40% 33% 28% 15%

5 Continuity of water supply 24 h ‐ 100% for areas covered in Phase I


6 Quality of water supplied 100% 100% 100% 100% 100%

7 Efficiency in redressal of customer complaints 80% 80% 80% 95% 95%

8 Cost recovery in water supply services 100% ‐ ‐ ‐ ‐

9 Efficiency in collection of water supply related charges

90% 90% for areas covered in Phase I

95% for areas covered in Phase I

By 2018 95% for areas covered in


SLB target S. No. KPI SLB as per MoUD 2015 2016 2019 2024


Phase II

Additional KPI s not prescribed by the MoUD

1 Water loss in the WTP ‐ 1.5% achievable in 2014 (at the end of construction period)

1.5% 1.5% 1.5%

2 Water loss in the transmission main ‐ 2% 2% 2% 2%

3 Ph10 – District meter density (No./1000 service connections) (Number of district meters / number of service connections x 1000) Ph10 = C11 /C24 x 1000 C11 – District meters (No.) C24 – Service connections (No.)

‐ 0.1 for areas covered in Phase I

0.5 for areas covered in Phase I 0.1 for areas covered in Phase II

By 2018 0.2 for areas covered in Phase II

* Note: 1. Phase I ‐ areas which have network coverage at the start of the project; Phase – II ‐ For the entire operator’s area except the colonies developed after award of work to the operator

2. Meter installation will start 6 months after initial handover date. Priority of installation will be – replacing non‐functional meters, metering un‐metered connections, and replacing functional meters, in that order.

djb+nangloi+water+project term+sheet+ bidders 06092011+pg

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